Businesses are always looking to improve their efficiency and save on costs. More and more, growing businesses are outsourcing their non-core functions as a cost-effective strategy. Outsourcing is a solution for a wide variety of tasks that a company doesn’t want to handle itself.
When considering what to outsource, conduct an analysis of your company’s core competencies. Ask yourself, “What non-critical tasks could be better handled by outside expertise?” Also, consider if there is any money you could save and determine if outsourcing is a worthwhile practice for your company.
What Can I Outsource?
You can outsource on either a per-project or ongoing basis. Outsourcing on a per-project basis could be relevant if your business is:
- Developing a website
- Translating a document
- Requiring consulting services
- Planning for an event
Alternatively, companies can also outsource service providers for ongoing needs such as blogging, social media marketing, or bookkeeping.
How do I Outsource?
Once you have made the decision to outsource, there are 10 issues you should consider when outsourcing an independent contractor.
Find the right professional. The first step to successfully outsourcing a project or a task is to find the right professional. Understand the skills, experience, and attitude needed to accomplish the task. Then, match the needs required to complete the task with a potential candidate’s skills. You can determine a candidate’s skills by conducting an interview and evaluating their resume.
Location is a very important factor to consider when outsourcing. Think about whether you want to work with a local or more distant freelancer. Although freelancer costs could be lower in other countries, there are many benefits to selecting local professionals.
For example, local service providers can easily be held accountable to the terms of a contract. Also, local providers can sometimes allow for more collaboration and be more readily available for meetings, due to being in your timezone.
Explore recruiting venues. There are many that you can find professionals for your project. You can list your job on an online job board, in the classifieds, or enlist the services of a staffing agency. Newer alternatives include sites such as Workhoppers that find you the right professionals on-demand (as a staffing agency would), but offers the ease and cost effectiveness of a job board.
Create your Service Contract. Once you have found the right person to work with, you must establish the terms of your business relationship. The contract should include provisions for all stages of work. Furthermore, the contract should clearly indicate the independent status and non-exclusivity of the relationship.
Length of the project. Discuss and agree upon the length of the project. If possible, it is important to set an exact deadline. Decide whether you will penalize the freelancer for delays and if you can end the contract (if the terms are not met).
Consider a cancellation clause. Even with the best of intentions, sometimes professional relationships just don’t work out. Decide what happens if one or both sides would like to get out of the contract.
Discuss how payments will be made. There are many options in regards to payment when it comes to your service provider. If you use a recruiter they may require a full payment held in escrow. A recruiter will take a percentage of the project cost or commission which can be quite costly.
If you find your own contractor you can negotiate directly and decide together what works for you both. Some possibilities would be to pay a small upfront fee, 50% midway, or paying the amount due in full upon completion of the contract.
Clarify intellectual property. Both parties should agree on who will own and who will be able to use the work product at the end of the project. Be sure to have an intellectual property agreement in place. The agreement should also take into account anything that was improved or modified during the relationship (such as content). Be sure to also include agreements on confidentiality and non-disclosure for all parties involved.
Discuss privacy and security measures. If your service provider will have access to sensitive information consider the steps to ensure privacy. For example, if a provider will have access to your software or your customer information, consider the provisions that can ensure privacy.
Create an action plan. Clearly defined responsibilities and end products are essential to completing a successful project. It is important to have measurable goals and benchmarks. The earlier you do it in the process, the more likely you are to avoid miscommunication with your freelancer.
Choosing to Outsource
Outsourcing is an effective way for companies to concentrate on their core business functions while still ensuring that less important tasks get done. It can be a cost saving solution that increases your company’s performance. As long as outsourcing is conducted properly and begins with a well-drafted service agreement, it can benefit a company and stimulate growth.
Linda Singer is the co-founder of Workhoppers.com, a website where talented people find flexible work and companies get matched with local help on-demand. She writes frequently on topics related to the contingent workforce.