Do you have an eCommerce business? Do you want to get started outsourcing but don't know where to begin? Are you curious about the best practices for outsourcing?
In today's competitive eCommerce environment, companies need to focus on their core competencies while outsourcing tasks that either does not require a high level of skill or would be better served by dedicated area experts.
In this article, we will share 10 of the best practices for outsourcing so that you can confidently make use of this essential business practice. But, before we dive into our essential tips, let's zoom out and look at eCommerce outsourcing in the macro.
What is eCommerce Outsourcing?
Simply put, eCommerce outsourcing is the process of hiring a third-party company to handle specific aspects of your eCommerce business. This could include tasks such as order fulfillment, shipping, customer service, or marketing.
The benefits of outsourcing these functions are many. You'll save time and money because you no longer need to hire employees who specialize in each function. You also won't have to invest in expensive equipment and software, which means lower costs.
You'll also gain access to specialized expertise. For example, if you're looking to launch a new product line, you may find it easier to work with someone who has experience launching similar products than trying to figure it all out yourself.
There are many reasons why businesses choose to outsource various tasks and operations. Here are a few of the common ones:
- The business has a limited budget and needs to make every dollar count. [Time is money, after all.] When you outsource, you save time and/or money on tasks that you do not require highly-skilled employees to carry out.
- You are bootstrapping your business, so hiring full-time employees is not an option.
- You are looking to scale quickly, and don't have the time or budget for in-house training. [This makes sense when you consider that it takes 200 hours of internal training to get a regular employee up to speed.] When you outsource, you can bring on an expert who is already up to speed and knows what they are doing.
- You want to focus on your core competencies and leave the less important tasks to someone else.
Now that we have a high-level understanding of eCommerce outsourcing, let's move on to the 10 best practices for outsourcing
# 1 Communicate Your Outsourcing Goals Clearly
First on our list of best practices for outsourcing is knowing and communicating your goals. As with all things, you must know your goals in order to be successful. This should include everything from cost savings to improved customer service. Once you know exactly what you want out of the process, it will be easier to find the right provider.
There are many services that businesses might consider for outsourcing. Here are just a few of the common ones:
- Customer service/support
- Back office processing (BPO)
- Accounting and finance
- Data entry
- Web design and hosting
- Legal services (e.g., patents, trademarks)
Once you have defined your goals, outline the expectations you have for your provider. Do you want to outsource part or all of an existing project? What level of involvement do you expect from the outsourcer in terms of functional responsibility and decision-making authority.
Be clear about what you want and expect from your outsourcing relationship to avoid any misunderstandings down the road.
# 2 Take Hidden Costs Into Consideration
Before you sign any contract, always ask if there are hidden costs associated with the service. Some providers may charge extra fees for things like additional services, software upgrades, or technical support. Be sure to check if you’re being charged by the hour because this could lead to unexpected charges. If you don’t think you’ll need certain services, ask if they’re included in the price.
Anytime you hire a third party to do work for you, you'll need to understand the billing model. It's important that this gives both parties clarity on what is expected and how much it will cost so as not to cause any misunderstandings later on.
# 3 Do Not Take KPIs For Granted
KPIs are important performance indicators that track and measure the success of your outsourcing relationship. It is important to be as specific as possible when evaluating KPIs for a particular project. For example, you might want your outsourcer to decrease the time it takes to process orders by 20 percent or increase first-call resolution rates on customer service calls.
Which KPIs you track will depend on what tasks you are having outsourced. However, there are some general KPIs that are often used when outsourcing:
- Project budget and spend
- Quality of service delivered
- Timeliness of service delivery
- Service level agreements (SLAs) met or not met
Take the time to identify which KPIs are relevant to your projects and tasks before you outsource your work. This way, you'll be able to track the success of the outsourced work.
# 4 Be Open To Cultural Differences
Next in our list of best practices for outsourcing is one that is often overlooked -understand and be open to cultural differences. If you don't know anything about the culture where you're working, you'll struggle to adapt and succeed. It is not unheard of for businesses to outsource to another part of the world and be caught off guard by cultural differences.
There will surely be at least some cultural differences between your outsourced workers and that of your base of operations. So you will need to know how you will deal with these differences. For instance, will you allow your workers to follow your country’s holiday or their local calendar? How about bonuses and incentives? For example, if you outsource from the Philippines, will you provide a 13th-month pay scale?
In order for your outsourced projects and tasks to be successful you must be understanding, accommodating, and considerate of all relevant cultural differences which you may encounter. If you are not, you run the risk of harming your business through lost investment and earn a reputation for being difficult.
