Lessons Learned After Spending $36,713 on Outsourcing

Outsourcing is a somewhat controversial topic as many people do lose their jobs to cheap labor in other countries. However, as entrepreneurs, this golden resource is what can be the difference in a successful business to one that’s stagnant. With hourly rates as low as $3, you can virtually outsource 90% of your business. One ‘downside’ is that it takes time to find the right talent and that’s why we have several entrepreneurs sharing their secrets to outsourcing.

Get references during the resume collecting process. Chances are if people look great on paper AND have verifiable references that shine, they are worthy of your time in an interview. Oftentimes we do this backward and interview candidates and then get references. Why waste your precious time interviewing someone who can’t provide excellent work history? Sometimes candidates will resist giving references prior to interviewing. That’s a possible red flag. If you let them know in your ad that you’d like 3-4 verifiable references included in their resume, they should have no problem providing them for you. If they resist, move on without them. – Amy Wright of Amy Wright

If you haven’t worked with somebody before, pay 100% of the money into escrow before the work begins. This protects both parties. If the provider has done jobs, but doesn’t have feedback, take that as bad feedback. Some buyers won’t leave feedback, even after a poor experience, especially if they’re the first ones, since it can crush a new provider. – David Hooper of Music Marketing

I have 3 full time virtual assistants. I found that when I set expectations each day as to the tasks I want accomplished, MUCH more is completed than the days I do not set expectations correctly. Also, I have my virtual assistant’s send a weekly sum up of their day so I can go over what they did and how we can improve upon each task for the next day. – John Lee Dumas of Entrepreneur On Fire

We outsource a lot of our content writing to many different locations in Europe and India. Our best practices when conducting this type of work is to usually hire 3-5 writers and even 2 from New York City (headquarters). We give each individual a task and after they complete the trial job, we inspect each piece of content from all the writers. We choose two or three and then weed them out again after the next content trial. We compensate each of these individuals and we purposely do trials on many different prospects mainly because we need them to do the job in a large scale and must be confident they can complete it accurately. You can’t hire someone to do a job and realize half way you have to fire them and hire another to finish the rest. The overhead on trials are worth it and in turn give you a better return on your investment in the long run.  These experiences are good to learn in the long run and I suggest many entrepreneurs to be careful who they hire. Do not rush (which is what we did at the time) and do your research. If you suspect something fishy, something fishy is probably going on. – William Lau of www.canvaspaintings

Freelancers today are playing the “numbers game” by mass-applying to any job post with specific tags or keywords. Several are even using bots and scripts to automatically detect these listings and apply with a canned response.  A simple but efficient way to weed these applicants out is to ask a completely random question in your job listing. In my last post I requested that all applicants reply with their favorite flavor of ice cream, in addition to portfolio examples and experience. Less than 10 percent of the applicants included this, helping me to weed out over 100 applicants who never even read the job listing. – Kris Alban of iGrad

We use outsourcing with great success in non customer facing positions. We use three websites: www.freelancer.com, www.odesk.com,  and www.elance.com. Of these sites we use oDesk the most frequently as it seems to strike a balance between lowest cost and some of the best talent. I’ll post a job across all 3 sites, and wait for the responses to come in. Once I start receiving responses I immediately delete any responses with major spelling or grammatical issues. I’ll also immediately delete anyone who looks like they send the same response over and over to everyone (very common). This will eliminate about 70-80% of the applicants right off the bat. From there I’ll reach out to the applicants I’m most interested in based off their previous feedback and ask them for their Skype name. Skype is a free service which allows you to chat and video chat across the globe. It’s very popular with freelancers. I’ll generally award a small test project to my top 3 applicants and pick the 1 which completes the project quickest and most efficiently. - Josh Natella of DIVTECH LLC

Clearly define your requirements. Many are unwilling to put in the effort to define requirements clearly with diagrams (where possible). Be reasonable with prices. Everything comes from somewhere and if the project is bigger, you want undivided attention post implementation to take care of the problems that may arise. Have a small milestone first to weed out any issues before moving to bigger tasks.  If it’s your first time working together, have a small milestone to familiarize yourself with each other working style. – Shyam Doshi of WizmoTech.

