This is a guest post from David Hamilton. David had contacted me about doing a guest post on my blog and offered three topic suggestions. When I saw “Outsourcing for Small Business Owners”, I knew that was the one. After reading Tim Ferris’ 4 Hour Work Week, I’ve become slightly OCD in outsourcing various parts of my work (office and blog). These are the tasks that I hate to do, blog down my time, and would rather much just pay someone else to do it who actually enjoys it. Outsourcing just a few of these weekly “chores” has given something much more valuable in return: time. Time to focus on the things that I like to do that dont’ feel like work. Are you a small business owner that feels constantly tied down? If so, then you might benefit from a little bit of outsourcing yourself. Intro Kevin….
Outsourcing – it either gets you excited for the possibility of saving money by utilizing the global workforce, or it might send shivers down your spine, thinking of all the unknowns and potential nightmares that can happen. Whatever your stance is currently – this guide should help clear up confusion about outsourcing and give you a guideline on how to hire abroad – whether you’re excited yet unsure at the prospect of it, or just a complete skeptic.
Evaluating Your Needs – What Can Be Outsourced, What Can’t?
Your business is your baby. All the blood, sweat, tears and cash you are investing into it don’t come easy — so naturally you want to protect your business like a child, making sure it grows, never stagnates, never gets sick or worst of all, comes to an end. The thought of outsourcing parts of your business might bring up fears like projects gone awry, customers lost, and databases and records out of order.
That’s why you’ve got to have a process in place to test outsourcing in a measured fashion, before going full force with it.
Choose tasks or projects that aren’t business critical to start. You might even run a test “in parallel” to see how the work turns out in comparison to having a local worker or vendor do it along with the outsourced worker.
Doing a Trial Run
In order to see if outsourcing works for you, start small. Perhaps something like entering expenses in your company ledger, a graphic design project for a new brochure or logo you are working on, or a small website enhancement you’ve been putting off. Maybe you’d simply like a personal assistant to take care of mundane personal tasks you don’t have time for. Doing a trial run in a small but measured fashion will help to show you that outsourcing your business tasks can be done reliably when you’ve screened your applicants properly and learn to manage them well.
Perhaps you have doubts about if your outsourced workers can handle the work – or maybe you have doubts about your ability to manage your team properly, especially if they are on the other side of the world. Whatever your reservations might be, a trial is perfect for putting your fears at ease, or maybe you’ll find that outsourcing just isn’t for you.
Determining Your Outsourcing Budget
Being that it’s likely you will pay substantially less for your outsourced staff, you can experiment with a very tiny budget. Depending on the tasks, you might pay only $25-$50 for a project. Setting a low cap for your trial run will prevent you from losing too much money and if it turns out well, you’ll have already gotten great value from your trial. So set the max you will spend for a project and don’t go over, and make this clear when you post your job as well. The global workforce is so vast so it’s really a buyer’s market. You have the advantage when it comes to setting the price, depending on the type of work you are hiring for.
Understanding Cultural Differences
One of the biggest barriers to successfully outsourcing can be the difference between cultures of the United States (or other Westernized country) and other non-Western countries. For example, with some Asian countries, you can often run into situations where you’re given the answer of “yes” when they really mean “no” – in many Asian countries ‘saving face’ is of utmost importance. Here in the US yes means yes and no means no, in general. To other countries, we may be considered too direct or aggressive.
The best way to learn this is to dive in, while being aware of the differences in culture and communication styles. Always seek to understand the other, don’t focus on “why isn’t this working.” Sometimes this is unavoidable however if their English isn’t good enough. But if you do happen to find workers who are experienced in working with US businesses, you’ll probably find it easier – as they will be used to our working style. You may want to state that on your job postings when screening applicants (more on that later).
English speaking countries to investigate: India, Ireland, Central America, Philippines, South Africa, Australia, New Zealand and yes, even the United States.
Here in the US you can “internally outsource” to people who live in places where the cost of living is much lower, or you might run across a certain demographic of workers who can’t leave the house, but want to work i.e. stay at home mothers. It’s a win-win situation because you can pay less and they get to work on their own schedule from home. If you provide consistent work (even at a lower wage), you’ll find they’ll stick with you. It’s also recommended to pay bonuses for jobs well done – if your business is doing well and you can afford it.
Pick a Web Resource
Places like Elance and oDesk are great places to start for outsourcing. These sites do charge a small fee per job, however it is well worth it: there is a tremendous pool of workers available, the web management and work tracking systems are excellent, allowing you can keep track of jobs and work progress very easily. These sites even have systems in place where you can dispute any disagreements about quality of work and other issues, although this is rare to encounter. There are more and more outsourcing websites popping up each day, and some are even country specific like onlinejobs.ph for the Philippines, for example.
