How to Outsource Effectively

In today's fast-paced business environment, companies of all sizes want to maintain competitive advantage. Pressured by daily demands and long-term goals, many businesses are realizing they can no longer do it all alone.

As a result, outsourcing recently has made global headlines as a key strategy for achieving marketplace competitiveness. "Outsourcing," in its basic definition involves transferring or sharing control of a business function to an outside supplier. In fact, small businesses are following the moves of larger companies by outsourcing various functions, from HR to finance to customer service.

To be effective, however, outsourcing involves a degree of two-way information exchange, coordination and trust between the outsourcer and its client. Simply put, using an outsource company can help reduce costs and gain efficiencies by leveraging the talent, technology and expertise of third party vendors. Additional benefits of outsourcing include the ability to purchase intellectual capital, focus on core competencies and better anticipate future costs.

The ins and outs of outsourcing
A relationship between the company and the outsourcee (if you will) is different than relationships between buyers and sellers of services. In the outsourcing relationship, both parties integrate and share control of a work process rather than remain separate.

In today's global and interconnected environment, it is common for businesses to choose outsourcees that they have never met in person. Two good examples are the freelance Web sites www.elance.com and www.guru.com. Both serve as marketplaces for buyers and sellers of particular services - from graphic arts design to marketing management. Elance and guru allow you to narrow down your choices based on expertise, location and price. These types of vendor marketplaces provide the flexibility of choice, with the power in the "buyers" hands.

Guidelines for choosing outsourcing partners
There are a few important points to remember when choosing outsourcing partners:

1. Consider the provider/vendor's references. Create three or four questions that you can ask various references in order to get a complete perspective of the vendor's work style, ability to meet deadlines and competency level.

2. Ask to see a portfolio or record of the provider/vendor's past work. Again, having a work product to reference will help you to better understand if the vendor is going to meet your specific outsourcing needs (for example, specialist vs. generalist)

3. Ensure the provider/vendor can be available during the work hours and days that you specify - some companies need an outsourcing partner with round-the-clock availability; others schedule weekly check-ins to report on progress.

4. Do not immediately choose the lowest priced provider. All elements discussed above must be taken into consideration.

5. Run a trial. There is no need to commit to long-term contracts with outsourcers. Try outsourcing a stand-alone project and then consider a longer term relationship once you see and are comfortable with the results.

Outsourcing is not right for every business, but it could be for yours. Think about the functions-from human resources to accounting to marketing - that may need a clearer focus. In turn, it will allow you to focus on your core business and ultimately, reap greater rewards.

Andrew Brown and Small Business Guru provide Coaching, Inspiration and Practical Advice for Small Business Owners and Entrepreneurs. Subscribe to the free, weekly newsletter at http://www.small-business-guru.com