How to earn money without invest money
Outsourcing is a business practice in which a company hires another company or an individual to perform tasks, handle operations or provide services that are either usually executed or had previously been done by the company's own employees.
The outside company, which is known as the service provider or a third-party provider, arranges for its own workers or computer systems to perform the tasks or services either on site at the hiring company's own facilities or at external locations.
Companies today can outsource a number of tasks or services. They often outsource information technology services, including programming and application development as well as technical support. They frequently outsource customer service and call service functions. They can outsource other types of work as well, including manufacturing processes, human resources tasks and financial functions such as bookkeeping and payroll. Companies can outsource entire divisions, such as its entire IT department, or just parts of a particular department.
Outsourcing business functions is sometimes called contracting out or business process outsourcing.
Outsourcing can involve using a large third-party provider, such as a company like IBM to manage IT services or FedEx Supply Chain for third-party logistics services, but it can also involve hiring individual independent contractors and temporary office workers.
Reasons for outsourcing
Companies often outsource as a way to lower costs, improve efficiencies and gain speed. Companies that decide to outsource rely on the third-party providers' expertise in performing the outsourced tasks to gain such benefits. The underlying principle is that because the third-party provider focuses on that particular task, it is able to do it better, faster and cheaper than the hiring company could.
Given such benefits, companies often decide to outsource supporting functions within their businesses so they can focus their resources more specifically on their core competencies, thereby helping them gain competitive advantages in the market.
However, some companies decide to outsource for other reasons.
For example, they outsource because they're unable to hire in-house workers with the specialized skills and experience needed to perform certain jobs.
Companies sometimes opt to outsource as a way to shift meeting regulatory requirements or obligations to the third-party provider.
Furthermore, more companies are looking to outsourcing providers as innovation centers. According to Deloitte's 2016 outsourcing survey, 35% of respondents said they are focused on measuring innovation value in their outsourcing partnerships.
Outsourcing vs. off-shoring
Companies that hire third-party providers to perform the outsourced work overseas are engaging in a particular form of outsourcing known as offshoring. Nearshoring is a term used for work done or services performed by people in nearby, often bordering regions and countries.
Outsourcing pros and cons
In addition to delivering lower costs and increased efficiencies, companies that outsource could see other benefits.
By outsourcing, companies could free up resources (i.e., cash, personnel, facilities) that can be redirected to existing tasks or new projects that deliver higher yields for the company than the functions that had been outsourced.
Companies might find, too, that they can streamline production and/or shorten production times because the third-party providers can more quickly execute the outsourced tasks.
Outsourcing, however, can produce challenges and drawbacks for companies.
Learn more about the pros and cons of outsourcing.
Companies engaged in outsourcing must adequately manage their contracts and their ongoing relationships with third-party providers to ensure success. Some might find that the resources devoted to managing those relationships rivals the resources devoted to the tasks that were outsourced, thereby possibly negating many, if not all, of the benefits sought by outsourcing.
Companies also could realize that they lose control over aspects of the outsourced tasks or services. For instance, a company could lose control over the quality of customer service provided when it outsources its call center function; even if the company's contract with the provider stipulates certain quality measures, the company might find it's more difficult to correct an outsourced provider than it would be to correct an in-house team.
Companies that outsource could also face heightened security risks, as they exchange with their third-party providers the company's proprietary information or sensitive data that could be misused, mishandled or inadvertently exposed by the outsource provider.
Additionally, companies might encounter difficulties in getting their own employees to communicate and collaborate effectively with those working for third-party providers -- a scenario that's more common if the third-party operates overseas.
Ethics
Outsourcing has raised some ethical issues for companies as well.
Most notably, some have criticized the practice for its impact on workers. Employees at companies that decide to outsource frequently see the decision to outsource as a threat to their job security; in many cases, that fear is justified as they lose their jobs to workers who may be paid less and receive fewer benefits.
This scenario has also drawn criticism from the public as well as from politicians, labor leaders and others.
Companies could also face negative publicity as a result of their decisions to outsource, with customers and the public in general viewing the move as a way to cut workers' wages and benefits or as a way to skirt environmental, financial or safety regulations.
Insourcing vs. outsourcing
Companies may decide against outsourcing and instead turn to insourcing.
As the name implies, insourcing refers to the practice of having in-house teams perform functions that could be handled by outside companies or contactors. Thus, insourcing can be viewed as the opposite of outsourcing.
Sometimes insourcing involves hiring new employees, either on a permanent or temporary basis, to execute the tasks being insourced. Companies might need to invest in new equipment, hardware and software when insourcing, and they might need to re-engineer business processes as well.
Outsourcing trends and future directions
Although outsourcing had been viewed as a way to lower costs and gain efficiencies, it is increasingly becoming a strategic tool for companies, too.
My first foray into outsourcing was before I even knew anything about internet marketing. I had read a blog post on Tim Ferriss’s blog and it blew my mind that I could hire people in India to work for me…all without leaving my apartment.
I had an internship at the time for a gym down in Ft. Lauderdale, FL, and one of my assignments was to create a calendar of all upcoming gym-related events. In a moment of genius (or laziness), I decided to try out this whole “outsourcing” thing to create our events calendar.