# 5 Talk About Ownership Early On
When you start working together, it's important to discuss who owns what. You'll need to agree on ownership before you can move forward. Otherwise, you risk having one party taking credit for work done by another.
There are a few ways to deal with this:
- Work-for-hire: Under this agreement, the outsourcer is considered an employee of the company, and all work done is the property of the hiring company.
- Assignment of intellectual property (IP): In this case, the outsourcer assigns all rights to the IP they create to the hiring company.
- Retained rights: Your outsourcer agrees not to use work done for any purpose outside of their agreement with you. This means that if they want to strike up a separate agreement, they would need your approval first.
This is an important issue which you will want to be clarified before you begin working on any project or task.
Where policies are not in place, businesses risk mishandled information. They also run the risk of being accused of negligence should any problems occur with regard to data and privacy concerns. Policies don't have to be complicated or difficult to understand either. In fact, they can be quite simple as long as they cover all the necessary bases.
A word on confidentiality
When you're sharing confidential information with someone, it's important to label it as such. This way, the recipient knows that they must keep this information confidential and not share it with anyone else.
The best way to do this is to have a nondisclosure agreement (NDA) in place. An NDA is a legal contract between two or more parties that prohibits them from revealing confidential information.
If you're sharing confidential information with an outsourcer, make sure you have an NDA in place. This will protect your information and help ensure that it remains confidential.
# 7 Be in Constant Communication
As you might notice, communication is part of nearly all of the entries in our list of best practices for outsourcing, and for good reason. It's important to stay connected throughout the entire project. Regular communication keeps everyone informed and helps avoid misunderstandings. It also ensures that both parties are aware of changes to the scope of the project.
Communication can be handled in a variety of ways:
- Regular meetings: Held either in person or over the phone/video conferencing, these meetings will help keep everyone on track and informed.
- Project updates: These should be sent out on a regular basis (think weekly or monthly) and should include information on the project's status, a summary of what has been completed, and any upcoming deadlines.
- Project management software: This allows you to communicate with outsourcers on an organized platform. It enables you to share files, track progress, send status updates, etc., along with your messages.
If something comes up during the course of the project, it's important to address it right away. Delaying a response can only lead to confusion and frustration on everyone's part.
If you're not sure how to handle something, don't hesitate to reach out for help. Your outsourcer should be more than happy to assist you with whatever you need.
Even if everything is going smoothly, it's a good idea to check in with your outsourcer on a regular basis. This allows you to ensure that they're still meeting your expectations and that the project is still on track. It also gives you the opportunity to provide feedback and ensure that the work they're doing is up to your standards.
# 8 Know Your Provider's Capacity
Before you enter into an agreement with a provider, be sure to understand their capacity. What is their normal workload? How many projects are they working on concurrently? What is the size of their team?
If you have a large project that needs to be completed in a short period of time, it's important to make sure the provider can handle the work. You don't want to start the project and then have the provider tell you they're too busy and can't take on any more work.
On the other hand, if you're outsourcing a task that is not time-sensitive, you can be more flexible with your provider's capacity. Just be sure to discuss this upfront so there are no surprises down the road.
# 9 Don't Be Blinded By Costs
Our next tip in our list of best practices for outsourcing asks you to not be overly concerned with costs. While it can be tempting to opt for the cheapest outsourcing options, costs shouldn't be the only factor determining which vendor to choose. Make sure that you consider other factors like quality, experience, and reputation. While it may be hard to resist going the most inexpensive route, it's often worth paying more for a higher-quality outsourcer.
Here are the key qualities to consider when searching for an outsourcing provider"
- Quality- this includes meeting deadlines, ensuring accuracy, and providing a high-quality finished product
- Experience- how long has the provider been in business? Do they have experience with your industry or niche?
- Reputation- what do other people have to say about the provider? Are they satisfied with the work that was done?
# 10 Choose The Right Outsourcing Provider For Your Business
Not all outsourcers are created equal. Each has its own strengths and weaknesses. It's important to find an outsourcer that is a good fit for your business.
Some things to consider include:
- The type of work you need to be done
- The size of the company
- The level of experience they have
- The type of services they offer
- Their geographical location
- The languages they speak
In some cases, it can be helpful to use an outsourcing broker to find the right provider for your business. They have experience working with a variety of outsourcers and can match you with one that meets your needs.
Fulfill Your Outsourcing Needs With Helpware
Now that you have a grasp on what the best practices for outsourcing are, you can move forward with finding the best outsourcing provider for your eCommerce business.
Helpware is providing the best in customer service and back-office processing for businesses across all industries.
To learn how you can get the most from your outsourced tasks, contact us today!