What are the most common questions about outsourcing?

Okay, let’s say to you have decided to hire an outsourcing company. Where do you start?

If you don’t hire the right outsourcing firm by performing due diligence ahead of time, you can leave yourself open to unwanted exposure.

A few years ago, Apple Computer (before it became Apple, Inc.) was left with a black eye.

Apple’s entire business structure is unique in that they have about 30,000 employees. Their largest vendor was a Chinese company that manufactures their equipment. That company has over one million employees. One would assume that Apple officials had done research on the vendor, but it turned out that child labor was used to assemble several of Apple’s computers. This not only caused a great deal of embarrassment for Apple, it was also a bad reflection in general on the outsourcing industry.

How do I pick an outsourcing company?

A critical step that everyone should understand before engaging in outsourcing is that there are four types of international outsourcing firms: digital outsourcing, management processes, communications/customer service, and security.

Another critical aspect is to make sure that the firm that you want to do business with has operations in the country where you live in addition to the country where the workforce is outsourced.

Why are these aspects critical to outsourcing?

Using Apple’s case as an example: If the Chinese vendor had a U.S. presence, they would have been held accountable for violations that took place within their business — even if those violations took place in their overseas operation over time.

Bring it down to a small business perspective. For example: you hire an overseas telemarketing company; the firm you hire either doesn’t know what the laws are, or completely ignores them as far as Do Not Call (DNC) compliance. DNC violations carry up to a $16,000 fine per incident. Something else to note is that this also covers anti-spamming regulations.

Note: these calls on your company’s behalf all take place from overseas to America. Whom you think will be held responsible for any violations they make? Take a look in the mirror. These are serious violations. When you have this type of exposure, you want to make sure that whomever you’re working with understands the severity of breaking the law and the penalty for violations. They must be in complete compliance.

In fact, we have had clients approach us about doing telemarketing campaigns. A few have stated in a matter-of-fact way, “We don’t pay attention to the DNC regulations.” Needless to say, we walked away from those potential clients with a, “Thank you very much, but no thanks.”
Do not call registration violations are serious issues and not something to take lightly. Make sure that the vendor you consider understands what U.S. laws are.

Keep in mind that if your vendor has a U.S. presence, it is more than likely that they will be held responsible for violations – not you.

Practicing due diligence to guarantee that your campaigns are done properly is critical to running a successful virtual team.

Outsourcing business versus bulletin boards

I hear this phrase often – “I tried that and had a bad experience.” I believe that the bad experience is most likely a direct reflection of the type of structure the client engaged in.

One common concern is that in hiring someone offshore there may not be a management system in place and no accountability measures for your virtual assistant. You might worry that after spending time and money to get them trained and ready, they disappear, never to be seen again. Unfortunately it does happen.

However, this scenario is typically a result of someone using an online bulletin board service such as Upwork (formerly oDesk), Elance, Fiverr, or Freelancer.

Frankly, these are great service providers and there’s nothing wrong with using them. In fact, I use them occasionally for specific, short-term projects. However, these sites are not primarily used for long-term contracts for day-to-day operations.

Some major flaws when it comes to these organizations are that individuals contract from their homes, so their infrastructure consists of DSL, and some type of voice-over IP setup such as Skype. There are few accountability measures in place. There isn’t a management team to supervise the work under contract, and if things aren’t getting done you don’t have a fallback.

I don’t have an issue with hiring through a bulletin board for jobs such as website development, non-critical article writing, and anything that is a one-off type of project that does not revolve around day-to-day operations.

Using someone from a bulletin board is a great, inexpensive alternative to get high-quality work done at an affordable price.

There are also differences between hiring an entire outsourcing company as opposed to hiring an individual who works independently for a living.

Using an outsourcing business provides an existing infrastructure. They know how to on-board new clients, have training procedures and practices for employees, and backup employees who can pick up the slack if another calls in sick.

Most outsourcing companies also have a training procedure in place so that your new virtual assistant can get up and running on your campaign quickly in the event that your current virtual team isn’t working out.

On the other hand, you don’t have that same kind of leverage when you use a bulletin board’s services.

These are subtle, yet critical distinctions between the two types of outsourcing that you should be aware of before you choose how to do business.

