What is outsourcing? Well, it’s about taking an internal task or process and transitioning it externally. Outsourcing can help your business by reducing your operational costs, reducing time spent by your team on ‘busy work’ or repetitive tasks, and it can introduce a new mindset around optimization.
Outsourcing is not a new idea, but it’s something that isn’t talked about enough. Especially given the fact that almost every large company you can think of does it. One of the driving factors is that the outsourcing industry is typically only available to larger entities. In order to hire a firm in the Philippines, you typically must commit to a minimum of 50-100 monthly full-time agents. So this industry often excludes companies needing only a few people for customer service, data management, content moderation, social media expertise, and basically any job that you can create a simplified process around.
But that can, and should, change. The intention of this guide is to introduce outsourcing to smaller businesses and walk through some of the basics of getting started. It is our fundamental belief that outsourcing is an incredible resource that all companies should explore as an option.
Outsourcing can be an incredible competitive advantage for companies. But as already mentioned, this advantage is typically not in reach for smaller teams. Given this, how are startups expected to scale and compete with the industry captains that DO outsource and maintain operations costs that are up to 90% lower? This cost break leaves a massive expense deficit that these companies spend on marketing, strategy, customer perks, [you name it].
Before we continue, we must touch on the ethics of outsourcing. There are many questions that one should have when considering outsourcing, some include: outsourcing takes away jobs; if I outsource, am I investing in an industry that treats people terribly?; outsourced teams are low quality; outsourced teams have bad working conditions. To be clear: yes, this does exist. But it should not and integrity based outsourcing is entirely within your control. When you work with an outsourced team, it is up to you to decide how they are treated. If you hire people yourself, treat them well. If you work with an agency, play an active role in deciding how your people are being treated. Lastly, outsourcing doesn’t take away jobs; rather, it frees up time so that your people can redirect their focus into more critical, high-skill related work. By delegating repetitive processes, you free up time for your team to take on newer, bigger, more impactful work.
What are the benefits of outsourcing?
- Outsourced teams can be up to 87% lower in pure hourly cost
- Outsourced teams are not subject to the federal and state labor laws and taxes. On average, these result in an increased bottom-line cost for each employee of 16%. This is true for:
- Social security tax
- Paid holiday and sick days
- Workers Comp
- Employment tax
- Overtime pay
- Outsourced teams provide easier scheduling and are available 24 hours 7 days a week
- The workers are highly specialized in specific tasks
- Outsourced agents are often more motivated to learn, grow, and excel
- Outsourced teams are easily scalable due to low turnover cost & optimized workflows
- Outsourcing allows your internal team to spend more time on core responsibilities
- Outsourcing allows you to free up cash
Read different perspectives on the benefits of outsourcing:
What type of work can you outsource?
You’re probably thinking okay, those benefits are enticing, what can outsourced teams really do though? To start, there are some general areas listed below. But honestly, get creative. OpsTales is helping with some pretty specific tasks, like weekly reporting on cashier voids to detect cashier fraud, managing back-office inventory levels for retail stores, and doing variance reporting on ATM machine withdraws. There is really no limit, if you can outline a step-by-step process, it can be outsourced:
- Customer service
- Merchant relations and management
- Data entry
- Content review
- Fraud prevention such as manual review and chargeback responses
- Social media management
- Marketing & Market Research
- Virtual or executive Assistant
Where do you start if you want to outsource?
It all starts with identifying what can, and should, be outsourced. The better your onboarding process and day-to-day operations are outlined, the easier it will be to get started. I would recommend reviewing your departments from a financial perspective first. What has a high cost but doesn’t necessarily need to be done in-house? Dig into where you team spends their time and categorize the work into buckets. You want to differentiate between tasks that are:
- essential core responsibilities for your team
- essential but process oriented or repetitive tasks
- non-essential tasks
If you find any tasks that classify as non-essential, you should stop performing them in-house and evaluate whether it makes sense to continue with an outsourced team. The essential but process oriented or repetitive tasks are ideal candidates for outsourcing.
In your accounting department, you will often find tasks that boil down to data entry. Outsourcing them can be a huge cost saver. Customer support is also a great candidate. Not just due to the cost of support agents. By outsourcing, you can have agents working 24/7, dramatically reduce response times, and make customers even happier.
Hiring outsourced teams
There are two main options for hiring. You can either hire individuals and build your own team or work with an agency. Agencies can help you with finding candidates, managing remote employees, designing processes and more. You should consider the weight of hiring and manage your own team vs letting an agency do the hard work. While building your own team is the cheaper solution, it requires serious hands-on management, navigating cultural differences, and many lessons learned. But it’s very doable – after all, that’s how I (the OpsTales founder) got started in outsourcing!
Which way to go ultimately depends on what you need as a company and how structured your business processes are. If you already have strong processes in place, know how to effectively train and manage a remote team, and can put someone in charge of rebuilding the processes to work for an outsourced team, try it out yourself over half a year.
