Outsourcing Do’s And Don’ts

Outsourcing Pro's and Con's

Hopefully it won’t ruffle your feathers to hear this, but … regardless of your thoughts on the “outsourcing / offshoring” debate:

In a globalized world, with globalized economies, it is inevitable that at least a portion of all your business operations will be wholly dependent on outsourcing.

Period. Full-stop.

That computer or tablet or smartphone you’re reading this on? … a product of outsourcing.

In fact, it’s a safe bet that several other items in direct view from your current position are all products of outsourcing … even down to the clothes on your back! Products of outsourcing abound.

The question is: what can outsourcing do for your business?

In a technologically interconnected, “globalized” economy, corporate isolationism isn’t going to make these business trends go away. Right now, the economy is accelerating toward a greater ease of integrating off-site workers (greater than ever before in history!). That means people from practically anywhere on earth could be helping your business grow right this instant.

Today, it is easier than ever to:

  • Hire home-based employees
  • Hire freelancers (through sites like Craigslist or Elance)
  • Hire people in foreign countries
  • Hire Virtual Assistants (VAs)
  • Collaborate on projects across long distances
  • Outsource significant portions of your work-force
  • Run entirely “non-local” companies

Just because it is easier than ever … does not mean that it is easy.

Many companies have tried their hand at outsourcing, from small mom-and-pop operations to hundred-billion dollar Fortune 100 companies. Some do much better than others in terms of net-ROI on their investments into off-site (and off-shore) workforces!

Outsourcing WINS: The Do’s

When outsourcing campaigns are successful … they tend to be very successful. On the right task or project, with the right staff, and the right workflow & operating procedures, an effective outsourcing effort can cut costs by 60 – 80% compared to completing the same task locally / in-house.

To ensure this type of ideal outcome hitting straight to your bottom line, here are some of the key factors you need to consider:

  1. DO Plan Workflow From Start-to-Finish Before You Get Started. Sometimes, a process will need to grow organically. Not everything can be predicted with 100% accuracy, and even the best laid plans can be laid to waste in an instant. That said: one of the key success differentiators in outsourcing campaigns is the careful planning of exactly who is responsible for exactly what.
  2. DO Be As Specific As Possible In Your Objectives And Task List. Consider every effort toward outlining your objectives as a an opportunity to inspire your off-site staff with the bigger picture. Consider every effort toward outlining specific tasks as if you were going to write a step-by-step “How To” manual. The more thorough you can be in defining the objectives of a campaign, and the scope of tasks which comprise it, the more likely you’ll be able to guide a team of remote workers toward achieving this commonly shared goal.
  3. DO Outsource As Many Repetitive Tasks As Possible. If you live in a rich nation, there are people elsewhere on this earth hungry to handle any and all work you can offer them. It is as certain that these people exist as it is that they will be able to work for significantly less than what it would cost you to hire someone locally. As long as you choose repetitive tasks that won’t suffer by being completed off-site (and that don’t require someone’s physical presence to complete), then you can continuously boost profits & increase cash flow by outsourcing as many repetitive tasks as you possibly can.
  4. DO Create Standard Operating Procedures (SOPs). Remember how I said you should consider every task as if you were going to write a step-by-step “How To” manual for it? This manual must be written, and it’s what we refer to as Standard Operating Procedures or SOPs. Only by systematizing your SOPs can your company fluidly implement changes in remote operations and accurately track & optimize results for the most efficient output.
  5. DO Outsource For Profit & Long-Term Cash Flow. The biggest mistake you can make when it comes to outsourcing is focusing too much on the short term (see the “Don’ts” list below). Focus on the long-term bottom line impact, and outsource only the tasks that have the greatest net ROI in perpetuity. Track the savings & boosted cash flow from each effort, and use this and only this to reinvest into lower ROI outsourcing tasks.
  6. DO Plan For Your Effort To Be Scalable. Outsourcing – utilizing an off-site, remote work-force – by its very nature is scalable. You don’t have to worry about the office or the infrastructure, so on your end the only difference between hiring 1 or 100 workers is the price-tag. As such, it is best to apply your outsourcing budget to tasks that can be scalable (like sales, marketing, research, data entry, etc).
  7. DO Monopolize Proven Staff, Teams, And Departments. When you have found an off-site team that can effectively, consistently, and profitably work together to achieve your objectives you have found a very valuable asset. In essence, your proven back-office staff is equivalent to money in the bank. When you find a deployment that works, whether it is one part-time worker who pays their own wage & then some … or it is a department of 200 workers saving the company $150,000 / month … keep your staff occupied to keep them on the payroll (or risk losing that investment to the next company down the line).

