MYTH: Keeping Outsourcing Costs Down Increases Profits
If you’re hiring help for your business, the natural instinct is to look for low cost services to save money. And with all the big corporations outsourcing their customer support and other operations to other lower-cost countries, it seems this tendency might be what makes business sense.
Here’s the thing. You aren’t a big corporation with hundreds of employees…or if you are, I haven’t the foggiest what you’re getting from reading my blog. 
You are likely or want to be a solo entrepreneur or partnership with a handful of people that work with you on a daily basis. Where a big corporation’s large staff is often disposable, yours is not…so why hire and treat people like they are disposable? It costs time and money to find new people, train them and all the while, your business suffers. When someone quits on you it leaves a much bigger mark on your business than if someone quits the 250-(wo)man customer service department for a large company.
See what I’m getting at?
Besides that, in our small operations, it’s not what we pay that matters that much – what matters are the RESULTS from the work we outsource and sometimes those results can take time to grow. When you first hire someone, there is a learning curve for both of you. You need to learn how to communicate exactly what you want, they need to learn the job and they will have a plenty of questions. As you continue to work together, your communication improves, their skills improve and they have the built-in knowledge to handle previously unknown situations accordingly.
To get that continued work, you need loyalty from your contractors. And how do you get loyalty? By treating them right. And a couple of ways you can treat your contractors right:
- Pay them well enough so they don’t have to take on all kinds of extra work to make ends meet.
- Give them regular raises to show that the experience and resulting improved work for your company is appreciated and valued.
I’ve been working with the same assistant for a few years now and when I look at our how our business relationship has grown, I’m amazed and know just how blessed I am. Communication is a snap because we have this history – she understands me and I know how she works. She knows my business well enough to make her own qualified decisions, make suggestions for improvements and can oversee my other contractors. I couldn’t get this if I was hiring assistant after assistant at $10 per hour.
So, do what you’d like with your outsourcing. Keep pinching pennies to keep your costs down…but realize that keeping costs down may be affecting your profitability and your sanity!
(Further Outsourcing Resource: Outsourcing Training and Full Service Online Business Help)
About: Alice Seba
Alice Seba earns a full-time online income as an entrepreneur and loves to help others achieve the same. With a focus on using content to create relationships, loyalty and results from the written word, she co-owns both a ghostwriting service and a private label content business. To get more tips for your content marketing, visit Contentrix.com - your free resource with plenty of tips and strategies.Freebies
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TIm King
This is so true, Alice. As a web-development consultant, I’m usually on the other side of that relationship. But I hear the horror stories of low-cost contractors.
A friend was telling me how his company contracts work on a certain project to a Mexican consulting house, at a fraction the hourly rate we charge. When my friend gets a new software release from the Mexican developers, it never works right. He always has to hack with it, suggest fixes, and then wait while they get it straightened out. He spends enough time fixing their mistakes that he feels very secure in his job, even though he works for a financial services company, in the current economy.
When I heard the story, I told him that we almost never let that happen. There are exceptions to the rule, yes. But every single exception is met with decisive action to make it less likely to happen again, because we have a team of experienced engineers using a mature process. In fact, one of our clients, when one of our releases didn’t work correctly due to circumstances beyond our control, the CTO got involved. It was that big of a deal. At my friend’s company, it’s just par for the course.
I know I’m rambling a little here, and this is probably starting to sound like a sales pitch, and I don’t mean it to. My point is that you frequently do get what you pay for. If you go with cut-rate prices, you will often get cut-rate service. And if you want effective service, you usually have to pay a little bit more. So determine where in your business the service you get counts, and then don’t scrimp on it.
-TimK