Outsourcing was the way to leverage and grow the company without incurring into payroll nightmares
Carlos Guzman is the CEO of both Grupo Arion and Prospect Factory which are companies based in Mexico City, with branch offices in Silicon Valey USA, providing BMC/ Remedy ITSM solutions software licensing and Digital Marketing services.
To begin with, the definition of Outsourcing from Carlos’ perspective is to get external expertise or capacity (and in this case, it can be HR or Software or other) in the case of need, which enables you to expand your business.
Prospect Factory portfolio comprehends Web Development, SEO campaigns, Social Listening, Content Development, AdWords and PPC, plus Community Managers for advertising in Social Media.
Grupo Arion, the IT services branch portfolio comprehends setup, configuration and mapping of the herein mentioned ITSM software tools, as well as ongoing maintenance and support after go-live (bug-fixing; version upgrades; knowledge transfer; change management), which may even imply having a full-time dedicated administrator on-site at the client or an hour based support contract.
When Prospect Factory started, 13 years ago, Carlos was the only “asset” not being outsourced; from Web Development to AdWords campaigns and SEO or even the management of continuous ongoing campaigns everything was Outsourced. In fact, the need to have some own headcount mainly derived from some enterprise clients who wanted to see specific Prospect Factory’ collaborators with whom to meet or establish recurring communication channels.
One perfect example of Outsourcing representing the only applicable viable solution relates to the Social Listening Service provided towards political campaigns, which, by definition are short term projects that demand high volume of trained people in a labour-intensive environment (no time to hire and train a team as also no financial grounds to maintain them afterward).
Social Listening is basically carefully surfing the Web in search of all the mentions and conversation around a given topic (product, brand, person, government agency). This produces Big Data which then is segmented and correlated by specific software in order to understand audience’s trends, feelings, predisposition to buy or adhere to and so on. So it allows Marketing initiatives (or other) to be focused and fine-tuned in order to better address the public expectations.
What to and not to Outsource?
Core Services like strategic decision making; SEO or mathematical analysis within the above mentioned Social Listening Service are not subject to Outsourcing; whereas Web Development is a good example of a 100% activity that is subject to Outsourcing for nowadays it is possible to hire the best experts from any geography and at a fraction of the cost it would represent having that skill set on payroll.
Now regarding choosing a provider, Carlos lists the following items to consider:
- Assess how committed they are to your project (proactivity and iteration initiative asking questions or conveying suggestions)
- Check what type of structure and redundancy can they ensure (in case of a given resource getting seek or leaving them)
- Look around for referrals and reputation feedback, do not limit yourself to the references they may give you
- Start by giving them a small initial pilot project that concerns you and not any client, to see how things go.
- Also, very relevant is to evaluate how do they deal with admin work such as invoicing; contracts, other
- Although it may seem to bare prejudice, an older provider is safer than a brand new one.
When you outsource you are hiring a service, so one of the goals is to have it “headache free”.
Any needed contact between the Outsourcing provider and the client always has the mediation of an own internal project manager. And, the main grounds for it consists of the fact that the Project Manager is the one knowing about the overall scope of both project as well as client relationship; the outsourcing provider may well be someone from across the world with poor English skills or so many other factors that could unnecessarily jeopardize the existing momentum.
On having the outsourcing provider presented as such to the client or otherwise as an internal element, Carlos explains that it depends on the client as much as the project, citing if the case being of a big project, makes it clear that some external support needs to be involved, for no company has unlimited resources.
How to deal with client’s insecurity over sharing their information with 3rd parties?
If considering Web Development (just as an example), the Database, hosting environment and some coding (like specific algorithms that empower the client’s USP) are some of the critical security related involved aspects. So, despite and besides the main provider signing an NDA with both the client and its outsourcing providers, sometimes both client and those outsourcing providers also have to sign an NDA between themselves. Additionally, if the data is confidential, the development phase with the outsourcing provider is done based on a small partial amount of real data. Then after successful development and testing the integration with real data is done in-house.
There are some cases, either when the client perceives its information being of major sensitiveness or if the required IT landscape is not easy to replicate due to sheer complexity or size, when the team physically goes to the client site and performs the work there (these cases dough, raise barriers to the outsourcing potential).
Having a mixed delivery model with minimal internal resources and main outsourcing stream, enables tackling with demanding circumstances or client’s requirements.
How do you manage client relationships while in the role of an outsourcing provider?
Most customers have a holistic view on their need but are not certain of what they want, so once hired you really need to invest time in defining the job specification and drawing up the best action plan to tackle the challenge at hand. Any other way around, like immediately jumping into action, usually leads to recurrent rework and maybe a project where instead of making money, you will end up losing money.
Being in the market for quite some time, also accounts for having done basic mistakes like forwarding the wrong e-mail to the wrong people or sharing information with non-authorised elements. Mistakes mitigation then goes into existing processes; hence the client will benefit from that additional security layer while working with a long term established provider.
Outsourcing means teamwork, and being either the client or the chosen provider does not entitle you to do anything and everything. Both must act together as partners towards one common goal. Above mentioned scoping and planning does not work if one of the parts is not dedicated, contributing when needed and communicating what is required.