To Outsource Or Not to Outsource?
If you’ve been following the financial situation of the United States lately, then you are well aware of the high rise of outsourcing going on. Countries such as India, China, and Europe are playing a crucial role in providing well-qualified workers for companies right here in America – heck, around the world!
Want to hear something shocking? Here in the United States we are producing roughly 60,000 engineers a year and overseas – most notably, India – close to 800,000 engineers are being produced per year. So what’s happening?
Well, top companies that heavily rely on the services of engineers, who hire around 1000 – 2000 of them per year are now aggressively increasing their outsourcing campaigns to find the talent that they need.
As a young entrepreneur running a startup for the past 3.5 years, I, too, have went the outsourcing route multiple times and still do from time to time. Let’s face it, when you are looking for quality programmers and top designers here in the states, your only bet is to go after that small niche of designers who have built names for themselves. And in order to attract those diamonds in the rough, you better have the dollars to pay them.
They are the type of engineers, programmers, and designers who always say: “I can afford not to take on your job.” You know, the type who have built large followings around their work and have tons of people sending them request for proposals all night and day.
Sure, when you have the money I’d say hunt these individuals down and try to get them a part of your project, but the harsh reality is that most of us young entrepreneurs don’t have buckets of cash and we rely on bootstrapping to get things done.
So this brings us back to the premise of the article – Outsourcing. Outsourcing can be a lifesaver of a killer for entrepreneurs depending on your experiences with the people you are working with.
My first Internet project that I started 3 years ago was 100% outsourced and it was one of the worst experiences of my entire life. So many factors threw the project awry: language barriers, time difference, and an overall misunderstanding of what needed to be done. It was absolutely horrible and I told myself “never again.”
But now, years later, I have given another look at outsourcing as a viable way to get what you need done without spending a ton. As these niche and tight groups of designers/programmers/engineers continue to work together and simultaneously raise their prices, us young entrepreneurs are forced to seek talent elsewhere.
If you do your research, put in the time, and really spend the hours looking for the right person/company to outsource work to, then you’d be surprised to see how much talent you can find outside of your own country. Sure, it won’t be easy but it’s doable.
There are always people out there who are talented and hungry for work; people who charge reasonable prices and are more than capable of communicating with you on a level that both parties can understand.
The bootstrapping entrepreneur cannot ignore the benefits of outsourcing – even if you had a horrible experience such as myself. Outsourcing can be the difference between moving forward with your dreams or become stagnant and/or caught in a bind of paying tons of cash unnecessarily.
It most cases, the saying is true: “you get what you pay for.” So if you aren’t fully confident that the person you are outsourcing to is competent and right for the job, then forget about it. Move on. Keep on searching. But if you have the dollars, then pay up and go with the people who you (and the rest of the world) already know are talented. Only you can decide.
Have any outsourcing experiences to share? Any situations that worked out? Any advice for young entrepreneurs thinking about outsourcing?
13 Comments
Luc Arnold
February 15th, 2007 at 1:33 pm
Hello David,
Excellent posting. Truth be told i’ve been i’ve been on the giving and recieving end of this issue.
While the saying “You get what you pay for” has a good amount of truth to it you need to ask yourself what matters most… Communication, Speed, Time Zone Issues, etc. Those are some factors that lead to people seeking the services of a local person to outsource to instead of someone in india.
Again awesome posting! Talk soon David,
Luc
David Askaripour
February 15th, 2007 at 2:04 pm
Hey Luc,
Thanks. Yeah, outsourcing is a tricky matter — it can also be a messy one..hehe… I guess it all boils down to priorities like you said. Things like speed and delivery are essential components when considering to outsource. But “communication” may be the most important in many cases.
Talk to you soon, buddy
Aaron
February 15th, 2007 at 2:21 pm
China Law Blog
February 15th, 2007 at 2:27 pm
The 800,000 engineers in India is the same as the 600,000 engineers in China statistic: invalid. In reality, there are only around 15,000 engineers in all of China with sufficient skills to work for an MNC and I am guessing the figures for China are similar.
Where people get into trouble when outsourcing is in not realizing the total costs. Sure, the guy you are hiring in China costs $100 a month, but if you are going to hire him legally, you need to pay all sorts of taxes on that. And if you are going to have a trade secret/IP protection contract that is worth anything at all, you are going to need to have it done by a attorney fluent in both English and Chinese. . . . .