Another reason to make sure that the client company has a presence overseas as well is that some agencies literally outsource their outsourcing. They sell you on the idea of hiring a virtual team, but the reality is that they are virtual, too. They have a few salespeople and outsource their outsourcing.

Those types of companies use bulletin boards to find fulfillment partners for their clients’ projects. This type of system can have so many challenges, such as: quality control, reliability, lack of infrastructure, and lack of training.

Make sure that whomever you do business with has multiple offices. I cannot emphasize enough that being in a stable environment is how business should be conducted

Are Developed Countries Losing Jobs?

Unless you’ve been living under a rock, you’ve heard the argument that overseas goods are flooding the US market and that is why American jobs are going by the wayside – citizens buy imported products.

I used to believe that. I ask you to shift your mindset.

Firstly, overseas goods are not flooding the US market. Merchandise all over the world can be purchased from those locations at better prices. Circulating American dollars enhances their standards of living and creates the opportunity to purchase other products and services.

Although these perks in the marketplace might be disastrous for an entrepreneur who competes against Chinese products, the overall effect is a higher standard of living for everyone.

The funny thing is, this is not a new standard. It’s basic Economics 101. One main reason the United States remains the food basket of the world is that farmers can effectively and efficiently farm large swaths of land with sophisticated farming equipment which requires few labor resources.

For example: American companies John Deere and Caterpillar export their machines to international markets. Those markets gain impact costs? which in turn allows Caterpillar and John Deere to provide jobs in the United States.

Companies who profit from these systems recognize and quickly integrate these ideas into their business practices.

Sitting back in a comfy office chair and complaining about worldwide business changes isn’t going to stop it from happening. What will happen is that the complainer is wasting valuable, quick-moving time criticizing, not capitalizing. The competition will seize the chance and surpass those who sit idly by.

Change is inevitable.

Being flexible and able to adjust will be the difference between success and failure.

Quite often I hear small businesses owners say, “Oh, I would never integrate overseas labor into my business.”

That attitude is fine.

However, there will be a hefty cost. Understanding the ground-breaking process of building virtual teams and making it work empowers savvy and flexible business owners to grow and compete on an international playing field.

This new way of doing business has opened the door for new companies and marketing trends to emerge into the forefront of today’s global economy. Few people could have imagined such a thing a few years ago.

Jobs are more accessible today as technology moves ahead at an ever-increasing pace and communication platforms become affordable to most. Technology and communication have merged to create a global workforce in a virtual, shared way. These resources can now be used in nearly every aspect of our lives.

This is an exciting time.

At this point in history there is a wave emerging — creative and resourceful entrepreneurs are combining their skills and strengths; this creates effective and efficient work environments which propel businesses forward.

This idea may seem inconceivable to you.
However, the truth is that today you can have a highly-skilled college graduate work in your company for less than minimum wage.

The entrepreneur who truly understands their own needs in the business world and uses today’s outsourcing providers can build a highly-skilled work force ready to compete on any international marketplace stage.

Top Five Outsourcing Advantages

The word “outsource” is a modern term that applies to the modern domestic and international virtual workforce.

To me, the purest form of outsourcing represents bringing in someone who has greater expertise to perform a specific task.

Think about it.

There are few of us who don’t do some form of outsourcing every day. If you have a gardener, or use a cleaning service, or take your clothes to a dry cleaner you outsource that work. You bring in someone who has greater expertise and a set of particular skills that you don’t have. You to pay someone to do something for you.

As a result, your time and resources are put to a greater value.

There are two big reasons why someone should outsource: it brings in a higher skill set, and it frees up time to make more money.

Greater freedom is worth more than outsourcing costs.

For the most part, the tasks I mentioned are things we could perform ourselves; however we elect to have someone else do them.

Business outsourcing isn’t much different. Do you hire a CPA firm to do your taxes? Do you hire an attorney or law firm when you need legal work? These are examples of short-term outsourcing contracts. These are individuals with higher skills. It doesn’t make sense to bring them on full-time.

1. Focus on core activities: Companies outsource because it allows them to stay focused on things they’re good at and on what makes money. A plethora of resources to set up a call center or to engage in other activities that could be handled by someone else doesn’t make sense, and for the most part should be handled by a third-party.

