Outsourcing is fast becoming the ‘oConomy’ or ‘New Market’ of 2010. Any company that is setting up an online business or optimizing an existing business will likely consider, at one point or another, whether or not to outsource any of their web design, IT maintenance, customer care or even data entry. And certainly, more and more companies are turning to outsourcing, often in an attempt to keep their costs down, and to stay competitive in an increasing complex marketplace.

The question about whether to outsource or not, at least for the thousands upon thousands who have already made this choice, is redundant. The real questions have become – What is Ethical Outsourcing?, and How to Outsource Ethically?

Let us start by taking a look at Outsourcing and the History of Outsourcing.

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What is Outsourcing?

Outsourcing involves hiring overseas companies or freelancers, located anywhere around the world, to do tasks you, as an entrepreneur, CEO or employee, would normally do yourself or delegate to employees of your company. Quite possibly, you’ll have heard of oDesk, Elance and Freelancer. Well, these are outsourcing platforms, where providers, from all corners of the globe, offer their services online, typically, at extremely competitive, if not unheard of, rates. Outsourcing can be compared to an online network or army of workers, and one which is certainly gaining in force.

The History of Outsourcing

Outsourcing is almost synonymous with, and certainly has seen an exponential growth spurt thanks to, the Internet and the Information Age. Think back to the early 1990s, when the Internet reached a critical mass, and then, almost overnight, technology changes started happening at an alarmingly rate. Blink, everyone had Internet. Then Youtube, MySpace, Facebook, Twitter. Blink, blink. . . Information became a primary commodity as our global economy morphed into one based on the manipulation of information, and the access to this information literally exploded. In the early outsourcing days, companies turning to outsourcers often sought IT providers. Today, a growing number of companies use outsourcing services as a means to develop their business, juggle the array of online social media and handle their customer care.

Is it Really Necessary to Outsource?

The reality for many entrepreneurs, who have attempted to set up their own company, is that they are just keeping afloat or are seeing a small profit margin. And many others are struggling to generate the same annual income they would have, had they sought employment, working for someone else. Outsourcing, if done ethically, may represent a way for some companies to stay in business.

But let’s look at the question for a moment from a different angle for a moment. My 2-cents worth is that trying to stop outsourcers from outsourcing would be like trying to stop social media, blogging and professional chat forums. I just can’t see this happening, short of pulling the plug on the Internet. Today, outsourcing is as much part of our economy, as local sourcing is. And it’s especially engrained as a business practise for those Internet entrepreneurs who are in the fast-lane to making the big money online and who are avid outsourcers. Those that want to outsource, or feel it’s the right choice for them, will outsource. And those that don’t, won’t. This article “If You Outsource, Outsource Ethically!” is a plea for just that, ethical outsourcing.

Argument for Ethical Outsourcing

Outsourcing ethically is a key to its long-term success. You may have heard the saying: “People like doing business with people they like”. Well, it would be a fair gamble to say, that, consumers prefer to buy from reputable companies, who make their business practises transparent and treat their employees with integrity.

Brian Clark and Jon Morrow, the authors of the e-book “The Outsourcing Conspiracy: What the 4-Hour Workweek and Internet Marketing Gurus aren’t telling You about Outsourcing”, ask the following question about outsourcing: “. . .but doesn’t something about it just bother you?”. As advocates of partnerships, they are pitching an alternative, and in all likelihood their main objection is not about the ethics of outsourcing. But what they say, echoes loudly for myself as a freelancer/outsourcer and should for any outsourcer. Whether you are a newbie or seasoned outsourcer, you should ask yourself on a regular basis:

“Do my outsourcing practises feel right (fair, ethical. . . )?

Is there anything that bothers me (should bother me) about my outsourcing practises?”.

Benefits Of Outsoursing

Here are a few of the more obvious benefits of outsourcing to consider when weighing the pros and cons:

The Time Zone Advantage:

A business owner can outsource any aspect of his online business to providers in a different time zone in the evening, and presto! the work will be in the company Inbox the next morning.

The Global Employee Pool:

A business owner who outsources tasks can tap into a network of literally thousands upon thousands of employees, the vast majority of whom are eager to do the work assigned. This is a treat for those employers who have tenured employees in the office, who grumble when given any new project.

The Clone Factor:

Ask yourself the following question: “What could you be doing if you, as the . . . . . (fill in your job title here). . . , if you were not working so hard? “What other revenue-generating ventures could I explore if someone else was doing some of my work?”.

