Top 5 Reasons Why Outsourcing Will End In Disaster
Outsourcing: a dream come true or a total disaster? Here are the top 5 things to think about before hiring outsourcing services.
For many businesses, outsourcing work comes as a very attractive option.
The needs of a company often don’t necessitate in-house hiring. Sometimes, specific skills are required on a short-term or project-by-project basis. In these cases, outsourcing generally makes more sense.
For others, some business owners may not be in an economic position to take on full-time, in house staff.
Start-up companies are currently at record levels, with 660,000 established in 2017 alone (Financial Times). With competition running high, the future of many start-ups remains uncertain for up to five years. As a result, for new and smaller companies, outsourcing work is more financially viable.
This is because outsourcing is often paid on results, not an hourly basis. You don’t need to cover the annual salary of an in-house employee, and can just use any resources when required.
That said, many businesses have a whole host of outsourcing disaster stories when it comes to dealing with agencies or freelancers.
Trusting an outside party to help grow and scale your business comes with a whole host of risks. These failures can come from both sides.
In this post, I’m going to talk about the five most common reasons why outsourcing can end in disaster.
1. Poor Communication
Poor communication covers a whole host of issues, such as language barriers, time zone differences and communication styles.
Here’s a quick rundown of the challenges you may face:
Many businesses that outsource work often do so in other countries where English isn’t the first language. The workers may be highly skilled in their specialist field. But, if communication is a problem, getting outsourcing done correctly can quickly turn into a disaster.
When selecting an agency for outsourcing work, see if they’re aware of this potential issue and what measures they have in place. Perhaps the firm has people who are fluent in English, both technical and conversational. If so, they may offer services in interpretation during your project.
Before outsourcing your work to a firm where English isn’t the first language, make sure both sides are comfortable communicating via email and telephone. Be sensitive to cultural differences, so feedback doesn’t literally get lost in translation.
Though it’s no one’s fault, different time zones can significantly impact the speed in which an outsourced project is finished.
For example, an email asking for clarification on one part of the project may go unanswered for several hours.
Impatience for an answer may cause the outsource firm to “go down a rabbit hole” with the work, which will take more time to fix later. Or, the firm will treat the wait as “downtime”, which only adds to the client’s expense (after all, time is money).
Thankfully, technology can help significantly with time zone differences. Applications like Slack can make sure teams are in one communicative group, rather than the complication of separate email chains.
Little things like sharing the project on Google Docs can also go a long way. Google Docs allows for multiple editors and commenters in one document, which lets people in different time zones hop in and out as needed. It also takes away the complications of having numerous versions of your project go back and forth.
Finally, plan your calendar and daily schedule accordingly. Several internet tools can help you calculate time zone differences, but keeping on top of public holidays and daylight saving periods can help enormously. Sharing your calendar with the outsourcing agency can show when you’re available to talk.
Unfortunately, differences in communication style can significantly impact the completion or quality of a project.
Unmatched communication styles between the client and the outsourcing agency can lower productivity and engagement by up to 30% (Forbes).
There are four primary types of communication style, which I’ll briefly explain now:
- Analytical communicators like data, numbers, and can’t stand people who skirt around the facts. They want specific language, and often write-off emotional responses as “wishy-washy”.
- Intuitive communicators prefer to work with the big picture, rather than get bogged down with the details. They’re looking for the end result, and will quickly get impatient with people bringing up every component of a project.
- Functional communicators like details, timelines and comprehensive plans. Expect to go through every step with a technical communicator, or they’ll write you off as vague and unprofessional.
- Personal communicators value language and connection. They want to know what other people are thinking and feeling, as they believe the project will be done best if the people involved feel positive.
The biggest clash comes between analytical and personal communicators. Analytical communicators feel emotionally-charged language is a waste of time.
Meanwhile, personal communicators hate talking about raw data. The abrupt nature of an analytical thinker can cause the personal communicator to think they’re always in the “dog house”, or see criticism when it isn’t there.
Functional and intuitive communicators also face their problems. Intuitives want to cut to the chase quickly as possible and lose concentration when confronted with details. Functionals, on the other hand, feel lost when they don’t have a “step-by-step guide”, and will flounder without all the information.
