Tweet

How to Get the Best from Outsourcing

Written by: Martin Haworth

Article Overview: To maximise profits, it has become fashionable to place some of your support requirements with 'experts', to allow you to focus on core activities. Especially for small businesses this can work well, but with larger organisations, unless you get it just right, it can be a lot more trouble than it's worth - and cost you a lot more.

How to Get the Best from Outsourcing

There's a great little article ('Business Lifeforms') on the back pages of the UK's leading management magazine, Management Today each month. It's a spoof (at least I think it is!) about some fictitious key player in a fictitious organisation. For January, it's about Ken, who's a 'Facilities Manager'.

Now Ken has seen it all and truly worked his way up from the bottom to the top. Until, that is, a couple of years ago when new MBA-armed suits took over and decide to slash Ken's department (until now, running very, very smoothly under Ken's watchful eye) and Ken himself. Of course it all goes pear-shaped and the top dog has to come grovelling back to Ken, offer him loads of money and a big car, basically to ensure that the toilets aren't 'backing up' any more!

This is in direct contrast to Michael Gerber, in his fascinating book The E-Myth Revisited. There he talks about working 'on' the business and 'in' the business, making it clear that if you do too much of the grindstone not-my-expertise stuff yourself, you lose track of what you are really good at, and what you went into business for.

In a past life, I too experienced challenging outsourcing. At one time I had a great little local cleaner who I trusted (he even opened the store up for me - hmmm, that was a long time ago!). He did an excellent job and was on hand for emergencies. Then a new senior director decided to consolidate and outsource, for 'economy and consistency'. It was cheap - but the service was awful. Each time I got a new 'centrally sourced' cleaning company, they came with great intentions for the first 3 months and then dribbled off (with our money!) until it became unsustainable and another 'excellent contractor' came along.

The moment of truth for me, was when the director for one of these contractors, came along for the first time in a brand new £60K Merc (and it's a few years ago now). Then I knew where my money would be going. I went through 6 contractors in 5 years, even though my hands were tied by 'Head Office' contracts!

To solve this problem? There needs to be strong leadership at the start. Very clear standards required from outside contractors and severe penalties (yes, stop paying them even!) for under achievement. Corporate central contracts agreed there, but implemented and managed locally, leave a lot of space for waste.

And yes, in a small business, don't even think of doing the bookkeeping yourself as soon as you can afford not to - do what you do best, value it and get on with creating the business you love, not like struggling Sarah in the book. But, get someone who you trust and who will deliver. Chris Barrow, of Million Dollar Coaching Practice fame, suggests that the very first thing anyone going into a consulting business should do, is get a PA. And that modern day evolution, a VA (virtual assistant) has made this a real, low cost possibility for many.

Moral of the story?

If you are going to outsource, especially if your business is big enough, where it's not only the fashion, but it can have economic and logistic value, take the following steps:-

1. Find the best on the market, not the cheapest.
2. Set the standards yourself, and don't take theirs.
3. Be very clear on expectations and outcomes if standards aren't met.
4. Keep in very business-like, however much you like/know/are related to them.
5. Have clear timescales for regular review.
6. Have a named and senior contact in the organisation for whom there will be pain if they lose the contract.
7. Keep contract length manageable.
8. If things start going wrong tackle them early, before too much money is wasted.
9. If 'Head Office' agrees the contract, don't chase your own tail over non-delivery - get someone from there down as soon as there is a problem - you have enough to do.
10. Don't get involved in the problems any local operatives might have - refer them back.

Martin Haworth is a business and management coach and trainer, working with a range of clients from corporates to individuals worldwide. www.MartinHaworth.com

Related Articles
  Outsourcing ‘has become a mandate’ for recession-hit firms
  Top 5 Qualities in an Outsourcing Company
  38% of software development professionals use outsourcing
  How to Conduct Effective Outsourcing Interviews
  News for Software Outosourcing Development

Article Tags: back pages, big car, bottom to the top, cleaning company, direct contrast, e myth, emergencies, grindstone, lifeforms, loads of money, magazine management, management magazine, merc, michael gerber, moment of truth, pear, spoof, toilets, top dog, watchful eye



Related Forum Posts
Re: What is your biggest challenge? Today? - Outsourcing and time management, but I'm continually making progress.
Re: Should a start-up outsource early? - Hello and welcome to the forum! I agree with Ideasuniversity. Outsourcing is a good way to leverage your time, provided you keep within your budget! Best wishes, David H
Re: Using PR in the Franchise Business - Outsourcing in any business can be a good thing, provided you can afford it and do your due diligence on the company that you outsource to. It is very easy to be taken for a ride if you don't know what you are doing. MichelleJ
Outsourcing - I'm with Louis on this one. By outsourcing you can bring in experts to handle the things you are not good at with a much lower price tag than if you brought someone on full time. Outsourcing is also a way to transition from being a solo-preneur to having staff - you don't have to bring on a salaried worker right away.
Re: In-House or Outsource? - You can outsource a lot of things. Join elance.com for free and they will send you an article on 101 things you can outsource. Outsourcing majority of your tasks make you work smarter. I read that Bill Gates bought the ms dos from someone for $50,000. Now he made billions out of it. This is the beauty and power of outsourcing.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Life is a Balancing Act!

Starting a Business with Bad Personal Credit

Why We MUST Reinvent The Wheel

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.