Negative Effects Of Outsoursing

Below are a number of the negative effects of outsourcing to consider when weighing the pros and cons of outsourcing. The first three listed are from the perspective of the provider, the later from the perspective of the outsourcer.

Outsourcing often leads to Unethical Outsourcing

The no. 1 danger of outsourcing today, in 2010, is that quickly becomes unethical. There is a disturbing, albeit increasingly commonplace trend, whereby outsourcers pay $2 an hour or their own ‘next-to-nothing’ salary to a team of providers who do the bulk of their work for them, and then they pocket a difference that subsidizes trips luxury lifestyles, yatch trips and exotic 4-star holidays.

Outsourcing often leads to Unethical Outsourcing on a Mass Scale

Take for example, the new breed of Online Marketers today, who are making money by selling the concept of outsourcing at $2 an hour. Essentially, they rack in literally thousands, while trafficking the idea that there is absolutely nothing immoral about paying another person $2 an hour.

Outsourcing often leads to Unpaid Work

Another disturbing trend, on a micro-scale compared to the $2 an hour elephant-in-the-room, is that some outsourcers feel entitled to ask for sample work for free. I am willing to bet my last 2-cents that these outsourcers would seldom, if never, agree to provide sample work for free, and would certainly never work under the conditions they are endorsing.

Outsourcing is Damaging to Local and National Economy

In recent years, outsourcing hit the headlines with a vengeance. There was an out lash against outsourcing, with the main arguments used including that it does not support the local and national economy, it reduces wages, and it costs local jobs. Other opponents raised the red alert flag that outsourcing would have negative impact on future generations.

Outsourcing May Incur in Mediocre Results

If you outsource, you have no guarantee that the results will be up to your standards and expectations. Some provider’s work is quite simply average or below average.

Outsourcing Begs the Question of Legal Liability

The concern about possible mediocre work, albeit a valid one, is no match for the legal and copyright issues a company can encounter. If you outsource confidential work, such as payroll, private financial records, and secure transactions, speak with your company lawyer first. If you hire a provider to write your marketing copy or the company blog, research up on the question of who holds authorship. And assume that if the provider writes erroneous content, and you end up putting it on your website, you will hold ultimate liability.

Outsourcing May Result in Intellectual Theft

Another concern may be that the provider just loves your ideas, copies them and beats you to the finish line first. And quite honestly, good luck with dealing with intellectual property theft, especially if you are paying your outsource providers $2-an-hour.

How to Outsource Your Work?

Start by Outsourcing Your No. 1 Repeat Task You Do in a Workday

You want to outsource the jobs that you do repeatedly and avoid, where possible, outsourcing ‘one-off’ jobs. Here’s the logic. Each new job or task needs some explanation. If you have one job, you’ll need to do some explaining once. If you have five different jobs, you’ll need to do some explaining five times. And so on. . . The ideal scenario really is to find a good provider, to explain the job that needs doing once, and then to call upon this person whenever you need their services to do that specific task.

Breakdown Your Tasks into Mini-Tasks

It may be harder to manage the outsourcing service providers, as they obviously are not in the same office space, and more often than not, not even in the same geographical location or in the same time zone. And you do have to be as careful, when hiring an outsource provider, as when hiring any employee. There are providers who will accept to do a job and then disappear, thus delaying the process. In other cases, the provider accepts payment in advance, or periodic payments, and then the end results are substandard. The best way is to start off by breaking down any bigger jobs into smaller ones, so that you can establish how you work best together and to establish a level of mutual trust.

Ask For and Give Regular Feedback

Under no circumstances is it acceptable to allow someone to complete hours of labour and not to pay them. The best way to ensure that you are paying for what you want is to give regular feedback so that the end result really does match what you are looking for.

Guidelines for Ethical Outsourcing

Do Not Pay Sub-Standard Wages Under Any Circumstances

If you outsource, outsource in a way that doesn’t involve sub-standard wages. Use the minimum wage in your country as a guideline. Pay your online employees the hourly salary that you would want your partner or child(ren) to be paid for the same job. We are putting in place a employment system that will impact generations to come. What if your son or daughter joins this ‘oComony’? Would you want them to be paid $2 an hour? Paying sub-standard wages falls under the category of unethical outsourcing on a major scale. Not paying for work completed falls under the category of unethical outsourcing on a more minor scale. You can certainly ask a provider to show you their portfolio of work. Do not ask them to do any new work for free.

