On the face of it, outsourcing seems simple enough. You work out what skills you need, search elance or place a job ad in the local paper, and contract the talent for a specific job.
For the small or solo business person who wants to expand without the burden (and risk!) of increased overheads, outsourcing can be ideal. Not only does it provide the business with greater flexibility and extended capabilities, it can help land contracts you wouldn’t otherwise have been able to win.
But is outsourcing really that simple? Of course not! In fact, it can be fraught with danger.
The Problems
SitePoint Community member hstraf recently faced this issue. As his business grew, he took on two freelancers, and this expansion allowed him to focus on researching and pursuing new clients and segments of the market.
Yet he wasn’t entirely comfortable with the situation. hstraf listed his concerns:
- “Fear of the contractor deciding to “run away” with my client. We had one situation recently where the client paid almost $20,000 for a project. After the project was finished, one of the graphic contractors (a guy whom I had hired several times before without any problem) decided to contact my client directly and offer his services to do some extra work. He told my client that he was the one who’d done the work, and that he could provide additional design services without needing to involve my company!
The SitePoint Community pooled their experience to come up with tips for hstraf. In the process, they developed a list of tecnhiques that any small business could better handle the outsourcing of Web work.
Option 1 – Use a Project Management System
Sketch advocates the use of a project management product.
“Communication with the client should be done through the system. That way, the contractor doesn’t know the client’s email address (as it’s masked within the system), and the client doesn’t know you’re using contractors because the emails come straight from the Project Management System.”
Adds johntabita, “If you don’t allow the contractor to have client contact in the first place, it’s not so easy for them to establish credibility with your client.” No credibility means there’s no opportunity to usurp your own position as owner of the relationship — so you keep a firm grip on the client.
This solution also prevents the client from finding out that you’re using a contractor (and that you’re potentially marking up their rates as you on-sell their skills to the client). It can also help avoid the situation where the contractor decides to contact the client directly and try to poach them, as they are never sure who they’re actually dealing with.
SitePoint Community members recommended PHProjekt, Phpcollab and Groove Workspace project management software products for the task.
However, problems with this solution arise when you really need the contractor to have personal interaction with the client. Perhaps you’ve hired a designer to create a site design, and they need to meet with the client to take a brief, present concepts, discuss amendments, and more. How can you avoid the potential for poaching in this case?
Option 2 – Use a Project Manager
johntabita has contracted a Project Manager to… er… manage his contractors!
A Project Manager is trained in project management, and they have the skills (and responsibility) to successfully act as middleman in the relationship. In this scenario, you as the business owner might establish the relationship, pitch to, and land the client. You then introduce your Project Manager, whose job it is to effectively liaise between yourself, the client, and any contracted staff to get the job done on time and on budget.
Says johntabita, “As far as owning the client relationship, having the Project Manager as your point of contact should reduce the risk of your sub-contractors stealing clients. Just find someone who doesn’t do Web development so there’s no conflict.”
He mentioned that, in addition to the anticipated benefits of contracting a Project Manager, the person he’d contracted “has also helped us break our workflow into phases, developed a workflow methodology, and tweaked our task tracking software so that it’s more like PM software.”
LeoWebDesign, however, points out a potential pitfall with this solution.
“The sub-contracting of the project management …would give the client a primary point of contact and free up more time for you. [But] if you really want to be completely in tune with your business and clients, then you really need to be the contact. Otherwise, you’re just a sales person. I would think it would be hard to build an ongoing relationship that way.
“It is important to check in regularly with the client so they know that you are the one “heading up the project”. Keeping in touch on a regular basis is necessary to build a relationship and resolve any issues for the client ASAP.”
One solution he tabled was to take a per-job approach to delegating client management. “You could also decide to maintain total control for all the larger clients and allow contractors more direct contact for the smaller stuff. I know this actually seems backwards because the larger projects require much more dialogue, but it does free up some time for you, while reducing the risk that you’ll lose the big money.”
johntabita supported this, adding, “Spend 90% of your time selling and getting more business, and 10% following up with the clients and your Project Manager to ensure everything is going well. That way, your clients will not perceive you just as the sales guy, but rather as the head of a company that is concerned with their well-being and satisfaction.”
