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How to Get The Best out of Outsourcing

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How to Get The Best out of Outsourcing
 
 

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How to Get The Best out of Outsourcing

Every manager knows that to compete in business you need the right people with the right skills.   Yet today, we’re in a new era of talent in which there is a growing gap between the demand for skills and the supply of people that have them.

Just putting out a help wanted ad or even recruiting at top universities isn’t enough anymore.  The US and Europe make up roughly half the world’s economic output, but only 10% of the population, so much of the world’s best talent lives in developing countries.

Yet this is not Mitt Romney’s outsourcing.  It’s no longer a matter of trolling the world for people poor and uneducated enough to work in Dickensian conditions for low pay, nor can you simply sign a contract with a foreign employment agency and expect to get access to top talent.  Today, if you expect to succeed, you’ll need to learn to do outsourcing right.

Why Outsourcing Has Become So Important

It’s never been harder to compete.  Whatever business you’re in, chances are that your suppliers are thinking of integrating forward and your customers are considering integrating backward.  With industry lines blurring, you also have to contend with new market entrants and a slew of startups powered by open technology and venture capital.

So strategy is no longer about planning, but being agile.  You need to act quickly to recognize threats and opportunities, collaborate across your organization and innovate.  Then, when it comes time to execute, you need to scale up quickly in highly coveted skill areas that you don’t have in-house.

That’s why outsourcing is becoming an essential capability for every enterprise.  The skill sets needed to execute plans have become too diverse for any organization to keep on staff full time.  In short, if you want to access top talent, you need to look outside your organization and tap the global market.

Screening Outsourced Employees

Much like with in-house employees, there are a variety of approaches to evaluating outsourced employees.  Elance works with over 3 million freelancers across the world working in a diverse set of fields.  Each contractor needs to complete an online course or pass a test in order to get accredited in a specific skill area.

For large corporate customers, Elance also offers private talent clouds and works with its clients to develop screening processes specific to their needs, such as more in-depth aptitude tests and legal and background screening.  For some specific high-end skills, such as IBM Watson development, it also works with external firms to accredit talent.

Toptal, a firm that specializes in “rock star” engineers in highly coveted areas such as Ruby on Rails and Python development, puts every contractor through a stringent evaluation process, including an in-depth interview, personal skills screening and a two-week trial period for each new engagement.

Other firms, like Icecat, an e-commerce company, take a more personal approach to outsourcing, accessing developer communities to get to know developers personally and making regular trips to the countries where they reside.  Icecat’s outsourcing activities led them to hire full time teams in emerging markets.

Understanding The Global Market For Talent

Outsourcing is not monolithic.  Taso Du Val, CEO of Toptal, says that he sees vastly different skill levels and prices in different regions.

Former Soviet Union: Software developers in the former Soviet Union are some of the best in the world and Du Val mentions graduates from Moscow’s MIPT as being especially impressive.  They are also very pricey, earning from $4000-$8000 per month, which is why Ukraine is also popular, where talent is also good and costs from $3000-$5000 per month.

Eastern Europe: The former Eastern Block countries of Poland, Czech and Hungary are also great sources of talent, but Du Val puts Poland a head above the rest.  Besides great programming skills, developers there also have excellent communication and business acumen and are priced reasonably at $4000-$6000 per month.

Latin America: Due to the similarities of time zones, many US firms favor Latin America for outsourcing.  Du Val is especially impressed with what’s available in Brazil, where he says you can find some of the best Ruby on Rails programmers in the world.  However, you pay for quality and in Brazil top developers demand $5000-$10,000 a month.

Asia:  It’s long been known that Asia is a hotbed of technical talent.  However, there is also lots of demand from multinational and local corporations that operate in India and China, so it can be hard to find truly world class people for project based employment.  Du Val prefers Pakistan, where you can get very good work done for $2000-$5000 per month.

The Key To Success Is Managing Outsourced Employees As Your Own

Talk to people who have outsourced and you will hear both fantastic stories of success and also some real nightmares.  The key to getting it right is managing outsourced talent as if they were your own employees.

Toptal’s Du Val stresses that you need to look beyond technical skills and also look at communication skills, initiative and teamwork.  Elance has developed a monitoring and feedback system that is so good, that some successful outsourcers come to them to help manage the network and cull the ranks of freelancers they already have.

Also, much like full time employees, you need to actively manage outsourced talent,  starting them on small jobs, but making sure that you keep them challenged and instilling them with pride in the projects that they work on as well as their own contribution.  Everybody, whether insourced or outsourced, wants to feel that their work has meaning.

Most of all, you need to treat outsourcing as any other part of your business—an important capability that you need to invest in, improve upon and take pride in doing well.

Source: Forbes

 

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Update: 2

UK manufacturing sector spends 132 per cent more on business and IT outsourcing in 2014

Source: Manufacturing and Logistics IT

The UK manufacturing sector spent £130m on outsourcing services during the first half of 2014, representing a 132% year-on-year increase, according to the latest arv ...
Source: Manufacturing and Logistics IT   Full article at: Manufacturing and Logistics IT Aug 14 2014, 1:50am CDT
 


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