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The word “outsourcing” doesn’t have a very good reputation, and I think it’s mostly because there’s a misconception about what outsourcing means. It doesn’t necessarily mean hiring people in Asia for a fraction of the cost, although this is certainly a possibility. I like defining outsourcing as “delegating some non-essential tasks so you have more free time to grow your business.” I’ve been outsourcing for 10 years and I want to share some of the most valuable lessons I learned.
My Three Filters
Different People Do Things in Different Ways
The biggest challenge when you outsource is that you expect things to be done the same way you’d do them. This is not going to happen. Explain what the end goal is let the other person find their own way. Outsourcing and then micro-managing is the worst mistake you can make.
Have Realistic Expectations
A lot of people will hate me for saying this, but I’ll say it anyway. In my experience, the work ethics in Europe and the US is much higher than it is in Asia. Don’t get me wrong: I work with a lot of people in Asia, but they don’t tend to follow through as much their North American and European counterparts. They miss more deadlines, their Internet connections die more often and a lot of them are more concerned with getting paid today than building a long-term relationship.
Keeping realistic expectations is key.
Some people are great at selling themselves but not as great doing the actual work, and vice versa. Third-party opinions are much more valuable. Check references and reviews.
Let’s say you need to build a whole website. Don’t give the whole project to someone and hope for the best. Hire someone to do only one page in one day. If you’re happy with the quality of their work and you like working with them, give them a second page, and then a third. This is definitely more work, but it’s much better than finding out a month later that your project hasn’t seen much progress after the third day.
Also, not to be over-pessimistic, but I’ve found that only one out of five people I outsource work to works out, so we always test them on small, non-important stuff, and only if they do a great job do I use them for my most important projects.
Even when you feel comfortable assigning someone an entire project, establish checkpoints (i.e. points where you’ll check their work and provide them with feedback). Other people can’t read your mind, so the sooner they show you what they do, the sooner you’ll be able to do some course-correction.
Use Performance-Based Compensation
I don’t feel that 100% performance-based compensation is ethical. They shouldn’t carry all the risk. But I do think that people should be paid more if they do a better job. Establish the desired outcome for the project and then decide on fixed fees and bonuses. Unless someone does admin work for you, never pay by the hour. Think about it: what motivation someone paid by the hour has to finish your project faster?
Name Your Price
I’ve found that I get a much better deal when I name my own price.
Think Value, Not Cheap
This is the most important piece of advice I can give you. Cheap people are cheap for a reason. Paying someone in Asia $1/hour and spending a bunch of time making sure they get work done isn’t smarter. I always get the highest quality I can get; I don’t care paying a few hundred dollars more for a project to hire the most qualified person I can find for the job.