Outsourcing Pitfalls You Can Avoid

Bill Hackos, PhD
Vice President, Comtech Services, Inc.

Your management has told you to outsource some of your documentation efforts to save headcount and money. Initially, you are appalled and upset. You will have to cut back on your staff and select an outsourcing supplier. What to do?

Before you do anything else, it’s important that you explicitly describe for yourself just what is to be outsourced. You need a statement of work. Do you want to hire contract writers from an outsourcing agency that you will have to equip, house, and manage yourself? Do you have enough managers for that? Or, do you want to hire an outsourcing organization that will do the entire job, including housing its own writers, providing its own equipment, and doing its own management? Are you more interested in saving money, or are you looking for special expertise? How much is it currently costing you to do the function that you intend to outsource? How much would it cost you to develop your own expertise to perform the function?

If you decide to outsource, you will need to develop a Request for Quote (RFQ). Then you can send the RFQ to a series of vendors and make a selection based on criteria you have developed.

Remember that your management is expecting you to save money and bring in expertise without adding to headcount. Don’t be tempted to base your selection on criteria that are irrelevant to your management’s goals. There are a number of consultants, books, and white papers that can help you. Here are a few pitfalls that you should avoid at all costs.

Pitfall 1: Selecting only Local Suppliers

You probably already have staff that is not in front of you everyday. Some of your staff are telecommuting. Some work at other company sites. Your company may have acquired another company recently, and you are managing their writers remotely. Your printer and graphics vendor may not be local. You are well qualified to manage people remotely. You have excellent tools, phone, fax, server, Internet, and intranet. What advantage does a local vendor give you? You can see the vendor staff in person, and the vendor’s staff can come to your office or a developer’s office on short notice. However, you may have to choose between a vendor who does high quality work but is not local and a mediocre local vendor. You should always choose in favor of quality. The cost of phone calls or travel a remote vendor may incur is usually small compared to the cost of fixing quality problems created by a mediocre vendor. If you insist on a local vendor, your pool of candidates is greatly diminished and the likelihood of a quality outsourced project is also diminished.

Pitfall 2: Selecting Friends

You have just been downsized along with other companies in your neighborhood. Some of your friends are looking for work. You know they must be good writers because they are fun to be with. Besides, you might need a favor from one of them someday. They get together and form an ad-hoc documentation outsourcing company or make contact with a body shop. What should you do?

Hiring your friends rather than using an established outsourcing organization is risky for you. You have an obligation to your management and your company. Why risk failure just to help your friends? At the same time you are risking that friendship if your friends don’t perform well.

Pitfall 3: Selecting the Lowest Price

We all have a natural urge to save money as well as a concern about being ripped off. However, you should control these urges and remember that management wants to save money while maintaining quality. You wouldn’t think of going to a camera store and purchasing the cheapest camera, because you know that not all cameras are alike. You ultimately strike a balance between cost and quality. You should do the same for the projects you outsource. When the cheap vendor produces poor quality, your management isn’t going to praise you for saving money.

Many managers are concerned that their outsource vendors may be making too much profit. Your concern should be how much you are saving while maintaining quality, not how much your vendor is making. It may be that the vendor making the most profit is also the one that saves you the most while maintaining high quality. If your outsource vendor is making a healthy profit, it will be more attentive to your concerns than if it is only eking out a small profit or losing money. The best situation is one in which you save the most money while maintaining quality at the same time that your vendor makes a good profit.

Pitfall 4: Meddling with Your Outsource Supplier’s Management

You want your outsourced project to go well. So you want to know all the details about how it’s doing. The temptation for a manager is to try to manage the details of the outsourcing. Remember that if you have chosen an adequate outsourcing vendor with a good track record, its management knows more about managing outsourcing than you do. Let your vendor manage. Many outsourcing projects fail because an amateur in outsourcing, you, meddles in its management.

Your job should be to do quality control on the results. Is the documentation accurate, usable, and well written? If you detect a problem, go back to the vendor management and let them resolve it. If they’re making a fair profit on your project, they will be eager to resolve problems and please you.