Clashes in communication style have caused outsourcers to pull out of projects early, as they’d prefer to work with people who “speak their language”. Clients have also been left feeling frustrated, as they think the outsourcer isn’t listening to instructions or they’re deliberately misinterpreting their comments.
In truth, both sides want to do the best they can for each other.
Unfortunately, there’s no easy way to combat this. Clients and outsourcers don’t often work with each other for very long, so there’s no time to “get used to” different communication styles.
You can generally tell how someone communicates through their writing style or telephone manner. If you want to solve any communication conflicts, you’ll have to train yourself to adapt — quickly. These changes will feel like you’re speaking a foreign language, at first, but practice will help you avoid this particular outsourcing disaster.
2. Unresponsiveness (On Both Sides)
You’ve told the agency or freelancer what you want and reached a financial agreement.
Emails are flying back and forth between you, and everything is going fine until…
They drop off the end of the Earth.
Thankfully, this doesn’t happen too often with a reputable outsourcing company. Still, it’s been known to occur with freelancers or anyone not part of an agency.
For any business owner, this can be an outsourcing disaster. Chances are, you’ve spent hours interviewing people, looking at portfolios, and building a level of trust. It may even cause you to lose faith in outsourcing completely.
Unfortunately, if your freelancer decides to go MIA, there’s not much you can do if you haven’t paid for the work.
If you’ve paid upfront, there are several actions you can take, including getting the small-claims court involved.
However, be warned. You’ll need the freelancer’s address to make a claim viable, and you should never seek out an address through illegal means. Taking someone to court can also rack up several costs — usually a lot more than what you originally paid for the work. So, proceed with caution.
Of course, there are several less dramatic reasons for unresponsiveness.
You don’t know how many clients the outsourcing company are dealing with. The firm or individual may be juggling several deadlines at once, and your project isn’t their only responsibility.
Likewise, you may have so many irons in the fire and daily tasks, you resent spending hours a week going back and forth via email. You outsourced the work for a reason — if you wanted to spend so much energy hand-holding, you’d have completed the project yourself.
Responsiveness, or lack of, is one of the biggest reasons outsourcing projects end in disaster.
If you leave the outsourcing agency hanging for too long, they may push forward with the project the way they think it should be done. That may not match your vision, which will waste time.
Or they’ll get vibes that your project isn’t the priority it was made out to be, and they will focus on other clients instead. Next thing you know, your project has dropped to the bottom of the heap.
Both sides need to make it very clear how often they expect to communicate with each other. That may mean setting up weekly Zoom meetings or telephone calls. You can also tell the firm how much you expect to speak to them via email. That could be daily updates, or on a case-by-case basis.
3. Making Assumptions
When you’re in the thick of a profit-making project, it can be easy to forget about boundaries.
You may have an idea that you wish to communicate immediately with the outsourcing firm. Unfortunately, it’s outside of their working hours or the weekend, and you’ll have to wait.
It can be agonising to wait for a response, but getting irritated will only antagonise the situation. Both parties should do their best to stick to the agreed communication times and channels.
Many business owners also forget that the outsourcing firm doesn’t know the ins-and-outs of the company the way they do. They expect the outsourcing firm to be able to read their minds, then are quick to write off the agency as an “unqualified disaster” when mistakes are made.
Don’t assume that the client will spend hours getting to know your business when the assigned project will last them a week. Give them an outline of what you expect and keep your communication channels open.
Likewise, for questions, issues and complaints, make sure you contact the right person. Keep a record of who deals with what, and this will reduce miscommunication and mistakes.
Finally, encourage the outsourcing team to ask plenty of questions. It may be a drag initially, but it will prevent mistakes in the long term. Assume the outsourcing firm knows nothing at all (at least initially), and you’ll be less likely to run into disappointment later.
4. They Try To Charge Over The Agreed Quote
At the end of the day, a client/outsourcing firm relationship comes down to money.
You want the project to make you a profit in some way, and the freelancers want payment for their work.
Some outsourcing firms will give clients a quote at the beginning of the project, only to try and charge double that come the end. As a result, the client will feel cheated, and that’s when rows and nastiness begin.
On the other hand, some clients try to get away with murder. They’ll be unclear about what’s expected when they hand over the project but will offer a hard sum.
