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Tuesday, July 18, 2023

Outsourcing Mistakes You Don't Want Your Business To Make

Outsourcing is an extremely common tactic used by a wide range of businesses, whether it’s relying on a service provider on a regular basis or paying individual contractors to provide labor, it’s a great way to help your business grow without having to pay all of the costs that come with hiring an employee. However, that does not mean that it’s a perfect solution, nor that it’s one that can be done without the appropriate level of forethought.

Outsourcing, when not done right, can result in more money spent than necessary, work not done right, and can lead to stagnation of the business. Here, we’re going to look at how you can ensure this doesn’t happen to you.

Image by Ziaur Chowdhury from Pixabay

Not being specific and measurable with your needs

The single best way to ensure that you’re not disappointed with the results of any outsourcing agreement is to be able to set appropriate objectives and expectations for the parties that you outsource to. You have to understand what it is that you want them to do and be able to put in clear and measurable terms so that you have a good idea of what a successful job looks like. Otherwise, it’s too easy for contractors and those who hire them to have different expectations.

Neglecting your contracts

Because contractors and outsourced providers are an independent body, outside of your business, disputes can boil up. Some of them can be fixed by following the tips here, but otherwise, the best way to prevent disagreements from getting in the way of your work, or to prevent yourself from being taken advantage of, is to ensure that you have contracts for each and every contractor that you work with. The contracts should lay out the scope of the work, expected outcomes, timeframe, as well as details on payment. That way, many disputes can be solved by simply working out: who was in breach of the contract?

Not knowing how to manage contractors

Working with contractors is not like working with employees. Rather than managing a person, you’re really managing their work orders and, when you work multiple times with multiple contractors, these work orders can build up. Tools like field service management software are designed specifically to be able to track and manage the workflow of those independent workers who come from outside the business. Put the time necessary into communicating with and tracking the work of those you bring in from outside the business.

Failing to integrate contractors into the organization

It’s not just the contractors or outsourced labor providers that you have to keep in the loop. You have to make sure that your team if you have one, is kept in the loop too. If you’re expecting them to work with outside contractors, then you have to give them an idea of how, exactly, that’s going to happen and what you expect them to do together. Otherwise, there’s going to be friction as two professionals, who don’t understand the context of their work together, try to figure it out themselves.

Losing track of pay

Of course, while ensuring that your contractors and outsourced service providers meet your expectations is vital to success, so too is meeting their expectations for payment. Pay disputes can arise over disagreements over the work provided, and that’s to be expected. Sometimes, it’s better to eat the cost and work with what you have, sometimes it’s better to stand and fight it. However, you should ensure that you use invoicing systems and whatever other tools you need to make sure that the payment expected for work completed goes out when and as agreed to in the contract. That’s one of the leading causes of disputes with contractors and it can be a major financial and legal headache.

Not knowing when it’s better to hire

Outsourcing is often a very effective option to help you access skills and labor that you don’t have at a fraction of the cost it would take to hire it internally into the team. However, if you find yourself outsourcing the same tasks again and again, at some point, it’s simply going to be more cost-effective to work with a recruitment agency to get that labor integrated into the team properly. Tracking the long-term costs of different tasks you outsource can make it easier to spot this point of diminishing return.

When you outsource, it has to be done with intention, with a keen eye for detail, and with an understanding of how that outsourced labor should function within your business as a whole. Hopefully, the tips above make it a little easier to work out how to do that.

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