Screen, Screen, Screen Your Applicants
As with any worker, there are people that are talented and hungry for work; and then there are those who are lazy, incompetent or difficult to work with. Always keeping in mind cultural differences (which you’ll learn along the way or can read up on), you’re ready to begin screening potential workers. Do this right and you’ll probably be sold on outsourcing; do it wrong and the nightmares that can follow may turn you off forever.
Evaluate English, Communication Skills, Willingness to Work
This is where you sift out the talent from the dregs, and is the most important part of the process. Believe it or not, you can train anyone on almost anything task-wise, while communication skills, passion and willingness to work don’t train so easily.
You must have strong standards when it comes to communication, willingness, reliability and responsiveness. You’ll often see a job application that is well written, but when you begin the interview over email, the communication is broken and stilted. Or you might get delayed responses all of the time. These are all red flags, and may warrant an immediate rejection.
Have Your Potential Worker Do Something in The Job Application
A great tactic for finding out the seriousness of your candidates, is to ask them to do some small task or two in the job application. This shows you immediately 1) if they even read the application or are just sending out mass applications; 2) how their work product or communication skill squares up with the resume they’ve sent you. You can knock out 90% of unwanted applicants with this method alone. Don’t worry about not getting enough applicants using this method. It will save you precious time by screening them out – with no work on your part other than writing the initial job posting.
Set Up a Live Communication Interview
If your applicant has made is this far, consider having a voice conversation or an IM chat. This is also a great way to test further English comprehension and communication. Since international calling is expensive, a free VOIP service like Skype, GoogleTalk or Yahoo IM will be your best bet. Most people that are outsourcing contractors will have access to this technology. If not, IM chat might have to do, and you’ll have to gauge their responsiveness either way.
Hire Slowly, Fire Quickly
One of the reasons screening has been emphasized — it’s just too easy to hire with the click of a button. So also make sure not to rush the hiring process. On the other hand, because most everything is done electronically and on a contract basis – firing is very easy to do if things don’t work out. Don’t hesitate to fire quickly if things go astray or the work isn’t delivered as promised.
A solid way to entice serious workers, is to make it clear in the job description that you are looking for full-time workers eventually and will pay bonuses, give holidays off (for their given country), and some type of vacation. However, you should state that it needs to begin on a trial basis first – again either a project or part-time basis. If all works out well, then you can consider hiring them full-time. If it doesn’t work out, it’s very easy to let them go. Make sure to research what salaries are for project-based, part-time and full-time work in the region you are hiring. It’s recommended to pay on a weekly basis to start, and never in advance. They must prove that they can deliver consistent work product before moving to a bi-weekly or monthly salary.
Give Detailed Training and Requirements
It’s important that you detail with documentation whatever task you’ve chosen for your outsourcers to do in the beginning. This is where nightmares really can occur if you aren’t clear in your instructions or requirements. If you aren’t clear and they are capable and willing to do the work, you’ll be the only one to blame.
Recording videos with software like Camtasia can be a great way to start and give a more personal feel – however videos are hard to edit. Written documentation is still the most solid form for training your outsourced worker. You could also combine documentation with VOIP or IM chats for questions that arise. If you’ve hired a great worker, they will probably enhance or make the process and documentation even better. In fact, this is something you may want to ask them to do after they have a feel for the tasks you’ve given them.
Once you’ve decided to hire someone full time after running a part-time or project basis – this is critical for keeping things running smoothly and avoiding disaster. Have your worker or staff send a daily status report via email at the end of the day, with what’s been accomplished for the day, what they are planning to do tomorrow, and any questions they may have that you can help them with. It’s also recommended you make yourself available as much as possible in case they run into a snag. You also might want to throw in a bi-weekly or monthly VOIP call to add a more personal touch and maintain the relationship.
Give Outsourcing a Try
When managed well outsourcing is a small business owner’s dream. Done improperly – a nightmare can ensue. Remember that even though you are getting a great rate for your outsourced workers and they are potentially living in a less successful economy than the US has been – doesn’t mean you should treat your outsourced workers any differently. It’s still a two way street – your outsourced workers are people with lives, families, dreams and hopes just like you.
Treat your outsourced workers with respect and you’ll find they’ll do the same. It’s quite possible that you may find that the work product is just as good or even superior to what you receive normally – at a much better price.
David Hamilton (aka FPT Guy) is owner and author of Financial Planning Tips – where you can find sensible information on personal finance for the average Joe or Jane. David is not endorsed or affiliated with LPL Financial.