What Is Outsourcing? Plus Outsourcing Pros and Cons.

outsourcing pros and consThere was this guy that ran his own business. 

Things were going really well and so he decided to hire more staff. 

The process was laborious but finally he managed to hire someone he felt fitted the company ethos, was trustworthy and hard working.

Then...

He was getting bogged down with having to answer supplier phone calls, take orders, problems with consignments, and then his car had to go into the garage.

He just didn’t have the time to get to the garage to get it fixed...

That’s where outsourcing comes in.  And, it can be done really cheaply.

There’s a massive BPO industry (Business Production Overseas) and we all should be taking advantage of it.

A lot of the time business owners and entrepreneurs don’t want to have other people working on things in their business, i was the same. 

We want to be in control of what is going on but also that a lot of us don’t think anyone else will have the passion or knowledge to do the same level of work as us.

The thing is...

You have to let go and allow other people to do the work.

The reason is so that you can focus on other things like maybe extra income sources or doing the aspects you are really great at - really working on your business rather than in it.

What you are doing is getting leverage by using other people’s time and so making your business more efficient. 

For example, maybe you can see what positive effects blogging can do for your business but feel you don’t have the time to write a blog post a month let alone a week!

Maybe there’s stuff that you have to do in your business but you don’t actually enjoy doing them such as payroll and accounts.

You can get outside help.

The point of outsourcing is really to buy your time back. 

Instead of trying to do everything yourself, you can outsource the stuff you’re not that great at that would take you a couple of weeks to do, an outsourcer would have it back to you in the same amount of time but allows you to work on other things in the meantime.

There is also an added bonus in that, as a small business, you may not be able to afford hiring someone full time as you’d have to pay benefits such as insurances.

 

Entrepreneur magazine states: “freelancers come on board as subcontractors and save the small business owner the burden of paying overhead associated with payroll taxes and expenses such as health insurance and worker's compensation, as well as the space constrictions that growing a company in-house can present."

http://www.entrepreneur.com/article/204652

Why outsource?

As an entrepreneur/business owner, your time is better spent and your business grows by directing the efforts of other people.  It’s called leverage.  You’re leveraging other people’s time instead of your own.

I can’t remember who told me this or where i heard it but you should only aim to get 1 or 2 really important things done each day which moves your business forward and/or produces income rather than on the technical stuff.

One of the advantages of outsourcing to the small business owner is that you can focus on the 3 ways to grow a business.  These are...

  1. Getting more qualified prospects.
  2. Converting those qualified prospects into customers.
  3. Increasing the average sale value of those customers.

**** Note **** You can find out for free how to go about growing your business in all 3 ways by going to the section on 4 steps to exponential growth and read about the USP, USP integration, database marketing and alliance marketing as Jay Abraham taught my mentor.

Outsourcing examples:

  • SEO
  • Social media
  • Blogging/article writing
  • Transcription
  • Syndication
  • Repurposing content
  • Web development
  • Outreach
  • Emails
  • Video production
  • Marketing
  • Bookkeeping
  • IT support
  • Data entry
  • Customer support
  • Outsourced marketing
  • Sales outsourcing
  • Call centre outsourcing (i’ve done this, it worked quite well.)

The list goes on and on and on.

There are different types of outsourcer you can get so one outsourcer doesn’t do all jobs.  They are experts or specialists in their own right just like in a normal workplace meaning that you won’t get a web designer writing a blog post for you!

Types of outsource staff:

  • General VA - they do general admin work and maybe a bit of social media management.
  • Article or content writer - they write all your content and submit it to the various places online.
  • SEO folks - they get your blog or website ranked so people can find it by link building, on and off page optimisation and keyword research.
  • PPC specialists - they run your pay per click (paid advertising online) campaigns.
  • Web developers and programmers - they set up websites and blog, make sure all your software and plugins are working and updated properly, and set up custom programming if you want things to look a certain way.
  • Graphic designers - they can design logos and images for your content including ebooks.
  • Video guys - they will make corporate videos for you and training videos etc.

There’s an outsourcer for every type of job basically!

One of the benefits of outsourcing that i really like is that you can hire them on a project by project, hourly, weekly, part time or full time basis.

Where to start the process for offshore outsourcing.

You want to make a list in a spreadsheet or whatever you use that outlines what it is that you do every day, what it is that you need or want to get done everyday, what you are not good at, what you don’t like doing (but needs to get done), what you want or need to spend more time doing and what you can get someone else to do.