2. Cost savings and competency: Another key factor is that someone who specializes in a particular skill set can work cheaper and better than someone who has to go out, build the infrastructure, and learn a new aspect of a business in which they’re not really involved.

One example is a high-priced attorney. Generally speaking, a high-priced attorney is specialized in one area of the law in which they’ve invested years of learning.

Surveys show that high-priced attorneys actually cost their clients less money, compared to less specialized, lower-cost attorneys. Why? Because someone who specializes in a particular skill set already knows how to those types of problems for their clients.

A high-priced attorney specializes in one particular niche of law. They learn that aspect of the law so exhaustively that they can make arguments and defend issues to a finite degree and win cases most of the time. In comparison, a general attorney can’t. In cases of law, it shouldn’t be on-the-job training or another day at the office. There is a big difference in that mindset.

If you think you can hire someone to stay on board cheaper than to outsource the task, consider other costs associated with hiring an onsite employee such as training, using the facility, and performance.

3. Reduced overhead: Keep in mind, the overhead required to have internal staffing can be significant, especially if your current physical capacity is already at its limit. In other words, bringing in more staff requires a larger office, more furniture, and extra phone sets, computers, and office equipment. These are all real costs that need to be taken into account when considering whether to bring someone in or to hire an outsourcing firm.

4. Operational control: Control of your business means that departments have accountability measures in place. Being able to step back and look at results rather than being involved in day-to-day activities can allow the business owner to focus more on the core, to see what’s really important, and determine what makes money. Keep in mind that very few people go into business to conduct telemarketing surveys and handle customer service issues. Generally, they want to achieve those things in which they have a core competency. However, as a result of running the business, aspects need to be delegated.

When considering whether or not to outsource, ask yourself if you are willing to bring in an outside firm that is good at something outside of your core competence — and take your business to the next level.

5. Staffing flexibility: Outsourcing gives you the ability to grow your staff quickly or to shrink it with ease. It also means that you avoid the cost of purchasing computer terminals, office furniture, and renting new space to expand your to accommodate more staff. In addition, you won’t be stuck with extra office space and equipment when the time comes to downsize your staff. There also won’t be any legacy cost with unemployment. It is not your problem.

Creating the Entrepreneurial Virtual Workforce

Twentieth century small American businesses didn’t have as many options to look for competitive market resources. As a result, they relied on relatively cheap labor.

However in the 21st century, “virtual teams” have made it possible for entrepreneurs to take full advantage of labor resources around the globe.

To take it a step further, the quest of cheap labor is mandatory for a successful business whether it is located in emerging markets or first-world countries.

Here is the underlying truth for all businesses: paying the lowest cost for labor will boost the overall top-line and bottom line growth. In our contemporary era, this is called outsourcing, or creating virtual teams.

There is nothing futuristic today about what is now a basic commodity — the Internet.  It is a gateway that has fully opened up the world in the last 20 years more than Christopher Columbus could have ever imagined when he discovered a new realm.

Business is no longer limited to the free trade concept. It is now a labor trade concept. Everyone who engages in and interacts with the outsourcing market gives themselves originality and the ability to compete for jobs, money and security on a level that was not even dreamed of 20 or 30 years ago.

Because of the Internet, companies around the world can grow rapidly. CEOs and managers will  pay less for labor without the worry of over-hiring or over-paying someone to sit in their office for a simple job that someone on  the other side of the world can do just as well for half or less of the paycheck.

Outsourcing gives companies financial freedom and reduces the cost of hiring a permanent employee. It gives employers freedom to peruse and browse a broader pool of qualified workers who will do the same task for less money — especially quarterly or annually. It allows for a greater top and bottom line number.

In this contemporary, networkable, computer-age working environment, people are no longer restricted by geographic location. Businesses are located anywhere. Entrepreneurs can simply search for and find staff anywhere via outsourcing. Necessary tasks can be given to anyone, anywhere who has a computer or tablet and access to an Internet connection.

If you’re not taking advantage of this new way of doing business by hiring outsourced work, why? Do you consider yourself ahead of the curve or behind it?

In my opinion, the clear answer is that you are behind the curve.