Outsourcing FAILS: The Don’ts

  1. DON’T Outsource For Short-Term Profit Or As Stop-Gaps. The biggest mistake made by companies large & small when it comes to outsourcing is focusing on short-term (quarterly or annual) profits at the expense of longer term sustainable growth. The classic example is the outsourced Customer Service Department that spawns parody & public outrage. Carefully analyze the tasks you outsource with long-term sustainability in mind, or you will inevitably find your short-term gains eclipsed by long-term travail and losses.
  2. DON’T Outsource Complicated, Strategic, Or Abstract Tasks. Outsourcing is best suited for repetitive tasks that can be clearly defined by Standard Operating Procedures. The more your off-site work-force is required to make complex decisions, the more you will need to be in close contact with them – which by its nature will be time consuming & difficult. Focus on outsourcing only the repetitive, clearly defined tasks, and keeping the complex, strategic, or abstract efforts in-house & on-site.
  3. DON’T Export Work That Can Be Better Done Locally. No matter where you live, there is a certain skilled, specialized labor pool in your local market that can complete certain tasks better than someone off-shore or off-site. That’s because sometimes the in-person, personal touch, or local knowledge & expertise make a significant difference in the quality of output generated, and these types of unique knowledge simply cannot be outsourced. The key is to leverage your presence in a rich nation as much as possible by securing support from back-office in lower cost regions.
  4. DON’T Try To Outsource Face-to-Face Time. This is perhaps a no-brainer … but there are certain occasions when business owners have vastly underestimated the value of eye-to-eye, in-person interaction. In reality, almost anything can be completed (or at least significantly supported) without face-to-face physical interaction. Especially in the age of webinars and video-conferences … it would seem face-to-face time is declared obsolete. That is exactly why good in-person service is now more valuable than ever (low supply, high demand).
  5. DON’T Outsource Anything Without Doing Your Homework! The second biggest mistake (after focusing on short-term gain) that businesses make when outsourcing is making decisions without doing their homework. This includes making decisions without ample research & planning, as well as making decisions without tracking results. Either one will get you burned badly when it comes to off-site staffing, because obviously without the boss in town ….. well, you can guess where accountability goes. I have examined cases where companies were literally double-billed millions of dollars in back-office staff before they realized something was amiss. Don’t let this happen to you. Do your homework when you are outsourcing, and keep doing it as long as your off-shore back-office staff is working for you.

If you follow all these “DO’s” and “DON’Ts” of outsourcing 101, you will definitely boost your bottom line in two primary ways…

How You’ll Profit Following This Outsourcing Etiquette

Profit Guarantee #1 :: You will achieve the same level of work output … at a fraction of the cost. Effective outsourcing, fluidly integrated into your local work-flow, will automatically reduce costs. When you do it right, you don’t have to sacrifice a modicum of quality.

Profit Guarantee #2 :: You will grow your business (and its revenues & profits). The greatest two factors about outsourcing when it comes to your cashflow is that it is:

a) scalable, and

b) can be used to fuel its own growth…

… using back-office marketing & sales staff to fund back-office administrative staff and overall revenue growth in a recursive loop of infinite profit expansion (ideally).

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