Entrepreneurs and small business are always looking for creative ways to accomplish more of their business goals for less money. One strategy that can help you save time, money and frustration when you start and build your business is to outsource as much work as possible to skilled, but cost-effective, external service providers.
Outsourcing success depends on how well you manage the process before and after the outsourcing contract is signed. Hope the following outsourcing tips will help you to achieve the results you desire.
Clearly define the scope and schedule for your project
Define your project requirements up front. Give vendors as much information as you can about what you need to be delivered and the way in which you need the work done. Also, be clear and realistic about your schedule requirements – project schedules can have a huge impact on project costs.
Evaluate a service provider like you’d hire a full-time employee
When you’re evaluating proposals from service providers, don’t be afraid to ask questions.
Look for specific experience fit
Ideally, the service provider you select should have specific experience with the type of project that you’re undertaking.
Don’t choose a vendor based solely on price
Never select a vendor based solely on price. Experienced buyers who have outsourced many projects and evaluated hundreds of proposals almost always recommend discarding the highest-priced and lowest-priced bid.
Review portfolios and samples
Examine the vendor’s previous work and make sure that their previous work meets your expectations for quality and style.
When engaging with a service provider for the first time, start with a project that is relatively small and simple in scope. This will give you a better idea of the provider’s style and capabilities before you entrust a “mission critical” project to them.
Tie payment to clearly defined project milestones
Just as you should be clear about project scope, make sure that you define a work plan for your outsourced project with clearly defined milestones. A good guideline for IT and software development projects is to pay no more than 20% to 30% of the total project price up front, with the rest of the payments based on the completion of 3 or 4 milestones.
Negotiate ownership of work before
For any type of outsourced project, make sure that you are clear about who owns the resulting work product and any important components of that product. Make sure the service provider understands how you intend to use the deliverables that they provide.
Don’t forget about support after the project is complete
For technology projects, it’s a good idea to specify a warranty or support clause so that you are assured of some amount of continuing support from the vendor after the project is complete. It’s much easier to negotiate a support clause before the service provider begins work, rather than after the completion of the project.
Get it in writing
Make sure that you clearly communicate any schedule, scope or payment changes to your service provider and get confirmation from them – in writing – that they understand and agree to the changes. Similarly, keep a record of any agreement changes requested by the service provider and whether you accept or reject those modifications. Save copies of any email exchanges that you have.
Before you ramp up your outsourcing services, learn these outsourcing ABCs from Kevin Gregson, chief executive officer of Sherwood Solutions, a business advisory firm.
Alignment: Is outsourcing the right move for your business? Business case: Have you taken all costs into consideration? Culture: Can you bridge the cultural difference between your company and the outsourcer? Delivery: How will you define success?
It might take a bit of time to get right, but the benefits of outsourcing can be enormous.
Nice Blog! I liked your idea of “Start small”. Next time I will follow it.
Wonderful, This surely helps small business who are thinking of outsourcing some of their task. I like everything you said very informative and true.
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