The Top 10 Outsourcing Problems and How to Avoid Them

In today’s business environment, you absolutely must outsource to stay competitive. No, I’m not talking about outsourcing your core competencies. But I am talking about outsourcing those business functions and activities that someone else can do faster, cheaper and/or more easily than you.

Unfortunately, when they start outsourcing, most entrepreneurs and small business owners make several mistakes. In this essay, I’m going to outline the 10 most common mistakes made when outsourcing work or projects to freelancers or other service providers not on your internal team [note that I use the term “freelancers” below to describe folks to whom you outsource].

Feel free to print this out as a quick checklist to run through when setting up your next outsourcing project. For each of these, think of how you will address or avoid these mistakes in advance to ensure smooth sailing.

Mistake #1: Define the task/project clearly

This is something I would do before even posting the project [i.e., to find the outsourced candidate]. Because you need to really understand the project in order to write an accurate job description. The process of defining the task/project clearly will also help you to estimate the costs, time frame, and skills needed from the person you hire.

One way to do this is to write down a very clear and descriptive explanation of the task. Another way is to record yourself speaking the description. Finally, another great way is to take a screen recording of yourself doing the work you wish to outsource (or taking a video of you doing the work if it’s not computer based). Try using a free screen recording program like Jing to make a quick video.

Mistake #2: Not having a well-planned estimate of costs

The more clearly you can define exactly what you need done by breaking it into parts, the better you can estimate how much time it will take – and therefore how much it will cost at the person’s typical hourly rate. You don’t want to just hand a bunch of work to someone and then get surprised when you get their bill and/or incorrectly assume they took too long to complete a project.

If the project you need completed is something that requires specialized knowledge, describe the project to potential freelancers and get their opinion on what is really involved and how long it should take. If there’s no typical hourly rate for the work they’re doing, then just get a solid estimate of the total project cost and consider it to see if it makes sense compared to the revenue it should generate (or costs it should save).

Mistake #3: Know your timeframe for starting and finishing the work

If you’ve ever provided services for a client in a rush, you know how stressful it can be to drop everything at the last minute and make their emergency yours. The people you outsource to are no different, and it will benefit you to plan and begin things in advance and not at the last minute.

So for whatever work it is you want to do, figure out how long it will take and when it absolutely has to be completed. You’ll come out with a rough idea of when the work needs to commence. Then, give yourself a week or two before that to post projects, screen candidates, and choose the right person…maybe more.

Mistake #4: Hiring someone without enough experience

Nothing is worse than the blind leading the blind. When I hire someone to do something that I do not know how to do personally, they need to know how to do it – period. They need to educate you on their chosen skill set, not the other way around.

Your role is to describe the end result you want, ask for and listen to their suggestions, and rely on their expertise and talent to achieve it according to your description.

Mistake #5: Not screening or testing enough freelancers

In choosing the right candidate, I would rather have more options to choose from than fewer. If you run a project only on Elance, for example, you are only going to get a few providers from Elance bidding on your project. This might be enough, but suppose you posted this same project (copy and paste) on Guru and ODesk as well? [Elance, Guru and ODesk are 3 of my recommended websites for finding freelancers and outsourced help]

I would rather have 30 applicants and choose from among the top three than to have 10 applicants and choose from among the top one.

Also, your goal is to build a list of qualified people to contact whenever you need them for projects or ongoing work. So even if you post a project and only hire one person, keep tabs of the runner-ups so to contact or test later on for future projects.

Mistake #6: Choosing someone with no room to grow

If you are outsourcing a project (e.g., graphic design) that you know you’ll need again in the future, you want to have one eye on the present project and your future needs. Think about what similar services you’ll need in the future and to what extent?

Or, if you have a freelancer build something that, once done, needs maintenance, then be sure to ask them about their work hours and schedule. Find out if they have enough time left for your needs in addition to their other clients. It’s terrible to go back to a great freelancer later on who is apologetic but too busy to help you.

Mistake #7: Outsourcing your weakness

If your business is weak in a certain area, it may also be weak at managing someone performing the work outside of your company, too. Think about it… every worthwhile endeavor requires some basic knowledge and strategy, as well as some understanding of how to perform the work and measure the results.

At least get this working knowledge upfront so that you can be effective at managing your freelancers. It doesn’t matter if someone else is doing the work or not, if you don’t start the project with a clear outcome and strategy, and continue to stay on top of it (not washing your hands and hiding somewhere) it will fail regardless of the skills and intelligence of your outsourcers.

Mistake #8: Lack of communication

You heard of management by walking around… well, this here is called seagull management. A seagull manager will be gone for days on end and suddenly come sailing in with the wind, squawking and dropping tons of work on everybody, and then flying away never to be seen again for days or weeks on end.

What seagull managers don’t realize is that you have to constantly be there for your team. This doesn’t mean it needs to take a lot of time, but they would appreciate fast responses just as you like them from others.

Again, just because someone else is performing the work does not mean you can abdicate your responsibility to support and manage them to achieve the result.

Mistake #9: Insufficient feedback

If you plan on using your freelancer for more than just a few quick tasks, then you will want to invest in your relationship with them from the beginning. Your job as a manager is to coach them and help them to do things exactly as you want over time.

You should expect them to make mistakes and encourage them to fail quickly so you can give feedback and show how to do it the right way. Don’t be a perfectionist, and don’t make them afraid or hesitant to admit challenges or mistakes and then blame them later.

Many managers just assume that the people who are working for them can read their minds and know all the little details without being told. This is not true, even when the person is highly intelligent. It’s your job to communicate clearly and often.

Mistake #10: Underutilizing hired talent

This probably keeps most entrepreneurs and small business owners from outsourcing in the first place. As entrepreneurs, I have to admit that we can have some pretty big egos. While this helps in the vision and confidence departments, it can also lead to the “no one can do it as well as I can” syndrome.

Maybe not, but I would still rather have 10 people who are 80% as good as me doing 90% of the work. Think about it! Besides, with proper coaching and support, you can make a good person great-as long as they are coachable and motivated to grow.

And even when you are outsourcing work to someone, don’t miss opportunities to give them even more work once they have proven themselves with some smaller task. I like to list all the work required on a consistent basis and check the sub-items off as I outsource them, one at a time.

Implement these suggestions and your outsourcing experience will be a lot more effective and hassle-free!

Suggested Resource: If you don’t outsource, you can’t compete. The math is simple…if your competitors are outsourcing and only pay $X to complete a task, and you pay $3X, $5X or $10X, your competitors will eat your lunch. You simply must outsource to stay competitive. Outsource the right way using Growthink’s Outsourcing Formula. Learn more by clicking here.