When business gets busy, outsourcing some of your operations is a great way to ease the strain. The benefits of outsourcing for business owners include higher profits, saved time, and great workers who you can hire again as needed.
But not every attempt to outsource is effective, and a misfire can cost you time and frustration or, in the worse cases, even legal trouble. When you make the decision to outsource, you need to be prepared.
That’s where we come in! To get the most from your outsourcing contracts, set yourself up for success with our best tips for outsourcing for your business.
Stay Within Budget
As soon as you know you’re going to start outsourcing functions or tasks, you should create an outsourcing budget—then be sure you stick to it. Careful, disciplined budgeting is a crucial business process in general, but when dealing with third-party providers, going over budget can cause even more complications. Problems like unhappy service providers and under-funded jobs eat up time and money, and can damage your company’s reputation.
Incorporate Performance Milestones—and Tie Them to Payment
To make sure expectations are met, design very clear project milestones. Then, when making your hire, tie pay to the milestones so that you can ensure your money—and your contractor’s talents—aren’t wasted.
Set milestones, but don’t ask if you can only pay once a final product is received. Arrange for a large piece of the payment up front—think 30% to 50%—with the rest tied to three or four different progress milestones.
You should never ask a vendor to submit finished work “on spec.” We’ll get into this important point next.
Never Ask for Work “On Spec”
“On spec” means you only agree to pay when you receive a final, finished product. While this may seem like a good strategy to protect yourself, no self-respecting professional would do it. Therefore, if someone agrees to work on spec, it’s a sign they might not be very experienced. For everyone else, it reflects poorly on your company because it’s a sign your company might avoid paying contractors for their services.
That being said, you also shouldn’t just automatically default to the cheapest service provider. This is a common, but very big mistake, and we’ll explain why in the next section.
Don’t Just Go with the Lowest Price
When it comes to outsourcing, you often get what you pay for. To ensure that money, time, and other resources aren’t wasted on a sub-par contractor, don’t just go with the service provider who gives the lowest price.
Price and value are two different things—you’re likely to get a better value by hiring someone who costs more, but gets the job done right.
Make Sure They Have Very Specific, Provable Experience
Before making your hire, verify that your chosen provider truly has demonstrable experience in the specific tasks they will be tackling. If you’re looking for an eBook developer for a Kindle-based book, make sure your hire is an expert in the Kindle format specifically, rather than just “eBooks” in general. Ensure their core competencies are a spot-on match.
So how do you ensure you’re hiring the right person for the job? That’s where our next tip comes in…
Request Sample Work & References
Looking at real work samples and speaking with real references is the best way, after looking at other qualifications, to make your hiring decision. Previous work is a powerful indicator of what a contractor might be capable of. Treat hiring them as you would a full-time employee. Do more due diligence in the beginning, and you can save yourself a lot of frustration later on.
Outsourcing firms can help, connecting you with highly qualified workers seeking contract employment in areas ranging from tech and IT to marketing and design.
Match to your Company Culture
Know your company’s culture, and make sure outsource hires fit it well, just as you would for your in-house employees. Will the hire jive with them, and be effective with clients? What are the cultures like at other companies they’ve worked for? What do other business owners think of cultural traits like work ethic, positivity, and empathy?
What I mean by this is, once you have someone who looks like a great match, don’t request two more interviews or keep looking at other candidates. Studies show this can waste a lot of time in hiring. Your first instinct is usually good, so keep the process moving once you think you’ve found the perfect contractor.
Use Contracts & Get Everything in Writing
This should go without saying, but it’s extremely important to use detailed contracts for every outsourcing service you need performed. Every aspect of the relationship and project should be outlined in writing, so that every party knows what is expected.
This protects the vendor in case of legal trouble, but it protects you as a business owner as well. If a vendor tries to sue you for back pay, personal expenses, or something else as a result of it being poorly defined or not in writing, it can be a very expensive and time-consuming undertaking.
Include a Support Clause in Contracts, With a Budget to Pay for It
Once the job is done, will software updates be needed? Will addition need to be made later? Will network equipment need to be maintained? Will there be bugs you need help diagnosing and fixing? Make sure you factor in support after the fact, or you may find yourself stuck and in need of a contractor yet again.
Make sure you incorporate support into the contract, and make sure you have a budget to pay for it. This sort of thing is extra important to make clear in writing, so everyone is on the same page. Figure out what level of support you expect to need once the job is done.
If Possible, Start with a Smaller Project
When it’s your first time working with a vendor, if possible, start them on a smaller project before giving them a huge one to do. This will show you more about their skills, work ethic, and how they jive with your company culture. Developing an outsourcing relationship with a vendor on a smaller scale first can go a long way toward ensuring peace of mind when you hire them for future projects that are more critical to the company.
This isn’t always possible, of course. That’s where clear, comprehensive contracts, impressive resumes, and professional references become even more important.
Keep Up the Relationship
Even after the work and support are no longer needed, keep up a relationship with the contractor. It will reflect well on your reputation, and give you someone to return to when you need the same kind of work done in the future. You might even someday have an opening for a fulltime in-house position, and you can offer the contractor the job to save time on interviewing and hiring.
Hiring outside vendors is a great way to get more done—but you have to make sure you do it right. That means taking the time to find the right service provider for the job, and making sure you do your part with clear, comprehensive contracts that put everything in writing.
Whether it’s graphic design, coding, bookkeeping, or business process outsourcing, success in outsourced projects is all about smart hiring and effective communication. Outsourcing is all about cost savings and efficiency, so an expensive mistake during the process will defeat the whole purpose!
With those tips, you’ll get the skilled help you need at a price you can afford, and you’ll make the most of your outsourcing—saving tons of time and money in the process.