10 Key Factors to Consider When Outsourcing

10 Key Factors to Consider When Outsourcing

The economy is changing and growing businesses are increasingly relying on outsourcing their non-core functions as a cost effective strategy. Outsourcing is a solution for a wide variety of tasks that may not be efficient for a company to handle itself. When considering what to outsource, conduct an analysis of what your company’s core competencies are, what non-critical tasks could be better handled by outside expertise, and what the savings would be.

What Can I Outsource?

Outsourcing can be done on either a per project or ongoing basis. Examples of outsourcing on a per project basis include activities such as:

  • Developing a website
  • Translating a document
  • Engaging consulting services
  • Planning for an event.

Alternatively, companies can also hire third-party service providers for ongoing needs such as blogging, social media marketing, or bookkeeping.

How do I Outsource?

Once you have made the decision to outsource, there are 10 issues you should consider and when engaging the services of an independent contractor.

Find the right professional. The first step to successfully outsourcing a project or a task is to find the right professional. Make sure to understand the skills, experience, and attitude needed to accomplish the task. These factors will require validation from a resume, interview, and professional referrals.

Location is a very important factor to consider when outsourcing. Think about whether you want to work with a local freelancer or an off-shore service provider. Although the initial cost may be lower in other countries third world countries, there are many benefits to selecting local professionals.

For example, local service providers can easily be held accountable to the terms of a contract written in the same country.

Explore recruiting venues. There are many venues that can help you to find professionals for your project. You can list your job on an online job board, in the classifieds, or enlist the services of a staffing agency. Newer alternatives include sites such as Workhoppers that find you the right professionals on-demand (as a staffing agency would), but offers the ease and cost effectiveness of a job board.

Create your Service Contract. Once you have locked in the right person to work with, it’s time to establish the rules that will govern your business relationship. The contract should include provisions for all stages of work and clearly indicate the independent status and non-exclusivity of the relationship.

Length of the project. Discuss and agree upon the length of the project. It is important to set an exact deadline if possible. Decide whether you will have penalties for delays and/or your right to end the contract should the level of service not be met.

Consider a cancellation clause. Even with the best of intentions, sometimes professional relationships just don’t work out. Decide what happens if one or both sides would like to get out of the contract.

Discuss how payments will be made. There are many options in regards to payment when it comes to your service provider. If you use a recruiter they may require a full payment held in escrow. A recruiter will take a percentage of the project cost or commission which can be quite costly.

If you find your own contractor you can negotiate directly and decide together what works for you both. Some possibilities would be to pay a small upfront fee, 50% midway, or paying the amount due in full upon completion of the contract.

Clarify intellectual property. Both parties should agree on who will own and who will be able to use the work product at the end of the project. Be sure to have an intellectual property agreement in place. The agreement should also take into account anything that was improved or modified during the relationship (such as content). Be sure to also include agreements on confidentiality and non-disclosure for all parties involved.

Discuss privacy and security measures. If your service provider will have access to sensitive information, such as your software or your customer information, consider discussing steps and provisions that should be taken to address and ensure privacy.

Create an action plan. Clearly defined responsibilities and end products are essential to successful project completion. It is important to have measurable goals and benchmarks. The earlier you do it in the process, the better it is to avoid miscommunication.

Choosing to Outsource

Outsourcing is an effective way for companies to concentrate on their core business functions while still focusing on less important tasks through contracting. It is a cost saving solution that can be an extremely effective strategy to increase your company’s performance as long as it is conducted properly and begins with a well-drafted outsourcing service agreement.

Linda SingerLinda Singer is the co-founder of Workhoppers.com, a website where talented people find flexible work and companies get matched with local help on-demand. She writes frequently on topics related to the contingent workforce.

 

 

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