Tips for First Time Outsourcers

Summary: When outsourcing for the first time, there are some very important guidelines you must follow. First, you must have a budget, and must stick to that budget for your outsourcing project. Second, you also should have an exact set of criteria for the project that you are wanting to outsource. Third, doing due diligence for the agency, or individual you are trusting your outsourcing project to, is a requirement. There are additional steps that should be followed as well, and the following article discusses those steps very well.

Outsourcing Aspects of Your Business For the First Time – Tips to Avoid the Pitfalls
By Jo Sale

So – you’re a business owner who wants to outsource some aspect of your business day and don’t know exactly what’s required to post your project online? You may have heard stories of business people who have been burnt by outsourcing and have ended up with something very different than what they were expecting. Well fear no more as this article will outline the steps you need to take to help you on the road to ensuring that what you get IS what you were expecting. What you don’t hear about those stories is that in most of those cases, the business owner didn’t provide enough detail to the freelancer about what they were expecting. It is imperative when dealing with freelancers who may live across town, across state or across the world, that you strictly define what the outsourced work (henceforth called a ‘project’) you require doing is all about. This can not only give a freelancer a better chance of correctly quoting a price for your project (thus insuring misunderstandings can be kept to a minimum), but it can also iron out any kinks in your project idea that you may not have previous thought about. Also, you have to remember that freelancers aren’t mind-readers – you may have it all perfectly worked out in your head, but if its not written down concisely then misunderstandings between you and your freelancer can occur.

When you have decided on what aspect of your business you want to outsource and you are ready to place your project onto a freelance site it is always a good idea if you create a project document that you can include along (with the brief synopsis of the overall project) so that prospective freelancers can know exactly what they are quoting for.

The detail included in your project document is not limited but should include the following things:

• The Scope of your project
• Payment terms (payment up front, installment payments or payment at the end of the project)
• Ownership of the final product
• Communication preferences
• Contract termination

Project scope:

Include a detailed description of the services you want performed. For example if you want a web site designing, you need to go into some detail about the type of features you want included, the number of pages etc. Simply stating ‘Need a website about horses creating’ doesn’t give a prospective freelancer a lot to go on, and could mean that you don’t end up getting what you wanted for the price you were willing to pay. The details should convey the objective of the job and the information that may be required to receive an accurate and appropriate bid from a freelancer. The more thought out this description is, the better quality of bid you are likely to receive. This is will also help alleviate any misunderstandings between you and your prospective freelancer, right from the beginning. Using the horse website design idea as an example, you would state how many pages you want your website to have (home page, general info about horses, tips for looking after your horse, contact us page to name but a few), whether it requires a shopping cart to sell horse related items, a newsletter opt in section for interested horse owners, etc etc. Already you can see that from the original idea of ‘wanting a website creating about horses’ you are already progressing to provide a better idea of what you want as you add more and more information. With this example you can drill down further if you wish and note any special features you may want to add to the site such as pop-ups or flash animation. This process also helps you visualize your project and make note of anything you hadn’t thought of before.

Within the project scope you may wish to include the deliverables expected at all stages of the project, with milestone dates set out quite clearly. It may be that your project is relatively small and only one deliverable date and milestone is required for the finished product. However, it is more than likely however that you would want to set several deliverable dates for the various milestones associated to your project.

Payment Terms:

It is important that your project document states your schedule of payment – whether you want to pay in installments upon receipt of deliverables along the length of the project, or whether to pay the full amount upon completion and sign off of the project. Also whether you simply want to pay an hourly rate, if your project is ongoing work such as data entry or internet research work.

Although at this stage you are still in the initial stages of posting your project online, you still need to decide how you are going to pay your freelancer once your project is completed – best to figure this out now and save any unnecessary hassles later on. The safest way is to use an online escrow service. With these online services your money is kept ‘in escrow’ until you have received all of your deliverables. Once approved, the money is released to the freelancer. This process also ensures that the freelancer knows that they will be paid for the project as they receive confirmation that the payment is being held awaiting release upon completion of the project. As some freelancers have delivered work for projects in the past and not received payment for it, the escrow process alleviates the worry involved in for all parties concerned.

Ownership of the final project deliverable:

Issues of ownership of the work completed can be a major concern for business owners. You need to make it clear in your project document that the project is a work that is ‘made-for-hire’, or include a clause in the contract transferring all rights relative to the project from the creator (freelancer) to the requestor (you).

Communication preferences:You might want to include which form of communication you will prefer to use throughout the project process with the successful freelancer. You may prefer to communicate via e-mail, telephone, skype, instant messaging, and its good to let people know from the beginning the best way to contact you if they win the project bid.

A few more things to consider…


Once you have chosen your freelancer from the bids you have received, it is important that you have a contract drawn up (or use an independent contractor contract template available online) that outlines what is expected from both you and your freelancer.

Confidentiality or NDA agreements:

If your project or business process that you are outsourcing is particular sensitive or confidential (or you simply don’t want anyone knowing about your revolutionary idea) then you should have your freelancers sign a confidentiality or non-disclosure agreement (NDA). You can either have your lawyer draft one, or find a general template for one on the internet. If you require a confidentiality or NDA agreement for your project, then you will obviously need to keep certain information out of your project document so that no one else runs away with your idea. It may be that you have to walk a fine line between detailing your project document with enough information and keeping the juicy bits back until you get your winning freelancer to sign an agreement. As long as you are aware that prospective freelancers still need to know the extent of the work involved, so it may be that you outline it enough for them to be able to adequately bid for the project, but not give away exact details.

Alternatively you could look at splitting your project into different sections and outsourcing them separately. That way no one person has the full view of what the project entails. However, this avenue for the outsourcing beginner is fraught with issues as depending on the complexity of the project this may be a nigh on impossible alternative without using the services of a Project Manager to tie the project together. (You can even find your Project Manager via the freelance website as well, if you don’t have one within your company to handle this process for you).

Contract Termination:

Your project document should include contract termination details which briefly outlining what may constitute as termination of the project. This can include such issues as:

• Late delivery of project deliverables
• Poor workmanship
• Lack of communication

Although the full details of contract termination would be discussed further with the freelancer who successfully bids on your project, it is important to briefly make the freelancers bidding on your project aware of your stance from the outset. This may also help to weed out the serious freelancers from the ‘tire-kickers’ if they know that from the beginning.


All in all, to successfully navigate the world of outsourcing, information is the key. As long as everyone involved in the process is well informed then the way forward for your project is going to be a lot clearer than that of the un-informed business owner who has a vague description and no clear defined agenda of the project they have to outsource.

Jo Sale is a New Zealander who runs her own freelance outsourcing business with her husband Phil.

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Summary: When outsourcing for the first time, there are some very important guidelines you must follow. First, you must have a budget, and must stick to that budget for your outsourcing project. Second, you also should have an exact set of criteria for the project that you are wanting to outsource. Third, doing due diligence for the agency, or individual you are trusting your outsourcing project to, is a requirement. There are additional steps that should be followed as well, and the article above discusses those steps very well.

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