I don’t hide the fact that I am outsourcing jobs in ALL of my businesses…
AND, WHY WOULD I?
Outsourcing is an effective way to scale your business, increase profit margins, and improve the customer experience
For those reasons, it is no wonder that it keeps becoming more prevalent in the marketplace.
Here are some eye-opening statistics from the TeamStage blog that support that:
- 14.3 million jobs are outsourced from the United States
- 37% of small businesses outsource part of their operations
- 65% of companies plan to increase outsourcing in their expansion
When it’s done right, this form of delegation can provide entrepreneurs with freedom and flexibility.
But, there are several HUGE problems with outsourcing that business owners have…
Owners try outsourcing jobs at the wrong time….
They delegate too much or too little…
Or, they manage outsourced teams ineffectually.
I want you to avoid those mistakes. So in this article, I am going to break down my exact formula for successfully outsourcing jobs.
THAT WAY, YOU CAN REAP THE BENEFITS OF THIS SMART STRATEGY — WITHOUT THE PITFALLS.
That being said, let’s get started…
Outsourcing vs. Insourcing
Most business owners understand the difference between outsourcing and insourcing by definition.
Still, I want to cover some of the pros and cons of both of these approaches in this section. This will give you the fundamental theory behind why my formula for outsourcing jobs works.
Let’s start with the advantages and disadvantages of insourcing.
Pros and Cons of Insourcing
The first obvious benefit of employees working internally is talent acquisition.
SPECIFICALLY, YOUR PEOPLE WILL DO THINGS YOUR WAY.
This spans from operating procedures to company culture. After all, it is easier to get your message across to someone there as opposed to someone outside.
Because of this, insourced tasks tend to be of higher quality.
Don’t get me wrong, there are operations you can outsource with fantastic results. However, certain actions require an authenticity a contractor can’t provide. We’ll talk more about that later on.
Those are the pros, but insourcing does have some downsides…
Most business owners will say the number one disadvantage to insourcing is cost, but they’d be wrong…
PEOPLE DON’T COST MONEY AND NEITHER DOES TRAINING THEM — LOST SALES COST MONEY.
This brings us to the biggest problem with insourcing — you and your employees aren’t available outside of business hours. By that fact alone, your business is going to lose revenue.
Think about it like this…
You’re looking online for information on new cabinets for your kitchen. You have questions about colors, materials, and price — but it’s 10 p.m…
IT’S UNLIKELY ANYONE WILL BE THERE TO HELP YOU!
Even if you email that company right then and there, what is the likelihood that you’ll consider them when they eventually respond?
Today’s customer moves fast, and operating on banking hours just won’t cut it. You need to be available 24/7 to survive in the marketplace.
Similarly, another issue with insourcing is the lack of technological resources.
If your business is not focused on accounting, it makes no sense to pay for expensive accounting software.
Sometimes, having qualified people use their resources is cheaper than buying and using them yourself. Situations like this are where outsourcing will shine.
That being said outsourcing jobs has unique factors to consider…
The “Good, Bad, and Ugly” of Outsourcing Jobs
Just a moment ago, I mentioned how additional resources and hours of availability are marks in outsourcing’s “pros” column. Still, there are a few more I want to mention before we move on…
OUTSOURCING ALLOWS YOU TO DELEGATE OPERATIONS THAT AREN’T THE CORE FUNCTION OF YOUR BUSINESS.
A common instance of this is retailers outsourcing their service jobs.
The retailer focuses on producing and selling great products; the third party handles customers.
Both parties make money and function smoothly. Everyone is happy.
These cases are successful because of how cost-effective contracting can be. But, be careful…
LOWER COSTS CAN SOMETIMES COST QUALITY AND TEMPT SOME ENTREPRENEURS TO OUTSOURCE JOBS PREMATURELY.
In that same vein, your projects will never be the full-time priority for a third-party contractor. As a result, tasks can have a slow turnaround time — and we just discussed the importance of speed…
At this point, you can see there are appropriate times and places for both outsourcing and insourcing in your company.
Now, let’s walk through what, when, and how to outsource…
My Formula to Outsource PERFECTLY
As you can see, outsourcing and insourcing have strengths and weaknesses.
The secret to my perfect outsourcing formula is to play on that fact. Each strategy plays the role they are best at, and my companies win.
Follow these guidelines, and your business will win too…
When it’s Time to Start Outsourcing Jobs
Regarding when the best time is to outsource, I have one guiding principle…
BE GREAT BEFORE YOU DELEGATE.
This especially applies to my young, hungry entrepreneurs out there.
Outsourcing is highly praised throughout the media as a fast way to grow. Consequently, business owners are seduced into it before their business processes are ready.
THEREFORE, OUTSOURCE ONLY WHEN YOU ARE ESTABLISHED, PROFITABLE, AND READY TO SCALE.
Look, there is no shortcut to success.
You have to know YOUR trade better than a third party — or anyone else for that matter!
