5 Fundamental Outsourcing Mistakes Made by Small Businesses

Outsourcing your non-strategic business processes allows you to quickly grow your business and save costs, but costly mistakes can quickly lead to business failure. When it comes to outsourcing tasks to independent contractors, there are five fundamental mistakes that many small business owners make that end up hurting their business. The following five mistakes should be avoided at all costs.


We Don’t Need Managers with Outsourcing

Like any other business, independent contractors and freelancer workers manage their own internal processes. However, this doesn’t mean you should assume they can or will manage your business. While you don't want to micromanage your remote workers, you can't expect them to manage your business. It is crucial for you to hire and train your own managers for both internal and external work projects.


We Can Hire Workers Anywhere in the World

Because of the reach of the internet, many businesses falsely assume that they can hire contract workers anywhere in the world. While labor rates are lower in other countries, however, culture and language match is key to your businesses productivity. Nations that are located near you may be in the same time zone, making it easier to communicate with your remote workers, but they may lack the skills required to complete the task successfully.


The Lowest Price That Can Be Negotiated is Fair Compensation

If you aren’t able to keep your virtual team happy, outsourcing won’t work. When your remote team is unhappy, the work will suffer, so going as cheap as you can is not a good deal. When determining fair compensation, you want to offer a rate that is slightly higher than the market price in the country where you are outsourcing, but less than what you would pay in your country.


You’ll Save Money on Your IT

While the remote workers that you hire will be using their own equipment and tools, you will still need to spend money on different IT tools to communicate and collaborate with your team. You will also need to invest more training in your team and increase your capital budget so you can purchase new hardware and software.


We’ll Outsource Everything and Save Money

There are some small business owners who think they can save more money by outsourcing that lands on their desks. You should only be outsourcing tasks that are outside your core competencies and those functions that can be managed with qualified deliverables and checkpoints.


As a small business owner, you should never view outsourcing as an inexpensive and easy way to offload work. It should be used to build an efficient, lean, and competitive business to help you save time for strategic focus.



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