When does it pay to outsource your small-business tasks?

By Christopher Null, PC World |  IT Management, outsourcing

Most outsourcers swear by third-party freelancing services to help vet knowledge worker providers, manage payments, and provide an intermediary if something goes wrong. Elance, oDesk, and Freelancer.com are the big ones. On the other hand, some caution against using manufacturers' representatives to communicate with an overseas factory. Says Lloyd-Roberts, "I use Alibaba, and every time I'd put in a request I'd get a response from the same U.S.-based rep company. Using a rep blows your margins."

Outsourcing challenges

Once you've found the right overseas partner, the hard work still lies ahead, and plenty of challenges await the unprepared when it comes to actually working with this person or company.

After language barriers, discussed above, the most common issue cited in dealing with outsourcing providers is that of time lag. The time difference between California and Bangladesh is 14 hours. At the end of your work day, they're still asleep over there. While some providers keep "U.S. hours," many do not, and you'll need to make peace with longer turnaround times and a lack of real-time communication. The typical strategy: Bundle up all your work, send it to the provider at the end of the day, and expect to have the completed jobs waiting for you in the morning when you get in.

Another challenge, closely related to the language issue, is one of the provider simply understanding the tasks assigned and the goals of the work being performed. This problem becomes compounded the bigger the project is. A local developer may understand well what the key goals of, say, a parking spot-finding iPhone app is, and can make certain decisions about the project without having to consult you, in case information has been left out of the design spec document. A foreign developer may have no clue what the real value of the app is, and his instinct about developing it may simply be wrong.

For any project outsourced like this, information is essential. You can't provide too much of it, and the more organized it is, the better. This may take an exceptional investment of time up front, but it will pay off in the end. Unfortunately, as programming projects migrate toward agile development principles, this type of carefully-scoped, finite design is increasingly difficult.

One aspect of outsourcing that's not overly complicated is tax considerations. Hiring an offshore contractor should create no additional tax headaches than hiring one in-country. In fact, outsourcing overseas may actually protect you from claims that a contractor is an employee, a common problem that can arise when hiring a local contractor. If paying people overseas seems daunting, use a third party like Elance to handle the relationship.

Originally published on PC World |  Click here to read the original story.
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