3 Fatal Outsourcing Mistakes


Outsourcing Tips Lesson Transcription:

Today I want to give you a quick outsourcing lesson.

What prompted me to do this is the number of questions I’ve received lately from students in my Internet Business Accelerator program about outsourcing in Odesk and eLance.

What I’m seeing is a lot of new entrepreneurs going to these powerful platforms and, unfortunately, not getting good results.

They then come to me and I have to break the news to them that it’s not the contractor’s fault – it’s their own fault because they went about the process all wrong.

So I want to share three simple strategies with you to make sure you get the best results from Odesk or eLance or any outsourcing platform you use.

Outsourcing Strategy # 1 – Quality vs. Value.

We all know we can go to Odesk or eLance to get jobs done for a fraction of what it would cost to hire an employee, and that’s why we love those sites.

But if you go in to a site like Odesk, post a job and shop purely based on the lowest price, I guarantee you will never get a result you’re happy with.

This is because there are a lot of contractors out there who don’t have the skills to do the job, but they will lowball the prices just to get any sort of work.

They are NOT going to do a good job for you!

When I post a job on Odesk or eLance, here’s what I do.

 Step 1 – I post the job and walk away for 48 hours and let the applications flow in.

 Step 2 – I log back in and start to filter them.

My first pass of filtering the good candidates, I don’t look at price at all.  Here’s what I look for:

  • Qualifications – Do they have the qualifications needed for my job?
  • Feedback – Have prior employers said good things about their work?
  • Work History –  How many hours have they logged?
  • Do they have a good portfolio?

So the most important thing I’m looking for initially is quality!

Once I’ve shortlisted my candidates, then I can start shopping for value.

But the reality is, if you choose the cheapest contractor but the qualifications aren’t there, you are just throwing away your outsourcing money.

So shop for quality, then value!

Outsourcing Strategy #2 – Fixed Price vs. Hourly

Now, another mistake I see too many entrepreneurs making is this: they post jobs that have a very specific outcome, such as:

  • Designing a webpage
  • Designing a graphic
  • Writing a salesletter

These are outsourcing jobs that have a specific outcome and deliverable and job is complete once they are finished.

These should be fixed price jobs, but because many people have no idea how long these jobs should take, they post them as hourly contracts.

The problem with hourly jobs is that you are not motivating your contractor to get it done as quickly as possible.

Secondly, this can lead to big, ongoing bills and a deliverable that you are not happy with and you overpaid for.

My rule of thumb is that if I have a job that has a specific deliverable, it is ALWAYS a fixed price.

If I don’t know how much I should be paying for that job, all I have to do is search around and see what other employers on those websites are paying for those jobs and use that as my benchmark.

And keep in mind that you will get applicants bidding all over the place.  The price you enter is simply the baseline recommendation, not necessarily what you will end up paying.

You may get someone well qualified who bids less than you offer, which is great.

But the bottom line is that you should NEVER hire a contractor on an hourly basis unless it is truly an ongoing job.

People I hire hourly are for jobs like virtual assistant, where every day they have specific tasks they need to do and I know how long those tasks should take.

Because if you hire someone on an hourly basis and you don’t know how long their tasks should take, you are setting yourself up to potentially be screwed – sorry, there’s just no nice way to put it!

Outsourcing Strategy #3 – Setting Expectations

Failing to set expectations is probably the biggest mistake you can make when outsourcing a contract, and the mistake that is most likely to lead to a failed contract.

It seems that too many entrepreneurs believe that these contractors should read minds.  They. Do. Not!

Whenever I hire a contractor to do anything for me, I give them the most explicit details possible.

For example, if I want a graphic design I will sketch out what I want as closely as I can.   I will also send over examples of other graphics that I like.  I will give very specific details on colors and wording.

If I want a webpage designed, I will draw a mock-up so the contractor will understand where everything needs to go.  I will send examples of sites I like and tell them exactly what I like about those sites.

But here’s the reality – that takes time! 

I may spend a couple of hours pulling together details to give to a contractor, but the fact is that if I don’t, they will deliver what they think is best and the likelihood of them creating something I’m happy with is pretty slim.

So no matter what you hire someone to do, no matter what the job is, you need to sit down and give them as much detail as possible.  Spending 5 mintues writing them a quick note just isn’t going to cut it.

You need to map out your expectations step by step.

If you do this, the likelihood of getting a deliverable that you’re happy with shoots through the roof! And if they don’t deliver exactly what you asked for after you mapped it out in detail, then you can go back and explain exactly what they missed.

On the other hand, if you only gave vague instructions, it’s much more difficult to argue that you didn’t get what you asked for.

Finally, make sure you set a specific deadline!  This will avoid having the contract drag out far longer than you want it to.

For larger projects, it’s also a great idea to set milestones.  Agree on deliverables for specific dates along the way so you can make sure your project is on track.

Anyone who has supervised employees knows that this is how you would typically manage a project, so why would a contractor be any different?  The more detail you give, the more successful you will be and the better results you will get.

Outsourcing Strategy Summary:

  • Make sure your contractor is qualified
  • Make sure you have a fixed price and deadline agreed upon
  • Make sure you give your contractor the most detailed instructions possible

If you follow these rules, outsourcing can work for anyone!

Eventually, you will find contractors you trust and can build relationships with.  This is great because you will know you can give them a job and get good results.

But when you are getting started, you must follow these rules!

If you do so, you will have massive success using outsourcing sites like Odesk and eLance.

But if you’re going to be lazy and not provide the detailed expectations, or be cheap and shop for price over value, you’re not going to be happy.

I hope you learned something.  Happy outsourcing!

– Derek


  1. Yeng Wah

    Hi Derek,
    I like the transcription. Thks.

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