Entrepreneurs who are bootstrapping their startup can consider outsourcing as it can help them to lower costs significantly. However, navigating the outsourcing industry can be tricky and is sometimes a hit or miss. In this post, Arup Maity shares the six tips he has for entrepreneurs when they outsource operations to others.
Arup Maity is the President & CEO of Blastasia, the President of Xamun, an Adjunct Faculty of the Asian Institute of Management, and a Founding Member of Spring.ph. Arup is also a Mentor for the Manila Founder Institute, which is currently accepting applications.
The article "Points to Consider for Outsourcing" originally appeared on Arup's website. It has been republished below with permission.
Coming from both ends of the spectrum of outsourcing and offshoring for the last 10 years and picking up on the pain points from others in the industry, the following is my collection of things to consider:
1. Freelancers
Choosing the right freelance talent works best for specific, one-off assignments. However, if you have a large project which requires a lot of collaboration and coordination, you might want to consider getting an entire team from one company rather than gathering several freelancers and forming your team. The latter seems to be the more affordable option, but you have to bear in mind that a lot more value can be delivered by the former. A group from a company has established processes, administrative support, centralized invoicing, and other services that may add a bit more to your cost, but also saves you from a lot of headache. The whole is bigger than the sum of the parts, after all.
2. Cheap
You are already saving a lot by going offshore, I believe a 40-50% saving from what you would pay locally is a good expectation. However, once you try to save more by going to the next cheaper group of service providers, you might be looking for trouble. Remember the people you are working with are also in business and they need to make enough money to 1) deliver quality output; and 2) be interested in doing business with you in the long term.
3. Flat World
Knowledge and know-how are more universal today due to the Internet and people working with each other across the world. Its best to be open minded about what the provider can contribute to your project, not only in terms of labor but also insights. Chances are, the outsourcing providers have had other similar or related experiences that can help improve your product concept.
4. Process
Sometimes following a process seems like a waste of time, but in reality it comes back to bite you later – in the form of missed out items and heavy rework. Working without any clear specifications and processes might work fine in a small collocated team, where knowledge sharing is seamless and instantaneous. However, as the team grows and extends beyond your table and physical office, you just can’t live without specifications and processes. Remember that ‘Lean’ and ‘Agile’ concepts talk about doing only the necessary documentation, not ‘no documents at all.’
5. Trust & Transparency
Starting small, knowing the people from outsourcing providers as intimately as your own team members at your office, and building the human connection is critical. It might be natural if you are in the same office working hours on your project –but when you are across the ocean from your outsourcing team, you really need to make a conscious effort to build the relation and trust. Spend some time visiting them at the beginning and during the project.
6. Big Benefit of Small Talk
To make lot of the above items to happen, there is no substitute for small talk. In the office you get to do this by the water cooler, over lunch, or over beer after work hours. With your outsourcing providers, you should try this over social channels like being part of their FB and Linkedin network. Constant Instant Messaging (IM) is a good option, too. When doing IM with the outsourcing team, perhaps keep a window open – this seems to work well for a couple of our teams. It is like a police blotter where open discussions and knowledge keep happening between all the team members.
Leverage on Technology
Remember that there was no outsourcing and offshoring of service before the Internet, technology made it happen. Don’t think it is a waste of money or time in leveraging as much possible on technology in getting all the above done smoothly and easily. Try an online tool like www.xamun.com to manage your projects, clients and distribution.
If you could benefit from Arup Maity's expertise, then apply to the Manila Founder Institute today!
