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This article discusses the 4 different business models used by outsourcing companies. Each of these has distinct advantages and risks. Which one is right for your next project? Read on and find out!

This is the second article in a 2 part series. You can find Part 1. The ‘3 Flavours of Freelancers’ here. It discusses the features and risks associated with the different types of freelancer.

Part 2. The 4 Flavours of Outsource Service Providers

So much choice... Does it really matter?

This article discusses outsource companies, as opposed to individual freelancers. Hiring a company to do your work can offer some significant advantages over a freelancer, but it does come at a cost.

Outsource Service Providers- General Information

Before we dive into their respective models, here are some of the general pros and cons of using a service provider/company instead of a freelancer.

Pros

• May apply more rigorous development and project management systems to the work, lowering the risk of failure
• May be able to offer a range of professionals. Diversity of skills allows for multiple tasks to be carried out simultaneously
• Scalability, can often add more people or remove people at short notice
• May appoint project managers or project leads to manage the team for you. This gives you a single point of contact and a single point of accountability if something goes wrong
• Can ‘crank out’ large quantities of work in very short period of time. The easiest way to get bigger projects done FAST!
• In-house infrastructure such as hosting/development environments can reduce your costs in the short term

Cons

• Less visibility of work (you’re likely to have groups of people doing your work, without knowing who they are or their skill sets)
• A greater tendency to ‘black box’ work. That is, hide the work from you until it is ‘finished’ in their opinion, and then ambush you to signoff on the project on the due date
• Can have trouble with communicating requirements because of ‘Chinese whispers’. Often there is a single representative appointed to act as a go between, screening you from direct interaction with the people doing the work
• Some companies are skilled at extracting more money for less work. Particularly if they control development environments, you could find yourself held to ransom by an unscrupulous provider
• May get lower skilled labour assigned to your project, resulting in lower quality output (the classic bait and switch)
• Larger companies may be less committed to your success if they have a high volume of work. One bad review can be buried very quickly, and may be less expensive than fixing the project. Sucks if it’s your project they decide to cut their losses on
• Jack of all trades mentality. ‘We’re experts at everything’ attitude can result in generally poorer quality product, and many companies are reluctant to admit which areas they are stronger or weaker in

Where do they come from?

Online, Outsource Service Providers come from just about everywhere. Like freelancers, they tend to be predominately from developing nations; however unlike freelancers, a large proportion of providers have created ‘local’ presences particularly in the US and UK. There are also a lot of locally based companies that do the opposite to compete in this space. In addition to their local business operations, they create a business unit offshore and send work there to be completed at lower cost, whilst charging you a premium rate.

Below, we’ll discuss the 4 distinct models that I’ve come across are:

• Type 1: Standard Full Service Providers
• Type 2: Specialised Service Providers
• Type 3: White Label ‘Full Service’ Middlemen
• Type 4: White Label ‘Hands Off’ Middlemen Read the rest of this entry

This article discusses the different models used by outsource service providers and freelancers. We will talk about the different types, as well as the pro’s and con’s associated with each. These differences can have a major impact on the success of your project, and it’s important that you select the right one for the right situation.

This is part 1 of a 2 part series. You can find ‘Part 2. The 4 Flavours of Outsource Service Providers’ here.

Note: to my North American friends.. I apologis(z)e for the repeated spelling of flavoUr… I just can’t give that up to U

Part 1, The 3 Flavours of a Freelancer.

More flavours than you care to know about

If you jump onto one of the many outsourcing/freelance websites you could be forgiven for thinking that all outsourcer’s are the same. Sure, there’s an obvious difference between a solo ‘freelancer’ and a company; some have a logo and a website, some don’t. But there are differences that run deeper than that.

Why should you care?

As we’ll discuss, if you want a successful outcome on your project you need to understand who you’re hiring and how they work. This will affect the:

• quality of their work and what they can offer,
• work they can do well, and what they will likely do poorly,
• how they interact with you,
• price they are likely to demand,
• ‘value for money’ that they can offer.

As always, I’ll start with a list, and then describe each in detail. In my descriptions below, I’m talking from my personal experience, and I’m not dealing in absolutes. So you may find someone who has all of these qualities or they may have none. I’ve broken the article into 2 parts, as it was a little on the long side. So here’s the list:

Article Part 1. 3 Flavours of Freelance Providers:

• Type 1: Casual Freelancers
• Type 2: Sleepless Professionals
• Type 3: Fulltime Professionals Read the rest of this entry

Welcome to Part II of how to use customer feedback to select a freelancer. This article covers how to analyse and vet customer comments, as well as how to do a simple web background check.

This article is part of a series on How to Select a Great Freelancer Online.

You can find Part 1 here.

Read the recent positive comments

Don’t just take an average rating as your guide, jump in and read customer comments. In particular, find jobs that sound like yours and see what customers had to say. Were they ecstatic or just so-so? Check the English quality in the posts, if you find recurring grammatical errors, or strangely recurring comments. Not everyone is an English major, but sometimes these little things can help you identify falsified comments, or at least suspect ones.