After doing this you can then decide what skill sets and qualities you need your outsourcers to have.

What job to hire for first?

Personal assistant.  Hire one of these first as they can take the brunt of the work from you.  You can get one of these on a part time basis first.

A way of looking at it that i learned a long time ago is to see how much an hour of your time is worth and anything that you don’t deem is at that pay point, you outsource.

So, if you want to make $1M a year and you work 8 hours a day, 5 days a week, your hourly rate is around $500 an hour.

Outsource anything that is under this amount such as copying/pasting email replies.

You then want to hire a bookkeeper which will help you see where your business stands month to month.  I know from personal experience that this aspect of a business is sometimes forgotten about how important it is as we put this job to the back burner.

There are pros and cons with outsourcing as there is with anything but i like the fact that you can outsource as necessary as you grow.

Where do you find people to do these things for you?

That’s the big question as you want them to be reliable, trustworthy, hardworking, knowledgable and fun to work with.

  • You can start with your network as business friends may be able to recommend someone.
  • You can ask people on your own prospect or customer lists.
  • Have a look on LinkedIn, Twitter etc.
  • Put an advert on Craigslist.
  • Your chambers of commerce or Business Gateway (UK) might be able to help.

Fiverr - these are people who are just starting up and trying to get a portfolio going so are cheap.  Instead of spending 10 hours doing something, you can have it done for $5.

You can get anything done here from keyword research and article writing, design work, social profiles, copywriting, video and content syndication.

Just type anything you want in the search box and go for people who have great feedback.

Or there’s freelancewriting.com which hand picks writers from popular job sites and will help any niche or industry.

Odesk.  You can post jobs you want done here for anything at all.  Coding, web design, you name it.

Freelancer.com is much the same as Odesk.

You can get writers and part time staff per hour or per project at Upwork.com and they work in many different fields and industries, manufacturing, professional, retail, IT etc.

Or Chris Duckers site virtualstafffinder.com is a great resource for personal assistants.  You can hire people from $250/month up who do great work.

Ex-pat communities (look around on ex-pat forums.)  A lot of the time people move abroad but can’t get a job in their field.  You can sometimes get lower cost work done by these people as their cost of living is lower.

Advantages and disadvantages of outsourcing to the Philippines...

Tons of people i know are outsourcing to the Philippines and i will be very soon.

If you haven’t thought about the Philippines for outsourcing, here’s why many people have staff from there:

They have very good English, are hardworking, loyal, knowledgable, trustworthy, service oriented and cheaper than someone in the West who might not be any of the above!

But, be careful...

Here’s a story about someone i know having work outsourced to the Philippines.

Anyway, this person trained the new staff member by Skype and thought he’d done a good job finding someone who really fitted the bill.

However, when he went to have a call at the end of their day, the person didn’t answer.

What had happened, he found out later, was that the person didn’t want to make a mistake, got overawed and quit.

They are a very conscientious and proud people, so you have to treat them differently.

You have to be able to explain the processes you want done to your outsourcer, no matter what country they’re from, as you don’t want them being overwhelmed and quitting without telling you.

(Price examples are in a section below.) 

This is a great concept to grasp as it frees up time for you to do something else.

You can just produce one piece of content such as a blog post, and have an outsourcer take care of the rest leaving you to focus on building your business and servicing more customers.

You may find people on your email list are experienced in this type of work and would be willing to work for you for a couple of hours a day.  It might be because they want to get into your industry or are already freelancers.

This is quite advantageous as they already know more or less what it is that you do.

Send an email and find out as you can build a really great working relationship with someone quicker and easier if they already know you than getting someone cold from Freelancer or Odesk.

There are also the countries in South East Asia, Eastern Europe, Pakistan, Bangladesh and India that have great people as well.

There’s always someone looking for work in this world.

What to watch out for...

Some places get a high proportion of natural disasters which can take out the whole city.

Be careful when hiring a designer from the east if you want a western looking result.

You want to be extremely clear about what it is that you want done including speed, quality and what they specialize in.

Thoroughly check the person out, their references and criminal background etc. 

Get a thorough contract written up which outlines, in detail, what you expect and what the job entails including performance and performance incentives.

Give the person a trial period or a project to work on to see how they fair in terms of communication, work rate and, if it is a designer for example, how the work looks to see if it will be a fit.  Please pay these people for their time at a price decided upon at the start whether or not it is satisfactory.  It’s just good karma as you could go around getting work done for free otherwise and that’s not cool! 

