In the last 7 years I’ve worked with outsourcing. I’ve setup
data entry teams in India and Bangladesh, dev teams in Philippines, Ukraine and
China and done 100+ freelancer projects.
The underlying principle of outsourcing is the same for manufacturing in China as it is for hiring someone to setup a website in wordpress. David Ricardo (old British dude) describes it in his theories on comparative advantages:
“Comparative advantage refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another. Even if one country is more efficient in the production of all goods than the other, both countries will still gain by trading with each other, as long as they have different relative efficiencies.”
For a startup with limited funds and resources this is fantastic news!
With the online availability of skilled workforce today, there are no limitations to what a startup can do for very little money. The same way as online tools have become free or dirt-cheap, so has skilled labor. Startups don’t need the funding they used to, to build, validate and expand their business concept. Online job marketplaces such as Freelancer and Odesk/Elance have not only provided startups easy access to cheap and skilled (also unskilled) labor, but also helped thousands if not millions of freelancers to a stable income, higher education through work and a better quality of life. Awesome concept.
Freelancers have played an important role in my current startup, AirHelp. They have without doubt accelerated the company through idea conceptualization, validation and expansion. Here are some examples on what we’ve outsourced to people from around the world:
- Accounting and bookkeeping (Pakistan)
- Market research and analysis (Portugal)
- Sales and cold calling (Philippines)
- IT development (Poland)
- Design (Romania)
- Data mining and entry (Bangladesh)
- Testing (Bangladesh)
- Presentations (Indonesia)
- Personal task (Bangladesh)
Why couldn’t we do it ourselves? The reason goes way beyond financial:
- You can’t do everything yourself. As an entrepreneur, you have thousands of ideas you want to try out, but with only two hands, you need people to help you. The faster you get those ideas knocked out (or confirmed) the faster you get to the right product.
- You’re not always the best person to do it. You might like creating landing pages for Facebook campaign tests, but wouldn’t someone else with better design skills be able to do it for cheap and free your time to focus on something more important?
- You might not like doing it. Designing a nice PowerPoint for your investors or logging all your expenses in a long excel sheet for bookkeeping might not be what gets you up in the morning. There are people in South East Asia who are very good at this stuff. Why not give it to them?
- You don’t have the money. Every startup has to bootstrap, which sets irritating limitations to what’s possible. For $5 on Fiverr, you can get a student, at a big university, to print and stick 20 posters to school billboards. Do that 20 times and you have your first 100 customer/users. How’s that for cheap marketing?
- You want to move your product and realize your goals and visions. Spending days on simple data entry and other tedious tasks doesn’t move your product. You need to free yourself from the less important task to work on the more important stuff such as talking to customers, defining, building and implementing the product that solves their pain.
- Try it first. I’ve seen a lot of work and resources being put into something that hasn’t been tested first and I’ve done it my self, thinking that if I built it they will come. The Lean Startup told us to seek customer validation from day one to avoid such errors. Talking to customers is something all founders must do themselves and it cannot be handed over to someone thousands of miles away that don’t have the same product understanding as you. However, they can provide you with market research, data analysis and quantitative findings, which is a good start.
Delegating tasks in-house as well as outsourcing to foreign
countries is a skill in itself. I’m a
strong believer in doing things first your self, before delegating it to
others. If the project scoping, demand specs and success measurement isn’t
crystal clear, you won’t be satisfied with the result and you end up wasting
your own time and the time of the person you gave the task – who you by the way
are paying to do it. Shit in, Shit out.
I’ve listed some of my recommendations below that you can use when you’re ready to outsource your first task:
- Use estimations and deadlines. If you don’t set a specific time frame on a certain task, you’ll quickly see people spending way too much time that only marginally improve results. Always set a deadline. It doesn’t matter what country or culture you’re from - everyone understands deadlines. Use milestones to make sure he/she is on the right path.
- Use online tools to manage and allocate tasks. Project management tools such as Asana, Trello and Jira are free (basic version) and very easy to use.
- Track their time. Timetrackers such as HubStaff, HiveDesk, Timr and Tiempo tells you what they are working on (screenshots), for how long, and makes invoicing super easy.
- Get a sample first. Make sure they understand the project/task.
- Do screening sessions. Invite 10 people to a Skype chat and give instructions on a test case. Kick people off one by one if they’re asking too many questions or not doing as instructed. When you’re down to one, you got your superstar.
- Use motivation boosters. Done before X, $X per X, less than X errors, etc.
- Don’t forget to compliment their work. Making you happy makes them happy.
- Don’t forget to criticize. If the task isn’t solved correctly, make sure they understand to avoid repetition.
There are million of people out there who are ready to help you and your startup. They were not there 10 years ago. Any startup that is able to utilize the online availability of skilled workforce will have an advantage to the ones who don’t.
AirHelp was built by people from all over the world. We are 38 people, 5 freelancers and 15 different nationalities. Born Global!