How to Outsource – Why don't Elance do Plumbers?
December 22, 2005 13 Comments
Although not doing as spectacularly well as the construction industry, the IT jobs market in Dublin is ticking along very nicely. Not too nicely that we don’t have occasional thoughts about picking up a trade and going to work on a building site, but certainly a happy mid way point between the dot com boom and the dot com bust.
Even in this market, I hear prospective employers say ‘it’s very difficult to find good people’. We found that ourselves when were we building the Red Piranha framework. While they did well at the initial interview any people we looked at claiming to know Enterprise Java turned out to lack the experience, or were missing key areas (like xml, database access or even how to build the project).
Our solution was to outsource the IT project. While we designed and built key areas, some of the more mundane coding we outsourced overseas. Given that we’re not the largest of companies, how did we use this? We used a website called Rent a Coder , but there are alternatives like Elance , Guru and Get a Freelancer .
What all these sites give you is
- A place to post IT Projects and work that you want done online.
- A way for prospective suppliers to make bids on your project.
- A way for you to rate suppliers by seeing their history, refereneces and work that they have done before.
- A way for you to select a supplier and put payment in Escrow (a secure ‘bank account’ that doesn’t get released until you’re satisfied that the work is done, so that the supplier is confident of getting paid).
- A way of resolving disputes.
- A way of monitoring progress and communicating with the supplier. The communications are recorded to help resolve disputes should they arise.
- A way of releasing payment to the supplier once the work is complete.
Haydn Shaughnessy writes in the Irish Times Business Section (Dec 15th 2005 ) about about the new possibilites.
All very well and good, but there are still risks , even for Small and Medium sized companies (SME’s) sending their project overseas. Most of these can be mitigated by good project management, but some ‘best practices’ to help manage your supplier include:
How to get it right
- Keep the projects small to medium size – there are few big projects that cannot be broken down into smaller chunks.
- Start with a ‘low business risk’ project. Not only will this help you learn how to outsource, but it can help you build up relationships with key suppliers that you can use again and again.
- Go by reputation – other people will have dealt with these suppliers before.
- You get what you pay for : some of the bids may be extremely cheap. Often these are legitimate companies looking to build a reputation. sometimes they may be just students looking for pocket money – fine if your business can take that risk.
- Play the game. It’s not just the suppliers that gets rated. Remember that you have a rating as well that will affect people making bids on your projects in the future.
And remember …
- Know what you want when you begin. Like any project, if you change your mind, it gives the people working for you an escape route to charge you more.
- Write it down in as much detail as possible. Often, you forget just hom much you know about your business – new people coming in won’t know this.
- You get what you can measure. Write what you want in a way that you can ask ‘was this feature delivered’ and get a yes/no answer.
- Don’t overload the project. It might be tempting to load on a lot of ‘nice to have features’, but could they wait until phase 2?
- Make yourself available to answer questions and quickly. Every specification will need some clarification, but it aslo shows the supplier the importance that you attach to the project.
If you’re not sure what that means , give FirstPartners.net a call. We’re IT people, with a background in Supplier Management, Procurement and Purchasing. We’re available on +353 87 1224449, +44 2081 23 2081 , email PaulBrowne at Firstpartners.net.
Now if only Elance did plumbers …
Are you planning to outsource any or part of your next project?