(This is a real annoyance from my time as a sound engineer as people wanted you to “just make the steam engine sound longer, it won’t take long” or “it’ll be great experience.”  Rubbish!  It will take time to lengthen the sound as i have to go into the granular level and the timings of the original sound.  Probably having to re-record or re-program it, set up the recording, edit it and then send it to you.  It then might need “just a little bit more length on it and could you make a steam train horn sound as that’d be cool.  Won’t take long will it?”  And... if you want lesser work done, get someone else to do it for free.  Pay me.) 

Personal rant over ha!

  

Interviewing outsource staff.

These can be done by Skype.  If they don’t have a microphone, you can pretty much not interview them!

Ask about their work experience, certificates and examples of work done.

Ask specific questions about projects they have worked on - they might say that they worked in web design but really have only organised the images with no programming.

What are their strengths and weaknesses.

Ask them technical questions.

Be interested in them, don’t act like the inquisition and frighten them.  You are looking for someone who is going to be an important partner in your organisation so treat with respect at all times.

Ask about their hobbies and interests, not family or anything personal as there are hiring laws against that in a few countries!  Ask, instead, about any distractions they may face when working from home.  (You can’t say “oh, you have a baby, that will be a distraction for you.”

Do they have the necessary equipment to work from home (great internet connection, reliable laptop etc.)

Make sure that they are suited to working from home unsupervised.  Ask them for instances of when they have done this or something similar.

Don’t hire immediately, fear of loss them by saying you have others to see.

On the flip side, let them know immediately if you won’t be hiring them.

You want to let them know about the following:

  • What is the role
  • How is it to be performed
  • How long should each task should take
  • What are the hours the employee is expected to work
  • What is the pay for the employee
  • What are the Key Performance Indicators for the role (what makes the person a success in the role, and how can that be monitored?

HR related aspects

  • Employment contracts or offer letters as well as confidentiality agreements
  • Probationary periods (standard is 3 months)
  • Review periods
  • Communication and feedback process (formal and informal)
  • Sick leave requirements (i.e. when a doctor’s certificate is required)
  • Workplace safety issues
  • Boundaries (especially if it’s a home office and they are therefore entering your private home)
  • Questions and notes policy – i.e. encourage questions but if they ask the same thing a number of times…
  • Commissions and other structures

Read more about this from David Henderson: www.davidhendersononline.com here:

Here’s some more interview questions (taken from 42insights.com)
http://42insights.com/how-to-hire-a-virtual-assistant/

  • How do I correctly pronounce your name?
  • Tell me about yourself
  • Why do you want this job?
  • What kind of related work have you done before?
  • Who was the best person you’ve previously done contract work for and why?
  • Who was the worst person you’ve previously done contract work for and why?
  • How do you typically communicate with your clients?
  • Tell me about your working setup (where, computer, internet connection)
  • When is the best time for you to work?
  • How many hours are you looking for?
  • Do you have any questions for me?

The first thing to do is post for the job you’re looking for on one of the sites mentioned above.

Some tips:

  • Explain the job as you would do to your 8 year old nephew.
  • Set clear payment structure and deliverables.
  • Get a non-disclosure agreement in place if the job is stealable sensitive.  EG, it’s for a new app or business idea.
  • If you don’t want the full info being out there, be as vague as possible and let only the people who show the right characteristics in on the full details.  (Have them sign a non-disclosure before hand.)
  • Possible make a video of you doing the job and put a link in the description.
  • Have a word or phrase that they have to use in any reply so you know that they have read the entire ad.  EG - to show you have read and understood the requirements, please reply to (your email address) with the phrase: ‘kangaroos are hopping mad’ in the subject line.  Or if you’re a little bit more conservative: “Entire Job Description Read” will suffice!
  • Make the project stand out by being excited about the opportunity and how good it will look on their CV further down the road.

Read some more tips regarding this from Time Doctor here:  http://blog.timedoctor.com/2011/02/22/the-top-6-outsourcing-sites-and-how-to-use-them

Here’s a great ad example from the folks over at signal v noise:

https://signalvnoise.com/posts/2740-looking-for-two-more-people-to-join-our-customer-support-team

And one from Odesk: https://www.odesk.com/blog/2008/09/writing-a-killer-job-description/

Contracts:

You can get a sample employee contract by clicking this link:

http://itlaw.wikia.com/wiki/Outsourcing_Agreement_(No._1)

This is something you have to think about and make sure you’re within the law.  The reason is that some tax authorities have different views on what is an outsourced independent contractor and a full time employee and you’d have to prove that you’re people are independent if you are ever monitored?