Stick to the prominent freelancer sites if you’re new to outsourcing. oDesk, Freelancer.com (formally vWorker) are the main two I use although I have used Elance too in the past. The way I screen serious candidates from the ones that are spam applications is by asking them to put the capital of a country at the very top of their application to even be considered. In my last advert for an outsourced worker, after the job description and type of person I’m looking for, I put  “you must include the capital of New Zealand at the top of your application to avoid being automatically rejected as a spam application.” Only the ones that put “Wellington” at the top got through. Some guessed, which made me think if they can’t even be bothered to Google the answer, then they’re not the type of person I want working for me. – Anand Pajpani of Memfy

My best tip is to put a random word into your posting and ask the respondent to include it in their response (I put “trombone” even though I am in the wine business). This helps me weed out anyone who did not read my whole job description – if they can’t even read that, how can I trust they will do a good job? This simple trick helps me eliminate 50% of the responses to my posted outsourcing jobs. – Adam Hirschkatz of From Fruit to Wine

One of the best places to outsource is Israel. It has the second-most educated workforce in the world and a very large pool of US/European born and educated professionals in all fields. However, in general the prices of services in Israel are lower than those in the US/Europe, so it is possible to get the same quality of service/product at a much lower cost. Second, my way of assessing subcontractors is through situational interviewing – I determine the qualities/behaviors/resources that are necessary for the job and ask about ways the subcontractor would handle such a situation or how they handled a similar situation in the past. – Leah Aharoni of Love Your Biz

Cheaper is not better. Outsourcing is generally less expensive than hiring an employee because you save on items such as overhead, benefits, and taxes. So, don’t try to save on the rate, it may result in lower quality and a lot of wasted time and resources. Don’t micro manage. When you choose to outsource, you have to respect the time and ability of the person that you chose to do the job. Hopefully by the time you have chosen someone, you have interviewed them, check resources, and signed a professional contract. Now it’s time to let them work. The last thing you want is to waste your time and theirs requesting constant updates and details. This will result in resentment and a poor working relationship. When choosing someone to outsource to, be sure to interview them thoroughly (have questions prepared), ask for references (actually follow-up with the references), search for them on social networking sites, review their website, and request a professional contract that outlines terms and other important details of the relationship. – Kathrine Farris of Strategic Office Support

Determine your needs in terms of required skills set, budget and your expectations/ goal. Sites such as Elance and Odesk can be used for posting your requirements. These sites have a good rating system and your initial evaluation of candidates can be done easily. Junk candidates can be weeded out based on proposal quality. Check if proposal addresses your job requirements and is not generic. Create a weighted average scorecard based on your set criteria (cost, time, skills, references, etc.), shortlist and interview candidates. Perform a reference check to know the candidate’s approach towards the job, quality, and timeliness of work. For a new candidate, it is best to start with a small job and if it works out per your expectations, you can go for a long-term association. Never pay full amount before the work is completed and tested. It is a good option to use Escrow for your outsourcing jobs. Make sure that the outsourcing contractual terms (cost, termination clause, licensing, etc.) are well described and agreed by both the parties. Other things to be considered are candidate’s availability for meetings (time-zone), communication skills, and most importantly candidate’s interest in working with you. – Jaimin Doshi of Apple Tech Consultants

Here’s our official tips:

Where to hire - We personally are big fans of Odesk.com and use that for almost all of our needs. Just like the other responses, you can also find talented workers on Elance, Freelancer, Rentacoder, etc. Although some of these might be more specific to programming versus general administrative support. Odesk has everything for web developers, designers, virtual assistants, and much more. If you want a taste of outsourcing without the cost, try using a site like Fiverr where you can outsource practically any small task for only $5.

