Thinking of outsourcing? Here are a few things to keep in mind

A few years back, for what seems like a lifetime ago for me now, I was running a small company. One of our projects at the time was to build an online branded-email application targeting the local fashion industry. Back then, it was a pretty open niche, with no, or very few competitors. We felt there was a sufficient demand from the industry based on all the PR the fashion industry sends out before fashion shows, but we knew that the barrier against  entry into this niche was low. We felt we had a window of opportunity, but we had to act fast. We had big dreams, but unfortunately, also shallow pockets.

We didn’t have the in-house staff to take on such a project and to finish it before the next Fashion Week, where ideally, we’d approach fashion designers and their PR staff with the idea. So we made the decision to outsource overseas. This is the story of how not to make the same mistakes we did.

My story

I put together a general requirements document, with screenshots and rough work-flows – it was quite thick. I then posted the project on an outsourcing website where outsourcing companies could indicate their interest and bid on it. I researched the bidders by sifting through their websites, and searching online for any comments made by their previous clients. Eventually I settled on one particular company located in India, signed a contract with them, and gave them a deposit. In turn, they gave me administrative access to their sandbox area where I could monitor their progress. Things were going well.

However, just a few days into the project, trouble arose. The quality of their work wasn’t up to snuff, and they seemed to be taking strange paths (read: inexplicably ass-backwards) to obvious solutions. Furthermore, due to the time difference, questions I had could only be answered a full day after the fact. In the end, after a month or so, the project was so off course and out of scope, I decided to pull the plug and cut our loses. (Tip: Always work a clawback clause in a contract for unsatisfactory work – they work wonders.)

What went wrong?

Now that I have had a few years to reflect on this experience, as well as a few MBA courses under my belt, I’ve finally been able to figure out where I misstepped, and compiled a short list of things you should take into consideration before you decide to outsource a project, not just to overseas developers, but to any outside company. Mind you, this list is not exhaustive, but I feel it includes some of the major concepts often overlooked by those looking to outsource.

Outsourcing Checklist

• Know what you want – in detail
  Never, ever, ever outsource something you only have a vague idea about. Create very detailed documents, and specifications of what should be developed. I’m talking about, if possible, function level specs here. Depending on the complexity of the project, this phase could easily take you months but will be well worth it.
• Budget to manage the outsourcing
  Outsourcing should never be viewed as something you do and walk away from. Personnel should be assigned to monitor the outsourcing regularly. Key performance indicators (KPIs) and other metrics should be created in order to track the projects’ progress. This personnel should also be very knowledgeable of the project requirements and must absolutely be available to communicate with the service provider – which in our case would of meant finding someone willing to stay up very late to send and answer emails.
• Budget for the possibility of back-sourcing (i.e., reversing the outsourcing process)
  No one likes to fail, but it can happen. The only way to prepare for failure, is to discuss and plan for it. Account for the man-hours it will take to reintegrate the work back into your company. Plan for the transfer of any information, such as documentation and know-how, that you outsourced. Budget for the time and effort to get back up to speed after back-sourcing as well.
• Don’t carbon-copy and learn from your mistakes
  Each project, no matter how similar, is different. Technologies change, staff change. Account for this. Furthermore, no outsourcing project goes off without a hitch. Learn from those mistakes and document them, and do your best to not repeat them.
• Money isn’t everything
  Never choose an outsourcing provider based solely on price. Consider reputation and reliability as well.

Whatever happened to our project? It remained mothballed while the market got flooded with online branded email services and project management tools. We missed the window. But as will most unsuccessful ventures, you learn and grow, and I’m a better person for it now.

Do you have any other lessons about outsourcing?

Leave a comment

Management Outsourcing