How to Outsource – Why don't Elance do Plumbers?

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?

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13 Responses to How to Outsource – Why don't Elance do Plumbers?

  1. potato says:

    I’ve been ripped off twice on Elance (as a buyer). The reputational systems I realise now are key, it is too easy for fly by night operations to setup on these websites.

  2. Paul Browne says:

    Sorry to hear that – what happened?

    I’ve had nothing but positive experiences (again as a buyer), but I would choose the people I’ve worked with / people that are recommended to me ahead of somebody new (again the power of reputation).

    While nothing can eliminate the risk, using the escrow feature (with Rent a coder arbitration), and writing the spec very tightly helped keep things above board …

  3. Linda says:

    I am a systems documentation provider and was ripped off this week by a database application developer. I worked double-time all week to create a quality custom user manual for his client that wanted it in 7 days. It included workflow diagrams, custom header/footers, the works. I provided the rough draft and never heard from the guy again. He never paid the bulk of the project which was the rough draft milestone. I am a small fry and worked my tail off. He got away with a $1,000 manual for $87.50. He’s in Australia so there is nothing I can do. ELANCE is a MAJOR rip off – they should require all projects to escrow and they should pre-qualify buyers. At some point quality buyers will quit using these services because they attract the lowest common denominator (lowest bidders). That means quality providers will go elsewhere for jobs to bid. I know I am.

  4. admin says:

    Linda,

    I’m sorry that you’ve had such a bad experience on Elance – I was thinking of switching to them from Rent-a-coder, but I wasn’t aware that the escrow system on Elance was so poor.

    Although I’m normally a buyer rather than a seller on these sites, it upsets me that things like this happen ; on RAC I have a top grade reputation / feedback score and I guard it jealously. This makes it easier to work with top people next time around.

    What I suggest to the supplier (as I like to build trust) is that they deliver to me in stages. Stage 1 could be the first 10 pages, with 10% payment at that stage.
    Stage 2 could be further pages /diagrams/code etc.

    It means that I know early if the supplier is any good, and they know they will get paid for their efforts.

    Other suggestion would be to deliver your work as locked PDF documentation until you have final payment – not foolproof , but a measure of security for you.

    Paul

  5. Daniel says:

    Hi,

    I am in the middle of a project (as a buyer) but i am starting to get warning signals and would appreciate any advice or thoughts.

    I selected a provider that has a 5.0 rating on elance with 100% positive feedback from over 10 projects they won. The price they quoted was in the mid range of my bids and the communication started off very positive.

    The project was for a link building campaign (100 page rank 4+ permanent links on music theme related sites) for a new music site I am about to launch.

    The payment was 50% down with a fixed budget – and the amount of links required was set. The Links had to follow a set of criteria i.e. no blackhat, hidden links, forum posts etc… basically genuine links.)

    Yesterday I was sent back his first list of links, they contained irrelevant links, claimed that he had requested links from sites etc – however 2 of the links where from sites i own and had linked them myself! Another was a search listing result page, another an alexa ranking page and 3/4 of them didn’t have any page rank at all…

    Obviously trying to fool me into paying for links that had nothing to do with him, and I have paid a considerable deposit… Now I don’t know how to deal with it. It is not in escrow as I didn’t post a ‘select’ project.

    I want to get what i asked for, but am worried that he will realize i am on to him and just run off with my cash and do no more work. The project is supposed to be completed in 2 weeks, and he is only 5% through. The work he has provided so far I could have done myself in a few hours, so my project is far from being too much work or unreasonable.

    What would you suggest as being the best way to approach this / communicate with my provider?

    Thanks,
    Dan.

  6. admin says:

    Daniel,

    I never pay for work upfront – if things are as bad as you suggest, then your money is gone.

    From what I’ve heard you’ve two options

    1) State your concerns to the provider (and get it on the record). Say what you expect (using your initial requirements). Maybe (but not likely) it will work out.

    2) Cut your losses (both money and time). Get another supplier. But in this one, pay only *after* work is done. Maybe pay 20% after 20% is delivered, but never before.

    Make this clear to suppliers when they bid.