Customer’s Seem to Have a Positive Review Bias

Be aware that customers are often coerced, begged, cajoled by their freelancer to leave favourable comments. The freelancer may also try and use their personal relationship with the customer as leverage to ensure that ‘minor issues’ are left out of reviews. Some flippant examples…

“Look how hard we worked for you, it COST ME money to finish your work!”

“Hugh my friend, it has been an honour to work with you. I will leave excellent feedback for you. I would be privileged if you would do the same!

Why mention this? Are they bad people for trying to sway your grade? No… it’s just business. A bit of a gentle squeeze can add a few points to their average rating, and a few extra dollars in their pocket.

The point I want to make is that glossy reviews are more the norm than the exception. Average providers with charismatic ‘front men’ will have very similar high positive ratings, to technically excellent providers. You need to look very closely to see the difference.

An average quality freelancer will provide a worse experience then an excellent one; but they’ll do a better job convincing you that there were good reasons why you had trouble! The fact that there is a positive bias in customer reviews is another reason why outsourcers with bad ratings should generally be avoided. Read the rest of this entry

This post is the first of a series on How to Select a Great Freelancer Online. It specifically discusses how to use past customer feedback and work histories to ‘read between the lines’ and reveal a freelancer’s real performance. You can find the index for the series and the first article here.

Part 1 of How to use customer feedback/ratings covers:

• How to use the average feedback rating (or score) to weed out under-performers
• How to assess past work performance and determine a freelancer’s credibility
• How to avoid being Scammed

Part II of How to use customer feedback/ratings (find it here) covers:

• How to analyse customer comments, what they mean, and reading between the lines
• How to do a background check on your potential outsourcer

So, On With Part 1. Customer Feedback, Past History = Future Performance?

The only way to verify someone’s past performance and identity online is by reviewing their customer feedback and interaction within outsourcing websites. All freelance/online outsource sites have customer feedback because it’s extremely useful for filtering out the trash (scammers, fly-by-nighters, psychos etc.). When using feedback and ratings it’s essential to remember that it isn’t perfect. As any investor will sorely tell you, past history is no guarantee of future performance! Add to this the fact that feedback histories can be gamed/manipulated, you’re left with an information source which is only useful if it’s used with care.

How to analyse customer feedback:

All feedback is not created equal, some reviews should be given more weight then others, and there are hidden stories in the data. Here are a few things to look for to keep you safe. Read the rest of this entry

This series of articles will help you achieve a much higher success rate on your projects by discussing how you can determine a good outsourcer/freelancer from a bad one. While it’s not 100% perfect, using my approach will dramatically improve your chances. I’ve used this approach on dozens of projects, and found that it has a excellent success rate.

When hiring a freelancer, we’re looking for someone who is adequately skilled, can communicate effectively, and who is going to take an interest in your work. It can be frustratingly difficult to find all of these qualities.

It’s also pretty common knowledge amongst freelancer’s that this is what most entrepreneurs are looking for. So it’s not surprising that on any given project, many of the bids received are designed to convince you that the bidder has all of these qualities… some bidders even go to the extreme of not addressing your project criteria at all; and instead focus on the touchy-feely ‘look how friendly I am’ stuff.

If you’re new to outsourcing, it’s normal to be drawn to the happy-friendly-feel good bidder. They make you feel comfortable and they always seen nice. I made this mistake early on, believing that many of these bidders must be so experienced, so smart, so great, that they need not concern themselves with the details of my project. I’ve had some major disasters (projects breaking down once the details are worked out) as a result, and I implore you to ignore feel good bidders and focus on my criteria below. Getting someone you can work with is important, but it’s essential that you don’t get drawn into the empty sales pitch!

So how do you pick a good freelancer? Read the rest of this entry

This article discusses what I consider to be the most important rule for entrepreneurs and small business to successfully use outsourcers or freelance labour. It is part of a series of articles I will publish over the next few weeks outline what I think the key guidelines are for outsourcing success.

My first rule of outsourcing is never, ever, ever, ever, outsource a problem! It’s the number one rule because it’s by far the easiest and most dangerous one to break. Early on I broke this rule repeatedly, without even realising what I was doing wrong. I kept thinking that I just couldn’t find good people, or that foreign providers just weren’t skilled enough. But the problem wasn’t (always) a lack of their skill; it was often my application of that skill. My expectations were in some ways too high and I was asking them to perform above/beyond their capability. I’ll explain what I mean.

Traps for new punters…

The first few times you engage someone to do specialist work for you, it’s easy to fall into the trap of giving them too much responsibility. It feels nice to ‘hand over the reigns’, and we’re conditioned to doing this. For example, if you take your car to a mechanic and you tell them that it needs a service; you’re trusting the expert to take care of the details. Here you’ve just outsourced a problem, that is, your car is worn and needs maintenance. You don’t know what maintenance and you don’t care! It’s up to the mechanic and you trust him to work out the details.

This mentality will lead you to disaster if applied to a foreign provider. In the mechanic example, if you were to outsource this properly you would need to say “change the oil, change the plugs, change the air filter, check the break pads for wear and tell me how worn they are…” etc. You are actively limiting the freelancer’s discretion, which forces you to consider your problem and work out a solution. Read the rest of this entry