How to Compete with the Big Boys through Outsourcing

© Fried Dough

We are living in a society that is unprecedented throughout the ages, as far as making money is concerned. In the past, businesses catered to local markets within their town or neighborhood. As they made money, that could be reinvested into expanding into more locations across the city, or even to other cities.

Then the internet came along and changed everything. Now businesses could market themselves to the world from a single location. Businesses moved from physical products to digital ones that could be instantly downloaded from anywhere. No more worrying about inventories and shipping costs.

It took me a while to start my first internet business, since I had limited skills, and required the money to:

  • Create a website and associated tools
  • Design a logo and graphics
  • Help me market the website
  • Handle the customer service

And this was assuming I already have a product to sell. If not, I would have had to add the costs of developing the product to the mix.

If I was to hire someone local (in a western country) to handle all these duties, I could easily be looking at investing several thousands of dollars before I had my first sale. While this would still be cheaper than opening a conventional bricks and mortar store, I certainly didn’t have the funds or the skills to get into it right away.

Fast forward five years later. Through the power of outsourcing, I was able to find specialists in each of the above categories to help me out in all aspects of my business, for a fraction of the cost I would normally have had to pay.

Why is outsourcing so much cheaper?

  • Many specialists are located in developing countries, where their costs are much cheaper.
  • Many specialists work from home, and don’t have the overhead of an office and other employees to pay.
  • Since I only pay for a project at a time, I don’t pay the additional administrative costs of hiring someone full time.

Now of course, in life many argue that you get what you pay for. So if I was hiring someone for $10 an hour, would his work be of the same quality as someone charging $150 an hour?

In some cases it was. In other cases it wasn’t. Like anything in life, a little due diligence was required.

There are several highly skilled individuals in developing countries who have many years of experience taking on projects in various areas, and have become very good at them in the process. Where my project matched their skill set, I got a very good deal.

In other cases, their quality wasn’t be very good at all. Or they were using my project as an educational opportunity to expand their skill set.

In either case, I was able to spot which type of person I was dealing with beforehand, by communicating with them and looking at reviews from previous projects they had handled.

As I got good at outsourcing, I started expanding to other projects that I would never have dreamed of doing before, but now had the resources to create. If I had a tight deadline and wanted something of the top most quality, I would look for someone experienced. In other cases, I had pet projects that were flexible – so I was willing to hire people with less experience for less money. Some of them worked out, some didn’t. However I did become better at vetting, in the process.

As I got more confident in outsourcing, I was able to outsource more aspects of the business that I hadn’t thought of before. This allowed me to create very professional looking products, for much less than it would have cost to have done in traditional ways. As an example, each of the elements below was outsourced to a different person in a different part of the world:

  • Logo, theme and graphic design for my first website (Russia)
  • Coding and custom features for the website (Hong Kong)
  • Composing audio that was used as an intro in my podcast (Argentina)
  • Editing of a YouTube video (Taiwan)
  • Development of my first iPhone app (Ukraine)
  • Custom icons and UI design for other iPhone apps (Canada)
  • Audio editing with music and sound effects for other podcasts (Philippines)
  • Singing of a cover song on a YouTube video (USA)

I’ve developed relationships with several of the people above. One side benefit of having them across different parts of the world is that in some cases I could assign some tasks overnight, and have them ready for me when I woke up the next day!

© Guilherme Jófili

So nowadays I am free to dream up new projects, that can quickly be assigned and developed for a fraction of a cost that competing companies would pay for having such employees on board full time.

What types of things would you be able to do or create for your own business, if you had your own team of highly skilled individuals waiting for your command?

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