In Outsourcing the moment you think you know everything, you know nothing
Gonzalo starts by explaining that having understood from early stages that upon outsourcing and growing the outsourced team, management starts to become an issue; he decided to focus on a developing a process and inherent training that would ease the burden of managing the multidisciplinary remote extended team.
How did Gonzalo started to Outsource?
From a tender age in school as an immigrant, Gonzalo undertook the strategic approach of actively listening to the others and “reverse engineering” what and how they would go about challenges. The habit was effective and so it became a life philosophy, which later on was applied to “how to proceed with Outsourcing”.
One of the early learnings was that if you go about outsourcing you for one, need to provide your providers with a proper work structure as also to hire not the cheapest provider but the cheapest one that has the competence to deliver as per your requirements/ need.
A best practice that is referred to is the “Macdonalds” approach, meaning instead of hiring some “superman” or “wonder women” that is able to do everything, Gonzalo learned to split the task into smaller pieces and outsource each piece to a specific expert that will have to dedicate a limited amount of time to fulfill such task.
Why is there such a limited number of companies Outsourcing?
Besides the fact that Outsourcing is associated with big corporations, humans have the natural tendency to rather do the task themselves (hence being in control of) instead of having someone else doing it; it can go wrong; it can take more time to accomplish and so on …
People with no skills on a given subject, have to outsource and in doing so become the epitome of Rockefeller's top rule which reads “better to get 1% out of 100 3rd parties than 100% out of my own effort”
What and why do you Outsource?
As just one example, there is copy writing; which can be very expensive (even to outsource), and on major events and launches enterprises need direct marketing; now content writers are much cheaper than copy writers with the leverage of writing good persuasive content, so the business opportunity here is in hiring good content writers, training them towards e-mail copywriting and getting a profit by having a lower cost, charging less to the end client and ending up delivering better quality.
Realizing the advantage that outsourcing represents often starts with the acknowledgment of the one most painful task that is being performed internally.
Realizing the advantage that outsourcing represents often starts with the acknowledgment of the one most painful task that is being performed internally.
Yet, one must avoid the idea that outsourcing serves the purpose of getting rid of one’s problems. Gonzalo gives the example of Active Campaign which is the tools that he uses to launch manage his e-mailing (for the several businesses that he runs). On deciding to go with that tool he had two choices; either dedicating several hours to learn and master how to better use the tool or to hire someone who is an expert with it.
Now, in order to have it done in the proper manner, there is the need of clear instructions. So, one starts by hiring an expert, asking the expert to do it and video records him/ herself while doing it (for some extra cash). Then one passes on the video on to a low-cost VA who will perform the task for a fraction of the cost that an expert would charge.
The example of Macdonnalds shows exactly how good processes allow anyone (background independently), to successfully run the business.
How to start outsourcing?
To start outsourcing the advice is to do it on a need basis, meaning hire providers on an hourly rate basis who will only work and get paid when there is work to be done.
Then look for the cheapest hour rates with the highest quality. One current example is Venezuela; due to the internal turmoil that the country is undergoing local currency has completely crashed which means that it is possible to get freelancer that are better than the ones from the Philippines for just $1.85 per hour with the added benefit of being in the same time zone as the U.S.
A concrete example given by Gonzalo pertains Graphic artists, which in the U.S. would cost some $50 per hour:
- - He started by hiring 3 Creative Directors in the U.S. to tell him how they go about doing what they do.
- - Then he posted some adds in Venezuela with specifications that he learned out of the “consulting” action by the hired Creative Directors.
- - His system will automatically assign some tests to the applicants upon receiving the CVs.
- - Upon getting the test (filled by the applicant) the system starts to automatically negotiate the hour rates with them.
- - Only after the process is finished will Gonzalo spend time evaluating the best candidates.
Upon effective work Gonzalo also listed some support tools like slack, zapier or joyproof and then he has VA’s performing the work check on joyproff (as an example).
What is not subject of Outsourcing?
The Business Owner should focus on strategy and move towards stopping all business related work, by means of outsourcing it; this is Gonzalo’s perspective.
Then one needs to focus on two types of business:
- - Recurring Business, meaning what has already proven to work and be profitable (because following trends, that change every week, is like chasing smoke).
- - “One Hit Wonders”, meaning deals that happen once but produce a humongous high profit.
Every business has three main components:
- - Traffic
- - Conversion
- - Fulfilment
So if you are weak in one of these areas, partner with people that are strong in that specific area.
“You will only be good at one thing in life”, so you need to partner with others that are good at what you need but you are not good at.