5 Tips to Ensure you Authentically Evaluate the Merits of Outsourcing Despite Strong Reservations – Part 4

December 20, 2017 | Shaunvir Singh
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In the past three blog posts, I have touched on how clients who have a very strong opinion that outsourcing “will not work for them” should approach the process. If, by now, you are convinced to at least be open to examining the merits of outsourcing, the exercise will still only be valuable if undertaken judiciously.

Unlike clients who, from the outset, have a more neutral opinion on what outsourcing may or may not be able to do for their business, clients that have strong reservations are (as one might expect) more likely to not authentically examine this business practice even if they have come around to considering it. Hence, in this blog post I share with you 5 tips to keep in mind while objectively evaluating the case for outsourcing overseas:

1. Remember, hiccups happen in all business activities

Outsourcing is a more efficient and seamless process than undertaking work in -house. Just take, for instance, hiring an employee locally vs. hiring a Virtual Employee. Locally, recruitment alone can take several weeks, if not months. By contrast, when outsourcing, you are looking at a timeline of days/ weeks. In short, outsourcing will save you time and effort.

However, that does not mean the process will be entirely 100% seamless. Sometimes small hiccups can and do still happen. Some clients will a) discard how much time/effort outsourcing has saved them in the first place and then, b) take the 1 event out of 100 that has not been executed entirely smoothly and again disregard the 99 that went smoothly.

You are outsourcing half way around the world. It is not going to be 100% seamless. Heck, hiccups in business happen even when you are collaborating with a business in the same town as you or even your own internal team are. That is just the nature of business!

But I have seen some clients not appreciating this fact when it comes to outsourcing. It is as though they expect the entire process to work like clock-work and at the smallest sign of any hiccup they quickly point fingers and lambast, “See, I told you it wouldn’t work, and see here is the proof!” This, however, is not the entire story. The reality is that hiccups just happen in any form of business engagement – business can never been 100% smooth, whether your own or when collaborating with other enterprises.

Hence, if you come across a bump in the road, using that as a justification that outsourcing does not work is definitely not an objective assessment. The irony is that any good outsourcing vendor will be fully aware of this mind-set and so over-compensate, i.e. take their level of service to an even higher standard than you might expect locally, so as to ensure a client has “no excuses”. One of our mottos is a very simple one – “you only get one shot” – if anything goes even slightly wrong we know that a lot of clients will take that as a sign that outsourcing doesn’t work, rather than just an everyday part and parcel of the reality of two businesses collaborating together.

An example of this is with regard to candidate interviews. Due to time zone differences, clients will often come back to us at our local times of 11pm-4am confirming that they want to interview a certain candidate the next day. Unfortunately, we cannot get a hold of candidates during these hours and this can result in ping-ponging back and forth regarding scheduling of the meeting This makes some clients “nervous” – which I find surprising; you are dealing with two very different time zones and a back-and-forth exchange can happen when you are scheduling interviews for the next day; it doesn’t mean that the service you are receiving is in any way compromised. It just involves moving round an unavoidable geographical fact.

2. Don’t conclude from just one assessment

A lot of clients will back out of the outsourcing process if they do not like the first candidate or batch of candidates that they interview. For them, that is sufficient to validate that outsourcing is not going to work for them.

This is a rather unfair benchmark to set, because it is the equivalent of interviewing a candidate locally (or a batch of candidates locally), not liking them and concluding that there is no talent in your local area for the position you are trying to close. When hiring a Virtual Employee overseas, you cannot expect the first candidate, or even set of candidates, you interview to be a gauge for the entire talent pool based in that country!

Over the years, on numerous occasions, I have seen clients totally unimpressed with the first candidate(s) that they have interacted with, but who then find themselves “over the moon” with the second batch of individuals they interviewed.

The same goes for trials too. There have been occasions where clients have not been satisfied with the first employee we have given them for the trial, but who have benn thrilled with their replacement.

The takeaway is – don’t form an opinion too quickly about technical ability and talent. Of course, there is going to be a discrepancy from person to person – and this is true throughout the world. If you want to objectively assess talent levels overseas, make sure your sample batch size is not limited.

