Successful Outsourcing

Successful outsourcing will not only allow you to focus on what you do best, but also find other ways to satisfy clients and expand your business. By building relationships with your subcontractors that are based on trust and respect, you will be able to create a team that can accomplish just about anything…and give you a day or two off in the process.

When I talk to buyers who’ve mastered the art of effectively managing external service providers, the same themes emerge over and over. I’ve distilled their advice into the following “Top 10 Best Practices” for working with external service providers. Following this advice can help you get the most out of your relationships with external vendors or contractors -- whether you use the web to find service providers or are requesting and evaluating quotes from vendors the “old fashioned” way.

1. Clearly define the scope and schedule for your project

This might seem obvious, but any successful outsourced project always starts with a clear statement of what you are hoping to accomplish. Define your project requirements up front. Service providers need accurate, complete information to present you with realistic proposals and to quote you a reasonable price. Be specific about the deliverables you expect the vendor provide. Give vendors as much information as you can about what you need delivered and the way in which you need the work done. Also, be clear and realistic about your schedule requirements - project schedules can have a huge impact on project costs.

2. Evaluate a service provider like you’d hire a full-time employee

When you’re evaluating proposals from service providers, don’t be afraid to ask questions. Just like hiring a full-time employee, selecting a vendor is a very subjective experience. Check their references and ask for feedback from other clients who have used their services. Engage in a dialog – if you have any concerns about a vendor’s specific capabilities, voice your concerns. Don’t just stew about it and hope for the best.

3. Look for specific experience fit

Ideally, the service provider you select will have specific experience with the type of project that you’re undertaking. You don’t want to be somebody’s “guinea pig.” This is especially crucial when outsourcing complex technical projects such as software development. For example, if you’re looking for someone to develop an application for the Palm PDA, make sure they’ve actually completed commercial projects on that platform for other satisfied customers. This advice holds true for other types of projects as well. If you need a business plan for opening a retail store, you’ll get best results if the consultant you hire has verifiable experience in the retail sector.

4. Don’t choose a vendor based solely on price

Though it might be tempting, never select a vendor based solely on price. Experienced buyers who have outsourced many projects and evaluated hundreds of proposals almost always recommend discarding the highest-priced and lowest-priced bid. Buyers report that their most successful projects are the ones where they felt the vendor offered a balance of good value and quality results.


One of the most important elements of subcontracting is making sure you and the subcontractor are on the same page and that there are no surprises. Keep these things on your list to help facilitate a smooth working relationship:

1. Use a contract
2. Make sure you agree on payment terms up front
3. Don’t pay in full until the job is complete
4. Be clear on how and when you plan to pay the subcontractor
5. Agree on a timeline for the work
6. Include a non-disclosure/non-competition provision in your contract
7. Determine how you will receive project updates
8. Clarify confidentiality expectations
9. Build in a “de-bugging” provision that identifies a specific period of time the subcontractor will be on call to fix potential problems that arise
10. Clarify the ownership of the project in writing


Protect Your Business

When you outsource, you are giving up some of your control over the project. Consider these tips to help you protect your business, interests and reputation:

11. Check references
12. Review the subcontractor’s portfolio
13. Verify skills
14. Consider a small test project first
15. Be prepared to review all work before turning it over to the client
16. Be very clear about expectations
17. Don’t leave any details out when relaying the project request to the subcontractor
18. Send all work requests in writing
19. Schedule an initial call and regular check-ins, if necessary
20. Be available throughout the duration of the project
21. Track all payments for your books

Client Relations

The goal of the project should be to meet and exceed the client’s needs. In order to do that, follow these tips to manage your relationship with your client:

22. Be the middleman
23. Tell your client you are using a subcontractor, if appropriate
24. Pad the time estimate provided by the subcontractor in your estimate for the client
25. Don’t forget to add in time for your management role
26. Be accountable for your work AND your subcontractor’s work

Aside from the Work

27. Don’t overlook the importance of complementary personalities
28. Respect the subcontractor’s time
29. Make sure there are no communication gaps
30. Give praise and appreciation for a job well done
31. Ask the subcontractor how it went at the end of the project and provide feedback.