David Askaripour
February 15th, 2007 at 2:30 pm
Hey Aaron,
Yeah, I’ve used RAC in the past. Overall, it’s been good but I have ran into some serious issues with the people on their at times. I once had a dude bail on me as well. The best bet when using RAC is to go with someone with an extremely high rating and has “never” had a issue with other clients.
You said it perfectly: “You’ll save money but most likely not time.” That is so, so, true!
David Askaripour
February 15th, 2007 at 2:34 pm
“The 800,000 engineers in India is the same as the 600,000 engineers in China statistic: invalid.” Hmm.. maybe I wasn’t clear. I was really referring to “India” in that statistic and my source is MSNBC financial channel. As for China, I am not certain. Thanks for the correction. Wow, I had no idea about what it takes to hire someone from China, thanks for that insight. I’ll remember that. I guess it doesn’t even compare to hiring someone from India, eh? (legally speaking)
Luc Arnold
February 15th, 2007 at 4:16 pm
Hello David,
Outsourcing is a tricky thing because most people are not accountable for their actions when left to freelance. The main purpose behind WebmasterFarms.com outside of helping people learn more about their websites and the latest advancements behind web technologies is to eventually act as a support company for online business systems looking to outsource certain tasks to cut costs to headcount, overhead fees, benefits, etc.
I’ve found that excellent communication is a rare thing and i suspect that it is something of high value to people. As long as freelancers talk to their customers speed is less of an issue, unless of course you are working with someone that wants things done yesterday. Avoid those people like the plague because they aren’t worth the time of energy it will take to manage their needs.
Just what i’ve learned so far. Cheers David,
Lucas
Lee Semel
February 16th, 2007 at 9:25 pm
Hi David,
I wrote about this subject on my blog a couple of days ago.
http://www.borrowmybrain.com/2007/02/14/startups-outsourcing/#comments
Lee
Brian B.
February 18th, 2007 at 5:05 pm
Hi David,
Great post. What you say is true. Being a startup providing the web design/development etc.. services to customers in the U.S. I have outsourced & offshored multiple times to handle the increase in clients and business I was getting.
I really have not had a bad experience since I spend a good amount of time to look for a mix between quality and cost. I try hard to make sure that I can establish a relationship so I can work with them in the future.
The best advice I can give is to take your time and do the research when doing outsourcing. Look for reviews on multiple freelance/ outsource sites for the same Freelancer. Review their portfolio to see if they have a)experience in your industry or similar b)meet your quality expectations.
Be extra careful about those trying to offer website optimization services. If they guarantee you #1 spot for all of your keywords, that is a big sign they are full of it. Unless your target is not a heavily diluted market or the words are very specific it is hard to make a hard guarantee on keywords instead of results.
The extra time you spend up front may save you extra time, money and stress down the line. Being a startup, time is a great asset to use. Thanks.
Brian
Luc Arnold
February 20th, 2007 at 10:43 am
Good point Brian about optimization,
The problem is that most small businesses really need to learn this themselves because to employ someone into a project means that there needs to be trust on both sides of the relationship. Also the best SEO gigs turn into rev. share opportunities which most small guys cannot afford.
Basically what i am saying is that unless you are willing to pay and build a solid relationship do the SEO yourself… you’ll see the best results over the long run.
Luc
David Askaripour
February 20th, 2007 at 11:27 am
Luc, you make a great point and I look forward to checking out your new service. Thanks for the insight.
Lee, thanks for augmenting this article with some great content, much appreciated.
Brian, I totally agree. It’s not worth skimping on the research time when seeking a quality freelances. It may feel like a waste of time, but when you are saving money in the long run it doesn’t seem so trite. Well said.
Ahh… SEO… yeah don’t get me started. Those companies make me sick — “top of google listing in a week!” Yeah… right…! hah
Luc Arnold
February 20th, 2007 at 12:44 pm
Thanks David,
No worries… i think the service i am building over time will become more and more needed to handle admin aspects of web business. Don’t want to plug too much on here
SEO is one of those things best left to the person running a site because its marketing and i think that any good business owner should always have control over their marketing to be truly successful.
Just my thoughts on that,
Luc
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