    Paul

  7. Linda says:

    Dan,
    Very sorry to hear about your situation!
    It does sound like its going south but I’ve worked projects that appeared that way and then worked out. There is always hope for the best outcome.

    These are a few things I would do…

    1. Communicate via the eLance PMB and then also send the same communication via email. With eLance watching, there is more accountability on both sides.

    2. Have an objective friend work with you to communicate with the provider. You do all of the communication with the provider directly but the other person provides an objective opinion throughout the sticky mess.

    This has really helped me in the past. Get a friend to watch your back, help you brainstorm, and one that can also be honest with you to point out any flaws during the previous communications.

    3. Get eLance involved. There is not anything they will do since you didn’t escrow but you want them to know about it before it goes south. Surprisingly, they offer some good advice too.

    For providers or buyers, this is the worst kind of nightmare so I can relate. Unfortunately, it is a situation that has kept me up many nights.

    After much worry over getting paid on multiple projects, I finally decided to require Escrow up front for any buyer I have not worked with before.

    ****That’s my #1 advice – escrow the entire project with any new provider you may work with in the future.****

    Try not to sour towards providers. I’m out here trying to make an honest living and since I have had problems with bad buyers in the past, I simply ADORE and am truly grateful for my regular clients.

    Knowing which tools are available (escrow) and when to use them will put you on the right track from the very beginning if you decide to outsource this way again.

    Hope it works out for you and you get what you paid for.
    Linda

  8. Daniel says:

    Thanks for the advice, I will follow up with my provider with an email that highlight my concerns and how I want it to get back on track – hopefully I can pull something of value out of this.

    But I will also look for another provider and tighten up the contract and run it through escrow, expensive lesson to learn!

    I have had a good experience with providers in the past and use a couple regularly that I have developed a good relationship with.

    I was hoping to find an SEO expert to use regularly and I guess i’m still looking…

  9. admin says:

    Daniel,

    I know of one Dublin based guy that I’ve met in person , he’s given me considerable and useful free advice, but have never paid him for SEO. Not sure if he does the manual link building stuff he tends to be more higher end than that.

    His blog is at : http://www.redcardinal.ie/

    Paul

  10. shayne says:

    Bit late, but to the person that got ripped off by the australian, contact the Australian Competition & Consumer Council. Believe me, they tale fraud very seriously and utterly throw the book at people that do that sort of stuff.

  11. Hope says:

    Elance SUCKS! It is both risky for buyers and sellers. Elance won’t intervene if a project goes south (in my case) and you are screwed.

    I put up 50% for a $800 project. The provider had a perfect score lots of feedback. During the project she was going through personal issues and felt she didn’t need to tell me and therefore a project that was supposed to be complete within 2 weeks still wasn’t complete after 6 weeks later after the initial due date she created! I canceled the project and requested my 50% deposit back. I couldn’t get my deposit back.

    Because i signed a contract with her (never do this!!!) she claims that if i don’t continue the project with her then she will bill me out her hourly rate and take me to court if i dont pay it. Or i can avoid all this and let her continue on the job.

    WTF!

  12. susan Soares says:

    Hey guys. I wanted to get in touch with as many people as I can regarding Elance and their shady business practices. I’m an employer. Elance let me hire a firm from India that they kicked off their site for God knows what 1 day after I posted my job. Did Elance tell me? NO. This company had 100% positive feedback. That happens because Elance allows them to create multiple accounts, hire themselves and give themselves positive feedback. Many times the projects they have listed in their profiles are not from other companies but inhouse projects. Elance let me hire them and they ended up stealing my intellectual property, taking the first two payments for milestones, never delivering anything, and HACKING my computer, Elance account, bank account and basically my life. DO NOT WORK WITH THIS COMPANY!

    I went to Godaddy to buy the domain ElanceSucks.com but it was already taken. What a surprise!

  13. Lyon says:

    That was a good blog, thanks for the thoughts on it. I’ve just written about my thoughts on using elance here: http://2010consultant.wordpress.com/2010/02/03/using-elance-have-someone-else-do-your-work/

    I’ll be posting a link back to this post of yours…

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