Otherwise, you are going to be replaced and go under.
And while you can’t outsource hustle, there are certain things you can — and should — hand over to someone else…
Which Tasks to Delegate
Now, we will examine which functions you can outsource once you’re ready to scale.
As I mentioned before, you should be the most educated and capable person in your business’s field. So, my counsel to you is…
OUTSOURCE OPERATIONS THAT DISTRACT YOU OR TAKE TIME AWAY FROM YOUR CORE FUNCTIONS.
What exactly would that look like?
Like it or not, we all have to pay taxes. Consequently, accounting is an essential part of every business. For that reason, let’s take the accounting example from earlier to illustrate this point…
Let’s say you run a construction company. You have to calculate and distribute payroll, pay suppliers, auditing reports, etc.
As you grow, these tasks are going to take you more and more time…
Without delegating those duties, you’ll find yourself spending more time with a calculator than on a construction site!
This is especially true because accounting is not your specialty. Therefore, another person could do it more quickly and accurately than you.
However, I need to caution you regarding the tasks you do outsource — even if you are not an expert in them…
How to Manage Designated Duties
Outsourcing jobs presents a unique obstacle when it comes to managing those tasks and the teams performing them.
These outsourced teams are not on-site where you can directly oversee their productivity. On top of that, they are often more versed in those functions.
Those two facts make evaluating how effective their efforts are difficult, but there is a way…
STAY CONNECTED WITH STATISTICS.
You don’t need to know everything there is to know about outsourced functions. But you need to be knowledgeable enough to assess whether an area is getting results.
At my companies, I get statistics on as many departments as possible. While I may not fully grasp how some numbers affect my bottom line, I look at them.
After all, a variable YOU don’t understand may be contributing to your success.
Now, let’s circle back to what you should never outsource under any circumstances…
What to NEVER Outsource
At length, outsourcing any job that you should be doing yourself is the fastest way to tank your business. This fact will become especially relevant and hard to maintain as the AI revolution continues…
YOUR CUSTOMERS AREN’T STUPID! THEY CAN TELL WHEN SOMETHING IS NOT AUTHENTIC.
That is the reason that when I tweet something with misspelled words it gets more engagement than if my social media team posts it…
Similarly, videos I make on my cell phone to promote events get more sales than footage edited together by pros….
You are the X-factor of your business. If you try and contract that out, you might as well shut your doors now because you’re in business for the wrong reasons.
If there was a short way, to sum up, my formula for outsourcing jobs it would be this…
DO WHAT YOU DO BEST AND HIRE OUT THE REST.
But I want to make sure your company outsources the right way. Therefore, there are a few more nuances to it we need to cover.
Everything You Need to Know About Global Outsourcing
Global outsourcing or “offshoring” refers to contracting a third-party company outside of your country.
The pros and cons of outsourcing vs. insourcing also apply to offshore outsourcing with a few additional and important notes.
HERE ARE THE FACTS YOU NEED TO KNOW ABOUT OFFSHORING…
According to an article on the Multiplier website, 70% of American companies’ top reason for global outsourcing is labor cost. Two factors play into this…
- Lower cost of living — outside North America especially
- Tax benefits for it in foreign countries — such as the Philippines
Another good reason to look at offshore options is to test out global markets.
I think it is safe to say that every company wants to eventually go global. And outsourcing is a viable way to do it with reduced risk.
All of that sounds great, but…
The Grass Is NOT Always Greener Offshore
Before you start signing contracts with outsourcing companies abroad, take a moment to consider some of these factors.
First, there are cultural differences that may not align with your company or brand.
Case and point, my personal brand is very direct. In certain countries, being straightforward is considered rude. So, I wouldn’t outsource certain tasks to a third party in those areas.
RIGHT AWAY, IT WOULD COME OFF AS PHONY.
One of the most notorious examples of an issue with global outsourcing is language barriers.
Accents and broken English are rampant in customer support done offshore. And by and large, customers don’t appreciate it.
Usually, this problem is compounded by the fact that your buyers are calling with complaints.
The last thing we need to address is data privacy.
OPENING YOUR COMPANY UP TO AN OFFSHORE STAFFING CAN ALSO OPEN YOU UP TO OFFSHORE CRIMINALS.
For that reason, make sure that the information you share when you globally outsource is only what they need and protected.
In general, outsourcing jobs is a lot of work and due diligence whether it’s global or not. But what if there was a way to streamline it?
Want to Outsource Your Outsourcing?
Frankly, the toughest part of outsourcing is getting organized.
Once you are grooved in and have a rhythm going, you’ll find that you are off to the races…
With that idea in mind, I developed my 10X Marketing System which includes my perfect formula for outsourcing jobs done for you.
In this program, I give you Excel sheets and reports for those vital stats, resources to train remote work employees, and more. You can get more information here.
But whether you use the 10X Marketing System or do it yourself, remember to keep the real secret to success — you — in-house.
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