And of course, if you’re uncomfortable with outsourcing the Project Management role, you could always consider hiring a staff member to take on this position.
Option 3 – Hire Contractors Your Can Trust
The Community also believed the problem could be addressed with a careful contractor selection process and stringent proving period.
As LeoWebDesign says, if you can’t trust your contractors with your clients, you may “have trust and confidentiality issues, not necessarily “management” issues.
“It is important to try to find someone that you trust. This isn’t easy. I would try to develop a relationship with a contractor slowly. Don’t throw part of a $20,000 job to a new guy if you can help it. Start a new guy out with something smaller to test the waters. Give him part of a job from someone that isn’t one of your best clients. That way if you lose the client it isn’t as big of a deal and you can cut the contractor off before a major loss occurs. A good test is to let the contractor “accidentally” know the client’s details to see if they contact the client.”
LeoWebDesign also highlights the importance of establishing the ground rules up-front in any contractor relationship. “If you supply [the contractor] a decent amount of work, you might want to let them know upfront that if there is breach of trust then the workflow will stop.”
Trust is essential to any partnership, especially when your livelihood is at stake! Working hard to source that trustworthy person is only part of the equation. Test them and allow them the opportunity to earn your trust over time — this is crucial to the relationship’s success.
Option 4 – Protect Yourself
Altima provides a number of tactics the burgeoning business can use to protect itself from shady contractors who might try to poach your clients.
“[The] usage of offshore sub-contractors can reduce the risk of having them steal your clients. …The client is much [less likely to use a] contractor from other side of globe. Of course, offshore outsourcing requires a stronger communication effort, but [also] has price benefits.
“Ask for a reference. If you [plan] to work with a company or person who constantly does outsourcing work, you can ask them to provide references from past clients [to whom they’ve contracted their skills].” This is a good way to check not just the quality of the contractor’s work, but to confirm their integrity.
“Indeed, we sign non-compete and non-disclosure agreement with most clients,” Altima adds, which is certainly a good way to make your expectations as the hiring party clear up-front. It also allows you to discuss with the contractor what might otherwise be a touchy subject, and gives you the opportunity to set the foundations for a solid, trusting business partnership.
Sharky explains, “I lock all my employees into a contract. I have used contractors in the past, and have also used contracts with [them]. I’ve spent the money to have an attorney write the contracts out correctly and [make them] air tight.”
Needless to say, signing legally-binding contracts at the commencement of a business relationship helps set a professional tone for the partnership, and establishes expectations in the contractors’ mind.
While many Community members felt, or had discovered through bitter experience, that contracts can cost more to legally enforce than the average business owner could afford, the fact that they’ve signed a legally-binding contract can simultaneously deter would-be poachers, and provide you with leverage if things get ugly.
Option 5 – Give Contractors a Good Deal
Once you find good contractors, you’ll want to hang onto them! But being a good employer can help you ensure that even brand new contracting partnerships have a better chance of success.
dhecker has some pointers.
“It’s up to you to ensure that you provide your contractors a better revenue stream than they would [gain] by stealing a single client and sacrificing their relationship with you. My programmers know that they could easily steal one of my clients and make some cash, but they also know that I’ve been paying their bills for years and no one client will offer them the steady work that I do.
“Professional contractors who are advanced in their career and have a reputation to uphold will probably not steal your clients. If you’re worried about this, you need better contractors, a better contract, and a better deal for the contractors themselves.”
Creating successful relationships with your contractors can only benefit your business. Good relationships mean happy contractors (who are more likely to refer other excellent colleagues to you should you need to contract further staff in future), happy clients, and an easy working relationship. Treating contractors well is the first step in the process.
Protect Your Assets
Your clients put bread on the table, which is why the relationships you establish with them must be your top priority. Expanding your business should not see you sacrifice the level of service or the closeness of the working relationship you have with clients. So take the time to explore your options, and aim to trial and review closely any systems or processes you use to manage contractors and clients.
These pointers may help you avoid having clients poached, and any ensuing law suits. Take a moment to see if and how you could work them into your expansion strategy. A dhecker says, “It’s up to you to make sure your contractors don’t want to steal your clients. Treat them well and protect yourself!”
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