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What Is Outsourcing And Why Should I Do It?

By Edited Sep 10, 2015 0 0

What is Outsourcing?

Outsourcing is simply paying someone else to do the work rather than you or your company doing it. Instead of having a paid employee, in some cases, who you then have to find enough work for to justify their continued employment, or doing the work yourself, you pay someone, either an individual or company, to do a specific job for a specific price.

Outsourcing is very common for online businesses, and this type of work rarely requires someone to be in a specific location or country. As long as you can communicate with each other, by email, instant messenger, message boards or, more rarely, by phone, your comparative locations do not matter.

Outsourced
Why Not Do It Yourself?

Insufficient Long Term Work

For a company, there simply might not be enough of the type of work to justify either a full time or part time employee to do it. For an individual, there are a number of possible reasons.

Knowledge

You may lack the knowledge or skills to do the job yourself. This would require learning some new skills, which you may never use again. Remember, if you can't do it, there will always be someone else who can, and often do it better, faster and therefore cheaper than you.

Time

A one person business has a specific and limited number of hours per day in which work can be done. You may simply not have the time to do the job being outsourced. This also applies to many small businesses.

Money

It may be quite simply cheaper and more profitable to pay someone to do the work than do it yourself. Even if you possess the knowledge and skills needed to do it, the effective cost of hiring someone else can be less than if you had done it.

Example: Your work generates $10/hour in income for yourself. The job you are considering outsourcing will not generate any direct revenue, although it is needed. You estimate that it will take you five hours to complete the job. The total cost to you is $50.

You post the job on a freelancer site, and you pick someone who will do the job for $25 including all costs. During the time when you would have earned nothing doing the job yourself, you have now earned $50 doing your normal work. $24 of this is spent on the freelancer and the costs involved in hiring them. You are now $25 better off by hiring someone else to do it than you would have been if you had done it yourself.

This doesn't even consider what it would have been like if you had to learn some new skills that you wouldn't have used very often, if ever, to do the work.

If you want to do this in your free time as a hobby, though, the time and money constraints don't apply. Doing the job in your prime working hours is a different matter.

Where can I Find a Freelancer?

There are a lot of sites set up specifically to provide a market for freelancers to sell their services and outsourcers to buy them. Usually, if you have a job you want to outsource, you would go to the site, sign up for an account there, and post your job, describing a variety of details such as job type, work entailed and budget. There are many categories of job types you can post to; if you were posting a software development job, you would select the appropriate programming type or language, such as PHP, ASP, C++ etc. There is typically a fee for posting a job.

Some of the bigger and well established freelancer sites available are:

Elance
Freelancer
Odesk
Scriptlance Scriptlance was acquired by Freelancer in July 2012

Although this is by no means a complete list. You are advised, though, to stick with a well known and established site for your own security, rather than a smaller or newer one, no matter how attractive the offer to use them might be - lower costs for example. It does no good saving money on the job if something goes wrong or the site goes under and you are unable to get your money back or get any recourse.

How Do I Pick Which Freelancer to Use?

Once your job is posted, freelancers will start bidding on them, specifying a price and a time frame. Check these freelancers carefully; don't just go for the cheapest.

See what their overall feedback is, read the comments and feedback on jobs they've already done - there are cases where the feedback score is terrible, yet the comment says the freelancer is excellent and they'd use them again, so probably a mistake was made there - and how much experience they already have in the same type of work.

If they have a portfolio, have a look through that. Sometimes, the lowest bidders may have no feedback; they may be doing a loss leader for their first job(s) to start getting some feedback before they can charge what they are worth, and this should show in their portfolio.

If an offer seems underpriced, it quite possibly is. Compare it against the competing quotes from other freelancers. Although the spread on the bids on a job can be enormous, from a few tens of dollars to thousands on the same job, many of the bids will often be in the same range.

Once you have selected your desired freelancer, assign them the project. The payment may need to be kept in escrow. This is often arranged by and through the freelancer site, and will be paid to the hired freelancer on completion of the job. Do not pay the freelancer up front. When the project is completed and you are happy with it, you then pay them, although in some cases an interim payment may be required at a goalpost agreed on beforehand.

Freelancer sites allow work in many categories and sub-categories. If there's an online job that needs doing, you can find someone to do it, whether it's internet marketing, web design, programming, writing, graphic design or some category not mentioned here.

Outsourcing by using freelancers is an excellent way of leveraging your time or avoiding the need for a full time employee. It is also a good way to earn money as a freelancer yourself.

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