3. Cost Saving

The amount of cost saving a company gains from outsourcing overseas is perhaps the most extreme way in which clients are prejudiced in their assessment of outsourcing. There are three key ways in which clients make unfair comparisons when it comes to calculating the cost saving from offshoring.

Can Hire Locally For That Much

We frequently have clients tell us that for “$1800 they can hire locally” – and this, frankly, is ridiculous. You can, at a push, hire a non-skilled worker for $1800 locally. But you cannot hire a senior software developer for $1800 per month.

Some clients will even audaciously claim that they can hire software developers locally for $1800! This, again, is an unfair comparison – you might, at a push, be able to hire a college graduate for $1800 per month and train them locally. But you cannot hire a software developer with 5 years of experience for $1800 a month.

You only have to take a look at recruitment sites such as Monster to substantiate my above claims.

Comparing Monthly Rates to Agency Rates

Other clients will compare the cost of hiring a full time remote employee with us, i.e. approximately 172 hours of service per month to that of the cost of outsourcing to a local agency. This is particularly true in fields such as Digital Marketing. Some clients will state that for “$1500 I can outsource to a local digital marketing agency.”

Yes, this is true. However, this is once again an undeserving comparison, because you won’t get 172 hours of service for $1500 per month with a local agency. In fact, local digital marketing outsourcing firms often do not even disclose the number of hours they spend on your account. What is certain is that it is significantly less than 172 hours.

Comparing Total Cost to Salary Cost

The most frequent form of biased cost saving analysis is with regards to comparing the total cost of an offshore vendor’s service to that of just the salary of a local employee.

What clients fail to do is to factor into the equation the additional/ hidden costs of hiring an employee locally. Secondly, clients also fail to appreciate that the quote an offshore vendor gives them is an all-inclusive cost, often interpreting this as just the ‘salary’ cost of hiring a remote employee.

When hiring an employee locally, if you were to factor in all the additional costs, such as recruitment, HR, accounts, IT, infrastructure, office space, overheads hardware, payroll, tax, employee benefits and so on the cost would increase substantially.

If clients want to fairly assess the merits of outsourcing then clients should actually compare the total cost of hiring locally vs the total cost of hiring offshore.

4. Don’t ignore benefits

Outsourcing sceptics focus primarily on what they perceive to be the disadvantages of outsourcing and relegate the advantages of outsourcing to solely “a potential cost saving”.

This is an unfair assessment because the advantages of outsourcing are numerous and extend far beyond that of mere cost saving. Just some of the advantages of outsourcing include immense scalability, quick time to market, no recruitment hassles, no employee liability or government tax burden, lower risk (no capital investments), increased experimentation and innovation, availability (24 hours of service), no support staff burden (HR, IT, accounts), no set up time and no infrastructure management and maintenance, and so on.

To authentically judge the case for outsourcing, you must also take into consideration all the advantages of outsourcing. For instance, outsourcing sceptics may not appreciate a huge advantage such as being able to work with an employee for years and then scale down within two weeks.

5. Break-in period

If you are an outsourcing sceptic, but somehow do end up actually partnering with an outsourcing vendor, ensure you factor in a ‘break-in period’. Don’t expect everything to instantly work on day 1. You have to give a little lee-way for a break-in period. Not only are you working with a new employee and a remote one at that, but there is also the additional dimension of there being a third party vendor involved in the process.

So, in case there are any initial teething problems, take them at face value without overly reading into them and again jumping to the conclusion that “this is not going to work.” You need to give a few days for the process to settle down before you can accurately judge if things are working or not.

Again, it is the same as hiring a new employee locally or even setting up a new department or office locally. It can take time for everything to get into the groove and this same consideration should be afforded when outsourcing overseas.

Conclusion

There are numerous ways in which clients unfairly assess the merits of outsourcing. In this blog post, I have simply touched upon 5 of the most common ones. But there is an underlying principle amongst all of the points that I have shared above which you can take away and apply to all your assessments to ensure you are objectively evaluating the case for outsourcing.

That principle is to simply ask yourself “Would I do this locally?” For instance, would you give a new local employee a few days to find their feet in your organization? If you have answered ‘yes’, then do the same for an offshore employee as well.

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