Pre-qualifying - All those responses above are very good. As others have mentioned, at least 80% of your applications will be very generic responses with no real interest in your job listing. We immediately delete the ones that fall into that category as its a waste of time. On Odesk our requirements usually always are the following: Must have at least 100 hours clocked, must have at least a 4.5 rating, must have a portfolio, and must speak english. When we start receiving applications, we immediately filter out anyone that does not fit the follow requirements.

Personnel - While not entirely true, certain countries excel at certain industries. Indians are generally on the cheap end of labor and can a little bit of everything from web design to SEO. Communication is often very hard as they’re not well versed in English. It’s always hit or miss and we try to shy away from Indian workers for the sole problem with communication. European workers such as Russians are great at programming software. Their prices are reasonable and English is acceptable. Philippine workers are roughly the same price as Indian workers but speak great English and are great at data entry type tasks. China also has a huge presence on Odesk but we haven’t worked with any yet. You’ll also see workers pop up from countries all over the world but those three are the most dominant.

Individual vs Agency – You’ll notice a lot of freelancers work through an agency rather than on their own for whatever reasons. We’ve had experience with both with good results. At the end of the day though, just be sure you are in direct contact with whomever is doing the work, not a middle man. Being able to skype, email, chat directly with your worker only makes the entire process smooth.

Training – Outsourcing is just like hiring for an in-house job. The person may know a particular skill-set but you will still have to train them to get them up to speed. The ability to speak English is very important here as you want to be able to communicate clearly with your contractor. Some people sometimes go the extra mile by screen recording themselves performing a particular task so the contractor can learn. Others write up pages upon pages of documentation. Do whatever is easiest for you. Unfortunately or fortunately (depends on you look at it), outsourcers usually follow instructions to the tee without thinking for themselves or in your best interest.

Management – A contractor is your employee so treat it like one. Managing styles all vary and we’re slightly hands-off at times. We feel if a worker is good at what they do and can be creative naturally then its best to let them be in their element and work. Obviously our door is always open for feedback. Just like Americans, outsourcers have their own unique holidays, personal matters, etc to attend to. Be slow to hire but quick to fire if things aren’t going the direction you want.

Expectations - Outsourcing is not as easy as posting an ad and hiring the first guy with awesome results. It takes days, weeks, and months to find the right talented workers. Sometimes one posting isn’t enough so you have to refine, repost, and repeat. When you actually engage in a contract, expect a bumpy ride and lots of headaches. Nothing will ever go smoothly honestly but if you are able to provide thorough instructions and set clear milestones, the journey will be less bumpy. You will save money in the long run versus hiring someone in-house but it’s not as cheap as you think. Outsourcing a website or app will still be in the thousands. Lastly, don’t expect amazing quality. You get what you pay for but that’s not entirely true. There are some hidden gems. You just have to find them and hold on to them tight.

Costs – We’ve seen hourly rates as low as $1 an hour to as high as $50+ an hour. Typically for a lot of the simple tasks like data entry, you can find talented workers for ~$3-4 an hour. When it comes to more complicated things like development, it’s easy to pay $15-$30 an hour. As you can see it’s not that cheap but still cheaper than hiring someone stateside. Usually you’ll have the option of paying someone hourly or paying a flat fee. Ultimately that is up to you but we’ve had good results setting a flat price for bigger projects in the thousands of dollars so the worker wouldn’t stretch the hours.

Lessons learned – Outsourcing can be very fun and rewarding when you have the right staff in your team. As mentioned, it’s not easy finding awesome workers but once you do, make sure you treat them well and keep them busy. We’ve had our fair share of headaches from deadlines not being met, to being scammed, to poor quality work done but it’s all in the game of continuously learning and improving. If there’s one tip we leave you with, its to make sure your worker speaks damn good English or else things can be lost in translation very fast.

We hope these tips helped you think outside the box a little. Start applying this to your business or day job and maybe you too can outsource your job to china while making six figures and watch cat videos all day.



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