Why Are You Outsourcing?

Posted on Aug 04, 2015 by admin

This may be a relatively simple question to ask yourself, however an honest appraisal of the conclusions you reach are vital in terms of maximising the benefits of this decision.

Truly understanding the reason why you are choosing to outsource will help you develop the most effective strategy for building your virtual team – but beware, if low cost is your only identifiable factor, you are already entering dangerous waters.

There are a multitude of reasons companies outsource, some of which (but not limited to) are:

  • ­ Salary cost reduction
  • ­ Lower other OPEX overheads such as office rent, equipment purchases etc
  • ­ Locate skills that are harder to come by in your local region
  • ­ Let other companies with expertise manage components of your operations
  • ­ Workforce flexibility (working hours, time zones etc)

Each company will have their own reasons for outsourcing. Mine were quite simple – I was tired of getting local quotes that were simply outside my price range and when I could afford the services, I often found it difficult to get the level of flexibility from the local resources to get the job done when I needed it. Sounds horrible I know, but entrepreneurs like myself can be relentless in terms of our working hours and often I needed companies to work with me after traditional business hours had closed. Some would, most wouldn’t.

My drivers for outsourcing initially were low cost and flexible staff. I felt I could build a virtual team and starting in India that is exactly what I did. To give me the 24/5 coverage I was seeking I eventually spread the team across India and the Philippines with the lofty goal of having a team that was, in one way or another, available for my clients most of the time. A 24/5 powerhouse that offered a level of service second to none. Did this work? Probably not, but it sure was a valuable learning exercise and despite the challenges, something I enjoyed tremendously.

Reflection showed me though that my initial drivers were a little off the mark. I have no qualms about seeking lower cost but as my primary driver, this caused me issues. The outcome? It was really hit or miss in terms of the quality of staff. I ignored the mantra: “Hire Slow, Fire Fast” and replaced that with “Hire Fast, Try and Resolve Quality Issues Over Time, Fire as Last Resort”. It was messy. And complicated. But a great learning exercise.

A close second in terms of drivers was workforce flexibility. I wanted my clients to get responses to queries quickly and from people, not auto­responders. I was tired of ticketing systems and wanted the personal touch for my clients. But the part I really underestimated was the amount of my time that managing that would involve. Despite appointing various offsite managers to oversee staff while I was not online, the fact that I was heavily cost focussed meant that I did not attract the right staff. I would often awake the next morning to find that nothing I had requested had been completed – experience has taught me that was as much my problem as it was the people not doing the work.

There was three issues at play here:

  1. The teams working cross borders and time zones would leave work for the next team and without suitable handovers in place – everyone waited for everyone else to do the work
  2. Some candidates I attracted were happy to take the pay check for a month and simply not work – if they worked at night and I could not monitor them it was keyboards down and time to relax – when you pay low rates, this is a more common outcome
  3. My instructions were not clear enough to allow the teams to address any hurdles without my involvement ie. They waited for me to proceed and we lost time

Evaluating why I was outsourcing allowed me to reflect positively on how I had set up my virtual teams and it also led me to reach a simple conclusion. Cost reduction was not my primary driver. It was a benefit of the process but what I was really seeking was quality deliverables that were affordable to me. That is a major difference. I have had no qualms about investing heavily in businesses I have created – so why was I focussing on investing lower in my most valuable asset – People! I have always been prepared to pay more for quality services – why not now? This allowed me to change my hiring strategy completely. I focussed on building smaller teams filled with quality staff. I worked closer with them individually to ensure they understood our vision and their roles. I bought out contracts with providers securing the best resources available and created a core team of committed and capable virtual staff.

The other thing that became clear was there was misalignment between my reasons to outsource and the way I wanted to service my clients. I was trying to deliver a premium service without paying for premium staff or charging my clients a premium for the service itself. In reality, it was destined to break and a couple of our projects did. But what we really did was set expectations though our actions that were completely unsustainable. Some of the more exploitative clients we had pushed scope hard as they saw us as too accommodating. Some began to expect responses to emails in minutes and found our willingness to serve meant that a temper tantrum would see them receive more bang for their buck. This was something that we needed to remedy. A solid client service philosophy based on mutual respect and benefits replaced the over servicing mentality that led to exploitation. The right staff upheld the philosophy and in fact, our service really improved and real, positive relationships were formed with the right clients. We began evaluating our clients before engagement and declining projects that displayed red flags. We placed a value on our service and that value created a stronger sense of team unity and morale.

We also streamlined our operations and with regret but a sense of purpose, we decided to run the whole operations from a single time zone. The team was based solely in the Philippines and the team in India was disbanded. There are some quality individuals in India I would love to work with again and they remain a friend to us still. Understanding why you are outsourcing will allow you to build the right virtual team and service your clients in a manner that is sustainable for your business and their project outcomes.

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