Turns out, the project involves multiple drafts and tweaks, and the client expects that hard sum to cover all sorts of extras that weren’t agreed. A project expected to take 10 hours a week suddenly takes 20 or more. For the outsourcing firm that’s a disaster — financially and for time spent with their other customers.
The client and outsourcing firm must negotiate a price that works for both of them.
And both must be a little bit flexible. If the project takes hours longer than expected and has loads of extras added on, the client must be prepared to pay for them. On the other hand, the outsourcing firm must be honest from the outset on how much they think the work will cost. Once agreed, they must keep the price within the client’s budget.
Lowering the price to unrealistic levels to “nab” the client is only going to sour the reputation of the outsourcing firm.
Good clients will hire through an outsourcing firm because they believe the agency will do a good job.
A bad client will seek out services when they need someone to do the work, but they have absolutely no faith the agency will do things right.
Instead of worrying about making a deadline, the freelancer now has to worry about every action he or she takes. This level of anxiety makes the work worse instead of better, and the project will take longer to complete. That’s an outsourcing disaster for both parties.
These are the most common signs of micromanagement:
- The outsourcing firm spends as much time making reports and updating their client as they do working on the project.
- The freelancer isn’t allowed to make any decisions — all actions must go through the client, who’ll sign it off (or not).
- The client complains constantly. If you’re always looking for mistakes, chances are, that’s all you’ll find. Incessant nit-picking is the quickest way to sap an employee’s motivation.
- The client refuses to acknowledge any feedback, believing only their opinions are the ones that matter.
- They lose sight of the big picture. If the client fixates on every tiny mistake, they may bin the entire project and ask the freelancer to start over.
- Projects go on forever. Perfection comes at a price, and that price is monetary, time-consuming and emotionally exhausting.
Micromanaging causes so much anger on both sides of the relationship. The client is furious because the work doesn’t match their standards, or the project is late, and they “can’t trust anybody”.
The freelancer feels like they’ve put in way more time and effort than the paycheque requires, and they’ll refuse to work for that client again.
Luckily, there are things both parties can do to stop micromanagement in its tracks. Here’s a quick list for both freelancers and clients.
- Put yourself in your client’s shoes (at least at first). Follow their rules and allow trust to build.
- Bombard micromanagers with updates and check-ins. The micromanager in question may get fed up of hearing from you and turn the intensity down somewhat.
- Show that you understand your role. Most micromanagers do so because they think you won’t do the job the way they want. Show you know what’s expected to dispel any fears.
- Establish your client’s expectations by asking them to put them in writing. Tell them you agree to each point and don’t keep it vague.
- Don’t set up the freelancers for failure. Having too many expectations will kill the project dead. Be reasonable with deadlines and the level of detail needed.
- Communicate your timelines. If the project is long enough to hit milestones, be clear when you expect them to be reached. Breaking down a project into chunks will reduce the risk that the outsource firm will run away with the work and move off-topic.
- Don’t be too rigid with your path. A project can be completed well, even if it’s not exactly the way you’d do it. Excellent communication (but not too much!) will ensure everything stays on track.
- Give positive feedback. Instead of focusing on all the mistakes, note what the outsourcing firm did well.
- Recognise their value. You outsourced this work for a reason. Perhaps the freelancer has the skills you lack. Or you don’t have the time, so you picked professionals in that field for a reason. Suitable freelancers will be happy to show you feedback from satisfied clients. Take a look, then trust them.
Outsourcing requires trust on behalf of both the client and the freelancer or outsourcing firm.
As you can see, lack of communication and unrealistic expectations are the biggest killers when it comes to an outsourcing relationship.
However, outsourcing doesn’t have to end in disaster. Learning how to choose the best freelancers and contractors is an important skill to learn — and you’ll find many are willing to help.
Do your research, and plan accordingly. If you’re worried about contacting individuals for outsourcing work, then agencies like NO LABEL Studi0s can provide a reliable, stress free outsourcing experience.
Our next post addresses ways to reduce the risk of outsourcing to a new white-label team. If you’re not sure if outsourcing is worth the risk, then this blog will show you how to get the outsource experience you deserve.
If you have any questions or comments about this post, write them in the box below. We’ll get back to you as soon as we can.