Thread: An Outsourcing Guide for Startups

An Outsourcing Guide for Startups
May 28, 2012
Adam Rich

An unavoidable fact when you're starting a company is that you will be seriously strapped for resources. When you're scrambling to get something off the ground your time is much more dear than money, and that's why it's important to develop an outsourcing strategy. Here are the steps I recommend.

1. Own your project's core value. This is an important exercise in focus generally, but also the first step toward being able to intelligently delegate work outside your company. This core element is what you must do in-house. You can't trust anyone else to drive the kind of innovation that differentiates your new business from the rest of the market. In order to give this aspect the attention it needs, everything else possible should be outsourced. If you are opening a restaurant, don't build your own chairs.

2. Get organized. Almost every time, outsourcing horror stories can be traced back to poor organization. Before you can hand work off, you need a clear idea of what the contractor can and can't do, the exact spec and scope of the work you contract for, a template and schedule for regular reporting, a timetable for deliverables, time in your schedule to provide thoughtful feedback, an understanding regarding revisions and an exit strategy in case the arrangement just isn't working. If your plans are in your head and scrawled on bar napkins, this will be another valuable, basic exercise for your startup.

3. Budget. Even though your time is more valuable than your money, you still need to be honest and realistic about its allocation. Understanding what you can afford on a given outsourcing project may affect the spec you ultimately move forward with, or it may affect whom you work with. Offshore prices can be extremely attractive, but a language barrier will make communication that much more difficult. Also, time changes can introduce huge gaps in productivity as both parties wait for a window to sync up.

4. Take the time to think. When you are moving a mile a minute and are conscious of not just your time, but the cost of retaining someone's help, the temptation is to rush things to keep the ball in your vendor's court. This is a mistake. Even if you're both speaking the same language, making yourself fully understood is a huge challenge. The last thing you want to do is give feedback that you haven't fully thought through, and then have to go back to revise and refine your concepts on the fly. Every time you modify your demands you create an opportunity for a misunderstanding. You can't assume your vendor knows what's in your head.

5. Don't settle. If the project is ostensibly done and you aren't happy with what you're seeing, one of two things has happened: 1. They have made good on a spec you didn't take the time or thought to build out correctly (or you have allowed your expectations to bloat beyond your initial scope); 2. They aren't delivering, and you have to hold their feet to the fire. It's important to honestly assess which situation you're in before seeking redress. And be fair, because in most instances, it's a combination of the two.

6. Know when to go in-house. At a certain point your expectations are going to become too nuanced or great for your partner to meet them fully. Maybe you need something done quickly and need rapid iterations to develop it right. Maybe the project has become one so specific that it needs to be executed by someone who's bought into your culture. It's critical to recognize when the task you want to outsource is core enough to your startup that you need to take it in-house.

What did you outsource when you company launched?

read Ronald Coase "Nature of the Firm"

- chuck

I'm going to sound like an arrogant dickhead right now, but can I ask why you copy and paste business 101 articles everyday?

It's my contribution to the L4P community.

Originally Posted by Chaseme

It's my contribution to the L4P community.

Fair enough. I'm actually a really nice guy...I was just wondering.

I love his contributions. I never read them though. I just polp them into ispeech and sit back and listen

1. Cheaper
2. Better
3. Faster

Pick any two.

Originally Posted by whoosh

1. Cheaper
2. Better
3. Faster

Pick any two.

Pretty accurate...usually it's 1 + 3.

2 can stand on its own if it truly is better.