For Example...

Where do they work?  At home or in an office?

Did you provide the equipment they work on?

Are their hours specified or can they work any hours as long as the work is completed?

Is there a contract?

You can read a full article about it here on the IRS website:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

And here’s what HMRC in the UK say:

https://www.gov.uk/employment-status/selfemployed-contractor 

Training outsource staff.

If you have ever had a ‘first day’ at a new office, you’ll know how strange it feels as you don’t know anyone, you don’t know your boss and you don’t really know the ins and outs of the job.

After a month, you’re fitting in properly though.

This is how your new team member will be feeling.

Spend as much time as is necessary to make sure they are completely happy with the processes and the work they will be carrying out (see the story above!)

This will usually equate to around 40 hours of training.  (The first week.) 

After 2 months they should be relatively happy completely working on their own and the questions should have stopped (mostly.)

At month 3, you want to re-evaluate if the arrangement is the right fit for all parties and, if not, fire as necessary.

You want to set up an induction day to go through all their required training.

Set up the systems for them that they’ll be using including programs, passwords, reporting etc.

Get them into the feel of your company and how you want them to act (stuffy corporate or more fun and friendly like Virgin.)

Reiterate (as they should know from the interview) what is expected of them.

Here you let them know what their role is, how it is to be performed and how long it should take them.  A good idea is to have a video showing you doing it..

You can use Camtasia to record your screen and you doing the work processes in real time.  Or Screenflow on a Mac.

For straight away communication, if they have urgent questions, you can use Skype video share or get them on a Google hangout. 

There is also a program called “Logmein” which allows you to control their computer remotely.

Jing is a great program that’s also free and allows you to capture your screen, take screenshots and write on the screenshot.  You then just send a link and the other person can see it.

You can use Gotomeeting as well (paid.)

Prices:

Pay weekly to begin with and at the end of the week.

Most people use Paypal to pay their staff.  Western Union is just so much more of a hassle.

If they can’t use Paypal in their country, go through Odesk because they will sort out the payments for you anywhere in the world.  Just set up a new job their and tell your outsourcer to apply through there.  Give them the job!  Odesk take 10% for doing this so add that onto their pay so they aren’t short.

You can get contractors in for as little as $1 an hour in developing countries for really simple task work.

USA and UK will be more and here is a list of some prices i’ve been quoted: 

 

  • General Virtual Assistant (GVA) – $500-$800 a month
  • Article / Content Writer - $500-$700 a month
  • SEO / Web Marketer VA – $650-$850 a month
  • Web Developer - $700-$1,400 a month
  • Mobile App Developer - $1499/mo
  • PHP Developer - Exp- 3+ Years - $1499/mo
  • Data Entry Executives (Data searching, scrubbing, List Management, CMS Bulk Entries etc) - $599/mo
  • Graphic Designer - Exp - 2-5 Years - ($949-$1499)/mo 
  • HTML/UI Developer – Exp- 3 Years -$949/mo
  • SEO/Pay Per Click Expert - Google Certified- $1499/mo
  • SharePoint Developer - $1599/mo
  • Content Writer - $999/mo

 

You do get what you pay for, as the saying goes, but bear in mind that it is a great idea to pay people what they are worth no matter where they are from but you can take into account favourable currency rates. 

Review every 6 months and increase wages every year.

Also, at the year end, it is required to provide a bonus. This is usually an extra months pay.  Feel free to give bonuses throughout the year for hitting targets and doing great work.

This could be in the form of a new laptop, extra time off, $50 bonus for a really great week and so on.

Top Tips for managing outsource staffing: 

Here is a great post about managing an outside workforce by the guys over at time doctor:

http://blog.timedoctor.com/2011/01/15/strategies-for-managing-virtual-teams

Here’s a link to a great app which you can use to keep track on the work done.  There’s a free 30 day trial (at time of writing July 2015) then it’s under $10 after that.  It’s called Time Doctor and i’ve just started using them myself.  (Not an affiliate link.)
http://www.timedoctor.com/

Make sure they have directives to work on day by day.

Use Google docs to organise your people and the jobs you are outsourcing.

Use Skype to communicate with them.

