What is Outsourcing?

There are several ways to think about outsourcing. When you are part of a big company or corporation, outsourcing occurs when you pay another company to provide services that would otherwise be done by in-house employees. You have probably experienced outsourcing in action as many of the customer service departments of local telephone or mobile phone service providers are located offshore. These companies have outsourced their customer service to specialized call centres that are often located in a completely different country.

As a newbie internet marketer, outsourcing has a different meaning. Outsourcing means contracting someone else to do some of the tasks or processes that you would otherwise have to do yourself. It’s like having an assistant that you only pay when they do work for you or when you have work for them to do. This assistant doesn’t even have to come to your office (which is often a home office) to do the work. They are also called virtual assistants.

Advantages of Outsourcing

The most commonly quoted advantage of outsourcing is cost savings. But there are a couple of points to be made about saving money. The first thing to think about is: can someone else do the task for you? The answer is always “yes”. The next question is: will it save me money to have someone else do the task for me? Working out exactly how much your time is actually worth is more complicated than you think. You can look at your income and how many hours you work per week and you can calculate an hourly rate. Then, if you can find an outsourcer for your project who is charging you less than this hourly rate – you are ahead, maybe. But what about if you paid your outsourcers slightly more than your own hourly rate and you could fill your time doing higher level activities such as strategizing, planning and expanding. If you use your time to grow your business then your hourly rate will increase. Some people refer to this as working on the business rather than in the business.

Outsourcing your project gives you flexibility. When your business is small you may not need the services of a full time programmer.By outsourcing your software development you only pay for a programmer when you actually need coding done. When the task is completed you can use your outsourcing budget to pay for a copywriter for your sales page. Later on when you need content creation you can outsource this task as well. Using outsourcers is this situation gives you far more flexibility and reduces your overheads considerably. You don’t have to pay any of these people except when they are actually producing something for you.

When you utilize your resources in this fashion then you will be able to outsource to people who are specialists in their area like the software developer and the copywriter. If you choose someone with good skills they will probably complete the project more successfully then you can (unless of course you are a coder or copywriter!)

Outsourcers usually work from their own office or home office so you don’t need to maintain an office. Thus reduces your expenses for rent and utilities. The people that you outsource to may not even reside in the same country as you.

As well of the many advantages of outsourcing there are pitfalls to avoid when outsourcing a project.