A constant problem for businesses is having affordable talent to meet your client’s needs. In 2018, we are seeing that as one of the constant issues facing employers. You feel hopeless when you can’t afford your labor costs while having a mountain of work ahead. It makes you wonder if the business can scale or even succeed. But how do you resolve this? One option? Outsource.

First off, what is outsourcing?

Outsourcing is utilizing another business’ strengths to get a specific task off your shoulders. For example, if punching in thousands of cells into a spreadsheet is keeping your employees from performing better, you could pay another business to accomplish that data entry. The principle is simple but it can be nerve-wracking. You’ve worked hard to build your business and will passing off a part of your business’ work diminish quality? delay turnaround time? Or worse? Is outsourcing even a good idea?

Believe me, there’s plenty of mistakes we’ve witnessed over our 20 years helping stateside firms get the best results from their outsourced efforts. To help with that, here is what we feel are the 5 fatal mistakes of outsourcing.

Not having an On-Shore Partner 

Remove the frustrations from not knowing where to turn for answers

 

In a study by Virgin, they come to a simple conclusion: better business is done in person. From the quality and amount of ideas generated to better decision making, 95% of those in the study say that face to face meetings are essential to long term relationships.

If an issue pops up, who do you contact? How long does it take to hear back? It’s imperative that the business you trust is able to meet with you locally and address your needs in person.

Working with a US-based firm directly, aids both in productivity and accountability. In our case study of a leading fintech company, our partner saw a 1,620% growth in their number of clients over 40 months. Not only did they have a great team and product, but by having a stateside partner, together we were able to create processes for productivity that streamlined workflow and maximized their results.

Instead of spending your time worrying if what you need to be done gets done, a stateside partner gives you the assurance and responsiveness that, should an issue arise, it can be addressed, same day.

Project minded rather than Relationship minded 

Create an extension of your existing staff

 

89% of companies that outsource continue to do so with their current provider. Why? Because they know that working with a company that knows your methods is more important than finishing a single task.

It takes a lot of effort to do one-off projects. These projects require learning new processes, new resources, and new tools; every time. By entering a relationship-minded engagement, you enable your outsourcing partner to learn your processes and expectations and deliver solutions that are both repeatable, and scalable.

Outsourcing takes time. It takes time for your stateside team to document processes for the work to be done correctly. It also takes time for your outsourcing partner to learn these procedures and implement them. This time can either be a one-time investment in an improved product and happier employees or a continuous expense. Because over time, each step in your process becomes refined.

You no longer have to constantly train a new team and then fail because work was done poorly, late, etc. Once your overseas team learns the process, the next steps get simpler, faster and cheaper.

Not having a dedicated team 

Create clarity with a team focused on your mission, vision, and goal

 

Imagine using a temp agency to fill critical roles in your service pipeline. Each time a new temporary employee came on-board, you would need to train them on the tasks they would perform, only to have them leave and take those skills elsewhere.

Branching off that last mistake, the best outsourcing results come from having a dedicated team. Usually, when you do project-based engagements, you don’t get a dedicated team. Think of it this way.

Outsourcing Model A

Say “Outsourcing Company A” has 100 employees and 20 clients. In a traditional model, they would take the work that needs to be done by the clients and give it to the 100 employees and they would get it done. In this model, employees of the outsourcing company are transitioning from one need to another, with different scopes, for different companies. This reduces the quality of work produced because it is being done by a different person every time it needs to be done.

 

Outsourcing Model B

Now let’s take “Outsourcing Company B”, again with 100 employees and 20 clients. Here, each client would have 5 dedicated employees. Because of the reduced scope of work, and team member consistency, the high standards you set for your business are able to be maintained. This also reduces the scope of who works with your process; ensuring that the investment of time and resources in your outsourcing partner only work for you and not the next business they bring on. This enables your team to grow with you and your knowledge. A dedicated team is focused and highly responsive to your needs.

Hourly billing

Add certainty to your budget

 

Outsourcing is already uncertain enough. If you add a fluctuating cost on top of it, managing your project could cause anxiety. Hourly billing can be catastrophic to your outsourcing efforts because you can’t budget that way. This uncertainty and lack of clarity can negatively impact your planning and your project’s success.

A flat-rate billing engagement means you don’t have to worry about expending energy on managing hours or auditing time logs. You can be focused on the end goal of delivering your solution to your client with peace of mind about your bottom line.

Rushing to the Finish Line

Remove the headache of having to redo work

 

Lastly, the most important mistake made in outsourcing is not working with a firm that is service-focused. This may sound vague but let me explain.

The number one complaint about outsourcing companies is that the staff is unqualified or that they provide poor quality of service. And while the industry has seen this number drop by 8% over the last two years, it still accounts for 20% of complaints companies have with their outsourcing company. Why is this the case?

Project-based outsourcing firms aim to churn out as many projects as possible in as little time as possible. Because project-based firms aren’t expecting work beyond that one project, their resources are oriented to project turnover and not long-term service after delivery. This results in lower quality and in the worst cases, needing to redo work that you paid to have done by stateside employees that would have cost more to do to it in the first place.

While this type of service may be more cost-effective up front, you get what you pay for. Partner organizations look to add value by providing maintenance and support to the relationship because they are incentivized to improve.

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