8 Common Offshore Outsourcing Mistakes

Small businesses may be interested in offshore outsourcing to decrease costs, expand or develop a global workforce. Here's what you should know about exploring these options while avoiding major missteps.
March 18, 2015

You may have heard larger companies talk about successes with offshore outsourcing. But have you ever wondered if it can work for your small business?  

There are a number of advantages that may be gained from offshore outsourcing. According to FlatWorld Solutions, the top reason companies give for outsourcing is cost savings. Other reasons include to scale and expand the business, develop a global workforce, tap into wider talent pools, and open up new markets by bringing on workers closer to the end customer around the world.  

But when it comes to outsourcing, there’s a difference in how small businesses, versus larger companies, tend to approach it.

Large corporations often hire entire teams and set up remote offices. The small-business version of offshoring may involve entire offshore teams, true. But frequently it can take the form of hiring one or more contract workers for projects or to augment staff long term. Talent marketplaces such as Elance, Guru and Freelancer can make it easier to find contract workers in other countries for just about any job or project.

However, recruiting, hiring and managing these offshore workers in a small organization is usually easier said than done. Companies that have outsourced have sometimes lost money, wasted time and had to deal with missed deadline and disappointing results.  

Here are common mistakes that small-business owners can make when offshore outsourcing, and how you can solve them.

1. Over-Relying on Email Communications

Email is often essential with overseas contractors because of different time zones. But it can be a big mistake to rely on email alone. Email is a one-way communication. It doesn’t include the body language and back-and-forth exchanges needed to build relationships.

“Human relationships are rich, and they're messy and demanding. And we clean them up with technology. And when we do, one of the things that can happen is that we sacrifice conversation for mere connection,” cultural analyst Sherry Turkle says in her TED talk, Connected, But Alone?

The Solution: Use Skype and other video conferencing tools that can give you the opportunity for face-to-face interaction. Seeing and speaking with others can provide immediate feedback and may help avoid the misunderstandings all too common in email alone.

2. Being Insensitive to Cultural Differences

Think about the last time you engaged in small talk before a meeting. Did everyone assume the others understood the references to sporting teams or local events? Would team members from another country have understood all those references, or would they have felt excluded?

And then there are behavioral differences such as handling disagreements and confrontation. For instance, those in east Asian countries may feel uncomfortable disagreeing.

The Solution: Take the time to learn more about your offshore team. Ask about their local weather, happenings, friends and family. This can create a common ground that transcends cultural differences and strengthens your working relationship. Also, listen carefully and observe body language so you can better communicate.  

3. Not Making Allowances for Time Zone Differences

It can be a mistake to expect your offshore teams to always make themselves available for meetings and conference calls on your time zone. Even worse, you probably don’t want to be operating on different time zones all the time.

The Solution: Randy Rayess, co-founder of VenturePact, suggests arranging to have a daily overlap of at least two hours. Consider adjusting your own hours to be available during your offshore team members’ working hours if that’s what it takes. It shows respect for them.

4. Trying to Offshore Too Much at Once

Business owners may be tempted to go all in. But successful outsourcing is an art, and trying to do it all at once with multiple services can be a mistake. The complexities of new relationships with overseas contractors may be one hurdle. But it also may take time to see whether the savings and other benefits you're expecting will be a reality.

The Solution: Consider beginning outsourcing and building your overseas team in increments. Maybe outsource a single function or project first. Get the feel of working with overseas contractors. Once your first success is proven, then you can outsource more.

5. Not Knowing What You Want

Sometimes business owners will outsource projects without fully understanding what needs to be done. If you don’t understand your project, it’s pretty hard to explain to others how it should be done, or judge whether they’re doing it right.

The Solution: Be sure you understand the project that you’re outsourcing and be able to communicate duties and expectations clearly to your overseas team. Be prepared to answer questions and to give helpful feedback when the project is complete.  

6. Being Guided Only by Cost  

Outsourcing work overseas shouldn’t be only about keeping costs low. It’s true small businesses in particular may be attracted to lower overseas costs as a way to scale on a budget. But there are other factors that may make overseas contractors desirable.

The Solution: Ask yourself what you want to gain from outsourcing offshore, and why offshore help can be equal to or better than in-country help. Do you need to draw from a more diverse reservoir of talent? Is gaining an international perspective for your business important? Does your business need an in-country sales or support presence during local time zones? Don’t skip this step—you should identify the advantages in order to make the right choice for you.

7. Not Vetting Candidates for Qualifications

Sites such as Freelancer and ODesk can be terrific marketplaces to find both in-country and offshore help. But beware of candidates who take a shotgun approach and apply for just about any open position. Some may represent that they have experience when they don’t.  

My company has posted contractor jobs only to get more than 100 responses in a matter of hours. Many candidates weren’t even marginally qualified. They simply did not have the requisite skills.

The solution: Dig deeper, especially when it comes to technical or specialist skills. Test applicants’  knowledge. Get samples of prior work. Avoid relying just on experience, site certifications or glowing reviews.

Offshore outsourcing can be successful for small businesses, and may give them leverage to grow. The important thing is to understand the challenges and avoid them.

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