I had someone from BrickWorks India, gave them my instructions, and patiently waited for my calendar to be completed.
48 hours later, it was done — and done EXACTLY to my specifications. Which was awesome. I know that a lot of people have outsourcing horror stories (and I do as well, though that’s for another post), but my first experience was flawless. Needless to say – I was hooked.
Since then, I have outsourced hundreds of projects to people all over the world, from Romania, to the Philippines, and to India. I’ve had logos designed, websites created, apps coded, linkbuilding done, and so much more that I can’t even remember at this point.
I’ve become pretty experienced in the “Art” of outsourcing – and because of that, Michael asked me to write you guys a post on some tips for better outsourcing — how to make sure you avoid a nightmare experience, and enjoy the true benefits that outsourcing can offer to you and your business.
Know What You Want
The most important key in outsourcing successfully is knowing EXACTLY what you want. One of the biggest mistakes I see people make when they outsource is that they give vague instructions, and expect the person they are outsourcing to to understand exactly what it is that they want.
The simple fact is this: no one is going to understand your vision unless you tell them explicitly what your vision is. If you just say “Make it kind of look this” without providing specifics, you are likely to be disappointed with the results. This mistake usually ends with you wasting a ton of time trying to get your project right.
So, in order to avoid this, you need to figure out exactly what it is that you want done. If you want a website designed in a certain way – do a wireframe (I will literally draw it out on a piece of paper, scan it, and e-mail it to my designer). If you want an app or piece of software to provide a certain function, make sure that it is outlined completely before you ask the outsourcer to do the work. For logos, provide examples of what you’re looking for with specific instructions.
A lot of people make this mistake when they start outsourcing — and it almost always ends poorly. So make sure that you take the time to figure out exactly what it is that you want your outsourcer to do, before you ask them to do anything. And, along these lines, you want to make sure you’re very specific in your job description as to what you are looking for.
Where To Find People To Work For You
There’s a couple of great sources to find employees online, and I’ll outline a few here:
1. oDesk — While my experience with oDesk is relatively limited, I have had quite a bit of success with the employees I’ve hired from there. They are usually the cheapest, but they provide good quality work. oDesk also has internal time tracking, and will take screenshots of your employees desktop while they work, so that you know they are on task.
2. Elance — I’ve had the most experience with Elance, and out of all of the sites that I’ve worked with, it’s been consistently the highest quality. While the workers here are usually on the more expensive side, you definitely get what you pay for. I’ve never had a bad experience with anyone that I’ve hired from Elance.
3. Craigslist — While not really “Outsourcing” as Craigslist is generally local people, I still list it here as it is a very, very useful resource for finding employees. You can still get cheap work, and depending on how big of a city you live in, you can usually get responses very quickly. However, I will say that Craigslist is best for finding employees that are local (that you will see face-to-face) as Craigslist does not protect you like Elance or Odesk if you are just hiring someone to work for you online.
Some other resources for hiring that I have only limited experience with are:
Guru
RentACoder
SitePoint
Freelancer
OnlineJobs.ph
Getting Started With Your Outsourcer
Before you dive in and give your outsourcer the reins to your business, you want to make sure that they are reliable, provide quality work, and communicate well with you, first. You don’t want to give them a huge project (that is important for your business) before you even know if they are legitimate or not. That is simply a recipe for disaster. Trust me, I’ve been there.
What you want to do is give them a small test project first. Something simple that is of minimal consequence to your business. For example, if you want them to eventually redo the design of your entire site, maybe have them redesign a banner or a specific portion of your site first, to test their skill.
The biggest thing you are looking for in this test, aside from actual skill — is reliability. Will they get the project done when they say they are going to get it done? I can tell you from personal experience that there are a TON of skilled workers out there to hire, however, only a small portion (I’d honestly say less than 5%) of them are actually reliable and can get things done by specific due dates.
And when you find the reliable ones – make sure that you hold onto them, as they are an extremely, extremely valuable resource to you and your business.
Keep Things Business
Another big mistake that you can make working with outsourcers is becoming friends with them. Now, that might sound a little strange, but hear me out. If you are hiring employees on a regular basis to do projects, there WILL eventually come a time when you have to fire someone because they are not getting the job done. It is an unfortunate inevitability when working with employees. I honestly wish everyone always got their work done on time, but that simply does not happen.
When the time comes to let go of someone because they aren’t getting their work done, if you are emotionally attached to them (by having become their friend), it makes it much harder for you to fire them. You might give them second chance after second chance because you don’t want to hurt their feelings. This is a mistake.
This is going to sound cold hearted – but what it comes down to is this. You have to decide which is more important to you – this persons hurt feelings, or your livelihood. If they are not getting the work that you need them to get done on time, it is THEIR fault that you are firing them, and you should not feel bad about it. They are taking advantage of you and you need to let them go.
If you are truly planning on being successful online, this is a hard lesson, but one that you need to learn early on, or it can be devastating to your business.
So because of this, it’s important to separate business and friendship – and keep them separated!
Questions? Comments?
I hope this post was helpful to you guys — let me know in the comments if you have any outsourcing or hiring questions, I’ll be here to respond.
And, if you like what I wrote here, chances are you’ll probably like our blog over at Real World Traffic. Make sure to check it out as well!
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