How To Avoid The 5 Most Common Outsourcing Mistakes

The idea of Outsourcing isn’t something new; all of us do it every day. None of us are self sufficient. We outsource our food to a grocery store, our housing to a bank or landlord, our clothing to a department store or chic boutique and our power needs to a utility company. The list of things we need and want that we can’t do for ourselves is nearly endless.

While the idea of outsourcing business functions was on the up before the current economic crisis, today it is charging ahead as if it was on afterburner. Today tens of thousands of businesses, large and small, digital and brick and mortar are routinely outsourcing their needs to the seemingly endless supply of freelance contractors.

Outsourcing can be the fastest way to grow your business or vastly improve productivity when done correctly. Unfortunately many business owners engage contractors with less thought than they give to deciding which brand of coffee to buy at the grocery. The result is frustration and a loss of time and probably money.

The way it should work

Here’s a simple story that demonstrates what I believe is an example of a perfect outsourcing experience.

I live in Alberta, Canada where the weather can turn nasty on a dime. Recently a storm brewed up and raged and wracked the land for several hours and when it was over I discovered it had blown a 30 year old tree flat down in my front yard.

I’m not a do it yourself-er when it comes to things like this. I don’t have the skill or the tools to handle major tree removal but I had an idea that my neighbour might. As it turns out he didn’t but his nephew did and he asked him to come by my house for a look.

He arrived at my house with a chainsaw and truck, took a look at the project, submitted a bid of $50 for the job and then went to work once I agreed. By the end of the afternoon my front yard was clear of debris and my neighbour’s nephew was $50 richer.

So here you have me (the buyer) with a project I can’t do myself. I go to my neighbour (network or freelance site) and describe what I need done (posts a job). He refers his nephew (contractor) who examines the project and submits a bid. I see that he looks healthy, has the tools to do the job and has been referred by a trusted source (evaluates the bid). I award the project, When the job is done I review results (evaluate work) and give the nephew $50 (pay contractor)

Pretty simple actually. Then why do so many companies have trouble with their outsourcing experiences? The truth is, when an outsourced project goes south it is usually the fault of the buyer because they made one or more of the most common mistakes. Here’s a list of those mistakes and how you can avoid them:

1. Know exactly what you want.

Probably the biggest mistake buyers make is posting incomplete or ambiguous job postings. Job postings that read “We need a skilled marketing writer to update the content on our site and make it pop” says absolutely nothing. What site? Which pages? Just what is the definition of “pop”?

The more detail you can provide the more informed bids with realistic pricing and timing you will receive. Will you get bids from an incomplete job description? Of course you will. But they will be from contractors who haven’t a clue as to what you really want they just want the work.

2. Evaluating bids and bidders.

Price is always a consideration but don’t make it your prime method of evaluation. When reviewing a proposal ask yourself if it addresses your specific needs and how the contractor will handle them or does it just sing the praises of the contractor. A professional proposal will spell out how your objectives will be met, provide references and samples to prove the contractor can do the work and have a realistic time frame for completion.

Always check references and if you’re using a freelance site that allows feedback, check what other buyers have said about the contractor. Look for jobs similar to yours and see what the feedback was.

3. Terms and conditions.

Never enter into a project without written Terms and Conditions that spell out the scope of the project, the timing, the responsibilities of the buyer and contractor and the method of payment. Get specific. For example in the web content project how many edits will the contractor do at no charge? Spelling out the deal before you begin eliminates wiggle room for both parties.

4. Monitor progress.

This one is critical unless you like big surprises. Break your project down into milestones and tie payment to performance. By requiring the contractor to deliver the project in “sections” you remain in the loop and you are assured that the contractor is actually working on the project. Make sure that at the very least you have taken some basic online computer programming classes so you know what’s going on. Tying a portion of the total price to the completion of a milestone also provides the contractor with a monetary incentive to get the work in on time.

5. Pay on time.

Your first outsourcing project will not be your last. You need to develop a reputation as a professional buyer just as the contractor has to earn his. Paying on time is half the game. The other half is staying engaged with the contractor and providing clear expectations of what is expected. If the work is done to your satisfaction there is no reason to delay payment.

It doesn’t matter what your website is promoting be it an 8 man tent, kitchen bar stools or chiropractic services, outsourcing can quickly grow your business and free you up to do what you do best. However that speed advantage can slip away if you do not manage your projects efficiently. Just pay attention to the tips listed above and you’ll be well on your way to developing your own virtual staff.