For hiring individual agents, there are a couple of major routes: Upwork, Freelancer, or Craigslist. What worked best for me was to use the Manila Craigslist to find candidates, conduct a thorough written and spoken multi-step interview process, then a trial period. I very quickly found my lead, Mia, and then transitioned finding candidates to her. She would post in her town hall and other local places around Manila, interview people, then send the best candidates through to me. We set up a home office in Manila with Mia where the team would work. So we ended up with an office, on-site manager, and mixed off-site and on-site team. Our lesson learned was that a team onsite with a manager onsite is very much the way to go, it just takes time to get there.
Something worth noting – if you build your own team, you will most likely start with home-based workers. This can work great, but it definitely can lead to misrepresented timesheets. The best way to combat that is to set up performance metrics and monitor closely for fluctuations. You will also want to use a time-tracking software, some record the screen usage, while others are simply a log-in and log-out system.
If you’re interested in outsourcing, but don’t have the resources to invest in building your own outsourced team, look for an agency. Depending on your specific needs, there is probably an agency out there specializing in it. Look around, post in communities, or reach out to us at OpsTales to see if we can help or refer you to someone who can.
Managing an outsourced team
This is a big topic that requires an article of its own and will come soon. To get you started, here are the key points. You must have very clearly outlined processes, ongoing management, strong communication, performance metrics, and you must pay attention to the cultural differences.
Cultural differences are the tough part, so it’s good practice to start small and quickly look for a team lead that can help you navigate the cultural differences. Some of the problems arise around a fear of asking too many questions, not understanding, making mistakes, and getting fired with no warning. Confront these fears and instill that all people make mistakes, they simply need to be acknowledged and turned into an opportunity for learning. Asking questions is a good thing. Be a team, don’t consider outsourced people to be expendable and faceless, and you’ll do fine.
Another lesson I learned along the way is that simplifying your processes, building clear and easy to follow training manuals (a mix of written and video), and using extremely precise verbiage is crucial. Walk through the instructions with your team. Make sure you give your team the room to ask questions and make mistakes. Expect to have to fine-tune your instructions, while they are probably clear and easy to you, they might not be to your outsourced team. But you have to provide the safe space to surface these questions and misunderstandings.
As for communication and on-going management, the tech products like Slack, Zoom, Google Drive make it feasible. KPIs are extremely helpful in managing remote teams. Set up performance metrics that show average completion rates for the task, and then monitor daily and weekly. Discuss fluctuations and train your outsourced team to think about optimizing their workflow. It has worked best for me to have visible performance metrics within each team and across each department. Be open and transparent about these metrics, how they are tracked and reviewed, and how each team and agent is performing.
Managing a team, let alone a remote team is a specialized skill. While you can outsource many positions, you should have an experienced person manage the team.
How can I be sure that the quality will be maintained?
As with any team, the responsibility falls on management. You need to monitor and manage to ensure that the quality is top notch. It is highly effective to define KPIs for quality and monitor for fluctuations. This could be daily emails answered, processed items, time spent per task, etc. If you see signs a downward trend in those KPIs, take immediate action. You need to be proactive in managing and training the team.
Also effective is to introduce a feedback loop and train for an optimization mindset. If each agent is reviewing the daily work through the lens of “how can this work better?” they will be more engaged. Engagement is the foundation for quality. Proper process and tools the woodwork.
Make sure your team has the tools and systems they need, are invested in the work they are doing, and that they are happy at work.
How can I be sure that my data is safe?
You might be scared to give people access to your data. You might be worried because you don’t know who will access the data, where it will be accessed from, how it is used and if a person on the remote team is trustworthy. You might also be concerned about who has access to the facility where the remote team works. These are valid concerns. But keeping data safe is always challenging and concerns for local vs remote teams are the same. Outsourcing or not, it’s generally a good approach to limit and monitor access to risky data. It’s also good practice to monitor login info such as IP address and new devices.
Ultimately, you need to build trust, ensure a good process and make sure that you have the information you need to feel safe. Building a relationship with your outsourced team is an extremely effective method. You can do this by connecting with the individuals and providing a genuine chance to grow within your company. By building a personal and long-lasting relationship with your remote team you will gain trust over time. This trust translates into data safety and high-quality work.
Outsourcing is an incredible resource and helps your business succeed.
Outsourcing has a myriad of benefits and can make a huge impact on your ability to grow as a business. There are a lot of factors to consider and you should make sure to be diligent and thoughtful in setting this up. Ask for help from consultants and do your research, no matter which way you go.
If you want to outsource, but don’t know where to start or lack the resources, reach out to us at OpsTales. Our goal is to make outsourcing accessible to smaller companies and startups, enabling them to be more competitive in their fields. More than that, we’re trying to change the outsourcing industry to be more people first, growth-oriented, and integrity bound. We help you isolate what can be outsourced, design new processes, and build and manage a new team for you.