4 Steps To Outsourcing: A Mini-Guide

It’s accepted among most experienced business leaders that to some degree, you must outsource or pay for vital functions your firm needs to operate. This isn’t necessarily related to how large or capable your firm is, for example, if you’re looking to hire a new executive, then using a professional headhunter to secure the best talent would be prudent.

That being said, outsourcing in itself can fulfil various purposes and help you sustain your brand more readily, but it’s not a magic fix-all solution. It’s entirely possible to outsource your business to services that you don’t really need, those that charge too much, or perhaps don’t scale as well with you as you had assumed.

For this reason, we intend to provide you with a guide to beginning outsourcing, helping you determine a good deal from a waste of time while helping you prevent mistakes:

Managing Scaleability

When you’re looking at outsourcing, you need to think about the future as much as the present. Right now, that IT support package might seem perfect for your current team of 10, but what happens when you grow to 50? Or 100? You don’t want to be stuck renegotiating contracts every few months and struggling to understand if your systems can handle the volume.

As such, you should look for providers that offer flexible packages or can easily scale their services as you grow. Perhaps they have tiered pricing based on usage, or perhaps they can add on additional services as you need them. If you find a partner who can grow with you, not one you’ll outgrow in a year, then you can rest easy knowing the fundamental processes you build your business on are reliable.

But of course, scaling down is just as important to get right as scaling up. What if you need to scale down temporarily? Can your outsourcing partner accommodate that without penalizing you because you might need to downgrade your package? Having that room to maneuver can make the costs associated with a bad year less difficult to manage.

Modular Pricing

Modularity is tied into our last point but still worth going over. A service that can allow you to pick and choose certain necessities can be helpful, like a fulfillment centre that will store your goods but may not process them for international delivery, giving you a discount for that or at least not charging you extra for a service you don’t use. Reliable services such as 3PL are worth looking into.

To use another example, if you’re outsourcing your marketing, you might not need social media management right now, but you do need help with content creation. A good outsourcing partner will let you pick and choose the services you need and then add them on as you grow. They know that if you’re supported to perfection with those minor services, you’re more likely to require an expansion in the future. Don’t outsource to companies that make you feel that business flexibility is some terrible provision to expect.

Contract Types

Outside of “being legal,” an outsourced contract can differ depending on what you need and what your expectations are. It’s true contracts can be pretty diverse in outsourcing. You may be familiar with fixed-price contracts, time and materials contracts, retainer agreements and more, but these are hardly exhaustive. Each has its pros and cons, and the right choice depends on your specific needs.

Fixed-price contracts can be great if you have a well-defined project with clear deliverables, for example, such as hiring writers to create content for you and paying per word count on a consistent basis. That provides you with cost certainty, which is always nice, but they can be inflexible if your needs change too. For some, consultation fees of legal services are worth paying even if that means they don’t retain a legal service year-round. Be mindful of your contracts and realise that while outsourcing is meant to be flexible, anything you sign must be taken seriously.

Competition & Negotiations

Most outsourcing providers expect you to negotiate just a little. It’s not rude, especially if you’re planning to book them on for a while. It’s bad form to do this with freelancers of course, especially individuals who have fixed prices. However, if you want to retain them or keep using them for projects, it’s prudent on their part to sustain your custom by offering a good deal.

You can always start by getting quotes from multiple providers. This provides you a helpful sense of the market rate but also gives you leverage in negotiations. If Provider A knows you’re also talking to Providers B and C, they’re more likely to sharpen their pencil on pricing, as it were. If you’re a good, trusty client, then of course they’ll be lucky to have you.

This is a contributed post.