4 Instances When It’s Wrong to Outsource

Facebooktwittergoogle_pluslinkedin

How often do you hear advice like “outsource as much as you can?” If you're a business owner, you probably hear that a lot. Don't get me wrong, outsourcing is a great tool for your arsenal, and you can use it to tap into specific types of expertise that you simply don't have (nor want to have).

Instead of taking the easy route and outsourcing, ask yourself these four questions:

  1. Does this process I am outsourcing touch any of my customers?
  2. Is it possible that by outsourcing, I could sacrifice quality?
  3. Am I getting a lot of stuff that I don't need bundled up with the outsourced service?
  4. If I had the same resources (i.e. people) at my fingertips, could I manage this better than the outsourcer myself?

If you answered yes to any of these, then it's time to step back and seriously look into your other options.

Outsourcing has a clear, distinct place in building your business. Used strategically, it can be a valuable tool. But used irresponsibly, you could end up losing control over key parts of your business that are vital to your success.

Sometimes companies outsource too much. Those who are looking to outsource -- especially startups and fast growth businesses -- need to think carefully about what benefits they are truly pursuing. You then need to determine how to get those benefits while retaining as much control and quality as possible.

What do I mean by outsourcing too much?

I had an interesting conversation with well-known business guru, author and speaker Geoff Burch in the UK. He told me a story of two bicycle makers, both British, who manufactured their products in China. One completely outsourced manufacturing and end-to-end management to another company. The other company managed, supervised and controlled the entire process themselves. Both built their bikes in China, but the completely outsourced bike -- the one where British management washed their hands off the process -- ended up a poor quality product. The other bike -- where processes were managed, quality controls were in place and the company truly owned the work -- was high quality and equal or better to what could have been made back home.

An off-shored product doesn't have to be poor quality

The company that completely outsourced their bike’s manufacturing concluded that the quality was poor because they had it made in China.

But what about the other company, who also made their bike in China, but did so differently? They ended up with a high quality, competitively made product.

It's much easier to blame an entire foreign country for poor quality than consider that perhaps the way you did things was wrong.

That's an example from offshored manufacturing. Now, take another example from offshored services: India and its ubiquitous call centers. How often have you heard arguments that attribute bad service to the fact that "they just shouldn't have gone to India?"

Often, bad service is a result of bad processes and bad policies. Blaming a nation for poor service is way too simplistic an explanation for a poor result. Businesses are after cost savings, talent, or capabilities. But just like with anything worth getting, you really should examine in much more detail the model in which you access the savings, people, or capabilities that you're after.

The problem is how you leverage talent, not where you leverage it.

The world is changing. There are skilled and talented people all around the world; the best talent is found not only in developed markets.

But bringing talent into your company from a different country is not as easy as bringing on locals. You need to consider cultural differences, geographic differences, and different working norms.

We’ve found that the companies who are most effective at leveraging global talent are the ones who are also very involved in the hiring and management of that talent. These companies have discovered that outsourcing management to 3rd parties doesn't solve fundamental problems for them. This is true especially in areas where they don't require outside expertise - areas where they really should be managing functions and people themselves.

Geoff Burch tells me he often sees managers who would love to get a problem off their hands, so they outsource it.  The lesson here is that, just like the bike company in the story above, there are different ways to do things internationally, and not all link to completely outsourcing to another business.

As a business owner, you can't afford to outsource your problems.

Bolton Remote helps companies build offshore teams without outsourcing the core of what they do.  Learn more at BoltonRemote.com!

Patrick Linton

Patrick Linton

Co-Founder at Bolton Remote
Patrick Linton is the co-founder of Bolton Remote, where he helps fast growing businesses reliably tap into large, dynamic and cost-competitive international talent markets.
Patrick Linton

Tags: , ,

About Patrick Linton

Patrick Linton is the co-founder of Bolton Remote, where he helps fast growing businesses reliably tap into large, dynamic and cost-competitive international talent markets.