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In 2020 internet has allowed employees to access top professionals in countries, where the pay is significantly lower than in the employees’ location. Fiverr, Upwork, TopTal and other platforms have capitalised on this, and now it is easier than ever to find the right professional, who would provide the right service for you at the lowest possible cost… Or so we are told to believe.
In reality, there are certain things you have to consider in order to be able to make the decision, whether to outsource someone’s services.
This is a fundamental consideration and one that should be behind every business owner’s decision. Whether short-term or long-term, you have to calculate the cost of outsourcing someone’s service vs your “reward” – i.e. how much your business will gain from their service.
The majority of times, businesses outsource certain work to freelancers, because of the low cost of these services. Hiring someone full-time can cost you 5x what a freelancer would charge you. If it’s £1000 vs £5000 this is a no-brainer. Why would you get a local web developer to make a website for you, if you could pay a web developer in the Philippines or India to do the job so much cheaper?
Take the approximate number of hours that they say would take to complete the task à calculate cost per hour à add another 20% on top (because things always take longer OR you get charged for “extra things” that you were not expecting) à calculate how much you would be paying someone to do the job full time.
At the end of the day, business is about making a profit. If the freelancer makes a product/provides a service that doubles your profit, then it’s easy. But cost of service is not actually that straightforward.
2. Keeping track
When you have someone in the office, it is a lot easier to track their progress and exchange ideas. If you are outsourcing someone (or another company’s service), it is VERY difficult to judge how they are getting on with the task. The best way to approach this, is to set milestones. You don’t want to have a milestone every hour of the day, but it helps if the freelancer reports back to you at the end of each day with a report on what’s been done.
The best kind of outsource, is where you can contact the person/team in question throughout the day. While time difference can play a huge part here, if the difference is 2-3 hours, there is absolutely NO REASON why the freelancer should not be contactable in the morning or in the afternoon.
When you are calculating “hours” (see above), it is important to include your hours spent monitoring your freelancers. This is not so straightforward, and sometimes even impossible, because that would mean adding up minutes that you spend throughout the day, sending them a message on Slack or other chat. Bottom line is: the freelancer must know what they are doing and produce results within your time frames. If you spend all the time explaining the task and correcting them – you got the wrong person, and outsourcing is NOT WORTH IT.
3. “You have changed”
Bear in mind as well, that at the start the freelancer would be trying their best to impress you. Every freelancer/company working as outsource dreams of landing a long-term contract (or, even better, two or three such contracts). This would mean steady revenue for them and less risk. However, as the first few months go by, you will notice a change. In good case scenario, they will submit completed tasks later than at the start. In bad case scenario… so many things can happen. They become less responsive, quality of work goes down, and eventually they also begin to demand more money.
That’s when you know that it is time to move on and hire someone full-time.
But guess what? Hiring someone takes time, and most small businesses don’t have that luxury. So, you have to be ruthless, when it comes down to outsourcing work. You have to stand your ground with your freelancer, if you believe that they didn’t work the hours they claimed that they worked.
You have to negotiate the price at the start (because IT WILL rise later). And you need to be ruthless when it comes down to quality control, because it will eventually go down and you HAVE to make sure that: either there is an incentive for the freelancer to continue to improve their work (for example a bonus at the end of the quarter), OR you need to constantly be looking at the market and seeing if there is someone else out there who can do a better job.
4. One of us
Something you also need to keep in mind is that, while you can always let go of the freelancer 10x faster than a full-time employee, the former can do the same to you. And then you will be stuck (especially if the service they provide is fairly complicated). Finding the next hire is just part of the solution – you need to also pass over to them all the stuff that has been done up to this point.
Good luck with that. If your freelancer left, because they found a full-time job or a better project, and did not document everything properly, you will be in quite a pickle.
You need to remember that at the end of the day your outsourced workforce will NEVER be the same as your full-time team. That’s just the hard truth. The moment things start to get hard and/or the tasks become more complicated, they WILL bail. This doesn’t mean that outsource cannot be hired long-term. Many companies outsource services/products long-term (just look at where Apple’s phones are manufactured), but that is exactly why you need to:
- Be very precise about the task that you want your outsource to do.
- Be clear about how they get compensated (by hour, by task completed, etc.)
- Put guarantees in place, to make sure that you safeguard against all of the possible scenarios that we went over above.
- Figure out if having someone “outsourced” would actually be cheaper, and REMEMBER TO COUNT YOUR OWN TIME. Time spent looking after your outsource and controlling the workflow, as that’s the time you could be spending attracting new clients.
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