Act As If Adequate Compliance Measures Were In Place

We can expect more compliance measures, although it may take an Enron-incident for appropriate controls to be put into place. One day, maybe all website owners will be audited on their outsourcing practises, to ensure universal standards of Ethical Outsourcing are applied. Imagine that this were the case today and that all websites were red-flagged (or not) according to whether or not the company directors or entrepreneur(s) behind the scenes were adhering to fair and ethical outsourcing practises. Would your website be red-flagged? One sure-fire way to help ensure you are outsourcing ethically is to write an Ethical Outsourcing Compliance Code which you adhere to, and that you post for others to see.

Be Careful About the West-East Debate

Anyone who hires an Indian or Chinese or Pakistani technical solution provider, for example, may attempt to justify paying low rates by saying something like: “It’s fair to pay sub-standard wages to providers in some countries because the cost of living is less in those countries”. The truth of the matter is that North Americans and Europeans are now dropping their hourly rates just to compete with their counterparts in countries with lower living standards. This argument, of course, is what we can call ‘losing sight of the real issues’. Who cares whether the outsource provider is Indian or American, $2 an hour is simply an unethical rate.

Imagine the Employee Working at the Same Table as You

Let’s go back to the online marketer mentioned earlier who made a video sharing his ‘secret’ of how to hire employees for $2 an hour. Not surprisingly, he had over 1000 views overnight of his video clip. Let’s do the math, here. This marketer is obviously aiming to launch an Information product – be it an e-book, a software program or a video tutorial. And we can safely assume, he plans to outsource as much of the content as possible. If Marketer X converts only 10% of his following to purchasers of his e-book or software or video tutorial, this would still represent, for example, 10% x 1000 followers times, let’s say, $49.99 per Info. Product, and this would generate a round-about $5 000 for one video in one day. That’s pretty decent turn-over for someone who’s only paying $2 an hour. Could you sit down to dinner having pocketed $5000 in a day with the person you are paying $2 an hour? And even if you can, would other people want to eat with you, if they knew your business practises?

Treat Your Outsource Provider as a Partner

Create a win-win working relationship or partnership of sorts, and one that is as transparent as possible. Take for example, the outsourcer who works in the domain of website creation or design, server administration, SEO and article content. There are outsourcing companies that will bid for jobs and then outsource the work to individuals who will work at lower rates. That this pecking order happens is not surprising – some individuals strive to put themselves in project management or managerial roles while others seek task-driven assignments. In this particular scenario, being transparent would involve saying: “We are getting paid this much per website or article. We will pay you this % of our share to do the actual work”. A side benefit of creating a genuine win-win working relationship is that typically it requires you to exhibit less managerial control.

Be an Advocate for your Outsource Provider

A good employer acts as an advocate for his or her employees, and helps them evolve. One way to act as an advocate for your outsource provider is to promote their services on your website or to refer work to them. Another is to offer, where appropriate, to help the provider profile himself or herself better so that they can charge a higher hourly rate with their other clients. For example, you are working with this provider because they are able to provide a service you need. Can you spot a way they may get more business at higher rates? And if you see a strength that the provider is not tapping into, can you help reveal it to them through your feedback? Failing this, a periodic bonus or coffee break cash is a good way to show appreciation.

Ask Yourself: “Is There Anything that Should Bother Me about My Outsourcing Practises?”

At the end of the day, it all comes down to a simple question of conscience. Can you sleep at night while the providers who make your ideas successful, are earning a mili-fraction of what you are pocketing. Ask yourself regularly: “Do my outsourcing practises feel right (fair, ethical. . . )? Is there anything that bothers me (should bother me) about my outsourcing practises?”.

Conclusion

• Outsourcing is fast becoming the ‘oConomy’ or ‘New Market’ of 2010.
• More and more companies are turning to outsourcing, often in an attempt to keep their costs down, and to stay competitive in an increasing complex marketplace.
• The question about whether to outsource or not, at least for the thousands upon thousands who have already made this choice, is redundant.
• Today, outsourcing is as much part of our economy, as local sourcing is.
• If You Outsource, Outsource Ethically!

Image Credits

• Closeup of business people
• Businessman’s hand showing
• Two gesturing hands
• Young woman drawing graph
• Public announcement
• Businessman with Fingers Crossed

Find Something Missing?

While writing this article, it’s always a possibility that we missed some other great information or resources about outsourcing. Feel free to share it with us.