The power of outsourcing: Why, when and how?

The word "outsourcing" sometimes conjures up images of entire departments shut down and moved overseas, often accompanied by an evil, moustache-twirling CEO, not wholly unlike Ebenezer Scrooge.

As someone who employs a primarily remote staff, this is not the kind of outsourcing I endorse. Nor is it representative of how many businesses work.

While it's true that large, multinational corporations may employ this tactic and get a bad reputation for doing so, outsourcing itself is not an inherently bad thing. For brand-new, or small but growing businesses, hiring freelancers and remote workers is often the best way to grow their business when time and resources are limited.

Outsourcing can be a smart business decision if done correctly, but it can also be detrimental to your business if you outsource for the wrong reasons, to the wrong person(s), or at the wrong time. Identifying a good time to outsource and implementing the strategy effectively can be a challenge, especially for new business owners and entrepreneurs.

Think your business could be ready to outsource some talent? Read on to make sure it’s the right choice for you and learn how to do it right.

Why Outsource?

Here are some of the many legitimate reasons why one might want to outsource business tasks:

1)  Someone can do it better than you

For some tasks, outsourcing to a specialist is not only easier, but also necessary. It is highly likely there are multiple facets of your business — media relations, copywriting, or video creation, for example — where your skills are not the best for the job. Hiring a contractor who is better at these tasks is a great way to ensure the job is done quickly and well. “Hiring a contractor who is better at these tasks is a great way to ensure the job is done quickly and well."

2) It frees up your time

As a business owner, your responsibilities will evolve regularly. A key element of good leadership is knowing when to step up and when to step out. As your business grows, there will be core areas where your expertise is needed to keep the company focused. Outsourcing other, less-important tasks makes you more available to apply yourself as a business owner.

3) The job doesn’t justify a new full-time employee

If you’re feeling overwhelmed, hiring a full-time staff member doesn’t always make sense. Perhaps there are one or two jobs that amount to a few hours a week — not quite enough to be a part-time position, either. You can choose the structure of your outsourcing arrangement and pay an hourly rate or a fixed price for a finished product. Either way, this can often be far more financially effective than hiring a full-time staff member.

So, what are the “wrong” reasons for outsourcing? Simply put, laziness. Relinquishing responsibility of a task or project simply because you don’t want to do it can disrupt your company’s progress. Outsourcing has to be done selectively and with careful consideration and can’t be limited to tasks you don’t enjoy.

When is it time to outsource?

This question is answered with two simple calculations of time and cost: the time and cost of doing it yourself, and the time and cost of hiring someone else to do it.

Do a cost comparison of freelancers and agencies who are qualified to complete the task you’re considering for outsourcing. How much will you be paying to save yourself some time?

Another factor to consider is time spent on hiring and training when you outsource. Outsourcing requires some additional time spent explaining your vision, your company’s systems and routines, and creating (and maintaining) project deadlines. It’s rare that you can outsource a task, walk away from it, and return to a satisfactory finished product. Consider the time and effort it will take to both hire and train your independent contractor in your comparison.

Often, it is more expensive but less time-consuming to outsource. In a situation like this, it comes down to finances: can you afford to outsource? If completing a project that you could hire a freelancer for is taking time and focus away from your more important tasks, you might instead ask yourself: Can you afford not to outsource?

How to outsource effectively

If you’ve decided outsourcing will work for you, one of the best places to start is your personal network. Talk to other entrepreneurs and business owners to see if they can recommend a good resource for a certain project, whether it's building a website, blogging, or something else entirely.

If your network doesn’t prove fruitful, options such as Freelancer and Upwork make outsourcing easier than ever. One of my personal favorites for finding freelancers is LinkedIn Recruiter, which has been very effective for our company.

The key to successful outsourcing is documentation. If you teach something to a freelancer, document it.  There's a good chance you'll need to outsource more than once or hire multiple contractors, so if you've documented your instructions, you can easily pass them on to future freelancers.

For documentation, one strategy we use is a wiki document. This detailed document explains how to perform business tasks and includes input from all staff members. By encouraging your employees to document their actions as they complete assignments, or by doing this yourself, you can create a blueprint of all your business' daily operations that newly hired contractors can refer to.

While clear communication is key to a successful relationship with your outsourced worker(s), a much bigger factor is trust. If you outsource a task and then spend all of your energy micromanaging it, it negates any time savings you might have achieved. When outsourcing, take your time and make sure you hire the right person for the job to ensure this doesn’t happen.

For some business owners, it's difficult to outsource tasks you actually enjoy, and for others, it's simply difficult to relinquish control. But after you've tried it, you will find that outsourcing at the right time, for the right reasons, to the right people, increases efficiency and ultimately improves your business.