3 Questions for the end of the day from Eben Pagan.  Get them to email you the answers to these 3 questions.

  1. What did you do today?
  2. What problems did you come up against?
  3. What can i help you with?

This is a great way to keep track on your staff and hold them accountable.

Have regular meetings with all your team which brings everyone together that you are all working towards something and beats the feelings of isolation a lot of people who work from home have.

Final thoughts.

Please be careful with the tax laws in your country regarding what is classed as an employee and what is classed as an independent contractor (virtual assistant.)
Here’s a great resource that can help you with that but always ask your own countries’ tax authority to be sure:

http://www.hireyourvirtualassistant.com/blog/the-irs-says-no-blurring-allowed-between-employee-and-virtual-assistant-independent-contractor-taxes-differences/

You must be careful when choosing your staff and be respectful of them.

Get EXACTLY what you want done figured out.  (Remember that one virtual assistant doesn’t fit all jobs though.  Don’t have a web developer also writing content for example.)

Try and have at least 100 applications for a single job post so you can really get the best person. 

I think it is important to realise that it is you that is responsible for mistakes made by your staff.  I will always say that it is down to me not training clearly.  Make absolutely sure that they are trained properly and know what they are doing.

The person will get better with time as they get comfortable in their new role.  Unless they really are incompetent, but that would be your fault as well for not hiring properly!

Always have targets and goals for them to strive for.  Bonus them for hitting them.

Sometimes language barriers and time zone differences have to be overcome, and you do pay more for those with great communication skills but the positives outweigh the negatives and it is up to you to interview and get exactly what you need.

Be careful if your outsourcer is to be handling sensitive data, make sure they are fully compliant with data protection and up to date with security policies.  You don’t want to put your company or your clients at risk. 

You can read more about information security compliance and protocols here: http://www.27000.org/

You may have to, depending on where you are, have to send forms to your outsource team or fill in forms and send them to your local tax authority.

For example, in USA, you have to send a form 1099 to any outsourcer you have paid over $600.  http://www.efile.com/what-is-form-1099-misc-income-tax-return-requirements/.

Always ask your tax office or accountant for advice on any things of this nature.

Remember that you are not hiring a jack of all trades.  You want to hire people with specific expertise to do specific tasks.

Please don’t get on their wick by checking up on them every 5 minutes.  It does neither you or your team any good as it’s supposed to fee up time for you and your team will feel like you don’t trust them. 

Here’s a link to a great tool for managing people by their production activity so you can see what everyone is doing remotely.

http://www.timedoctor.com/ (Not an affiliate link.) 

Have a sickness or absence policy and make sure they know how to get in touch with you.  See my comment on weather patterns and other mother nature problems depending on where your outsourcer lives (This is sorted out by using time doctor as there is a bit for that built into the app.)

If done correctly, it may take a couple of attempts to get the right staff, you’ll find that your business will probably double in the next month as you can work on the important things whilst your remedial tasks are taken up with an outsource team.

Here’s a great resource that has a download for hiring VA’s and is also a database of virtual assistants.

http://www.virtualassistantassistant.com/

http://www.amazon.com/dp/B008WAKDAC

I think it’s important to just try this out, fail a few times but persevere to get it right.  The outcome will be greatly worth it.

Some more resources for finding staff  (I haven’t tried any of these but they seem okay from the research i carried out.  Always do your due diligence though.):

These are agencies whereas I think it better to be more involved and find outsourcers yourself on Odesk, forums, job boards and through any contacts you have.

I’ve heard some bad reviews about outsourcing companies and agencies so proceed with caution.  These are the ones i would go to if i wanted to do it this way.

BPO Companies:

https://www.staff.com/

http://www.virtualcoworker.com/

http://www.onlinejobs.ph/

http://www.remotestaff.com.au/

http://outsourced.ph/

http://www.virtualstafffinder.com/

All the best and have a great day,

Colin.

Resources:

http://www.incomediary.com/10-steps-to-successful-outsourcing

http://www.chrisducker.com/how-much-do-i-pay-my-virtual-assistant/

http://blog.timedoctor.com/2011/01/15/strategies-for-managing-virtual-teams

(read the other 3 parts as well!)

http://www.entrepreneur.com/article/204652

http://www.taskus.com/10-tips-hiring-working-virtual-assistant/

http://nomadcapitalist.com/2013/11/25/how-to-hire-a-virtual-assistant-3-tips-increase-productivity/

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