Whenever you hire someone or a group of people that are outside of your business
to handle business functions. This can include, auditing, payroll data entry
and work in Information Technology.
Outsourcing is essentially hiring a contract employee for your business. While
the concept can be used for businesses and projects of any size the work involved
is about the same. You will still need to manage your work and employees, answer
questions, make sure that work is completed on time and within budget. This
guide will explain how to do all of this. In the next section you will learn
about the benefits of outsourcing your development work and what this means
for your bottom line.
Not currently spending anything on web development? Doing it all yourself?
Hi, my name is Peter Ferrigan and this was me 3 years ago. I used to do the
same thing until I realized that my job was to smoothly run successful websites
and build new online ventures. You can look at the passion for new business
or the pure number value. Either way there are larger things that you could
be accomplishing with your time. How much is one hour of your time worth? If
you are currently working for someone else, the number is easy to place. If
you are self employed, it gets a bit harder.
Starting out as a programmer, when my work load increased and I was self-employed
I naturally assumed that I would continue doing what I was best at, programming.
The change from programmer to Project Manager happened when I started to put
a number value on my time. One hour of solid coding, how much could I charge
for this? As the work increased and my life got busier things started being
measured in smaller amounts of time. Instead of basing my pay on the entire
project, I began to look at how many hours it would take to complete and then
my average pay per hour.
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Developer Fantasy Land
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Let's say you take a small job that will take you an hour to complete.
For this work, your client, or boss pays you $40. So your wage per hour is $40.
This is of course assuming that you have an unlimited amount of clients or a
rock solid job, which is why these figures are used as just an example. So you
are currently making $40 an hour at a rock solid job or self employed with a
waiting list of wealthy clients. Life is good. You set $40 per hour as the cost
for 60 minutes of your time.
Change your perspective just a little bit and you can see that there is lost
opportunity. I read once that when investing in real estate you should avoid
all contact with a hammer, paint and nails. Why? Your job should be a professional
check writer, because time spent hammering or painting is time lost doing something
more profitable. Actions such as looking for another house to purchase.
Regardless of your current title, I am sure you know there are larger opportunities
in your field. Most of the time these opportunities are lost because you are
too busy focused on mundane details rather then the bigger picture of what you
could be achieving. Included below is an example of how outsourcing can benefit
you.
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Outsourcing for Increased Profit and Productivity
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Back to developer fantasy land, you're making $40 an hour. What if you
could find someone to do the same work for $5 an hour? What if they were available
24/7 and could work while you were asleep? How much would your time be worth
then?
If you could find someone to do the same work for $5 and you were charging
$40. You would make $35 an hour right? That's the common assumption for
the starting Project Manager (your new title).
How much time would it take you to find the programmer, explain the project
and check the work. Usually from my experience (for a one hour job) only about
10 minutes. So what is your total pay? $35 for ten minutes of work. We are still
in fantasy land, so after you have hired someone for $5 to complete your $40
job you go to the next client on your list.
Another $40 project appears, you spend $5 and 10 minutes. This keeps going
on 6 times. So in one hour you have made $210 ($35 X 6) as opposed to your previous
$40 an hour.
You have just given yourself a 525% percent raise.
One thing to remember is that we are in outsourcing fantasy land where each
programmer does exactly the right work; it is always completed on time and to
your exact specifications. This of course does not happen all of the time. You
will have some programmers cancel, others not respond and some might complete
the work incorrectly. If you leave 20 min out of each hour to review and handle
these issues, you are still making $140 / hour, 350% raise.
The best part is that outsourcing not only allows you to be more productive
and profitable while you work, it also provides these benefits in the time your
off work.
Let's say you work just 8 hours a day, and no more (in fantasy land).
This means that you are unproductive (on work issues) for 16 hours of every
day. These 16 hours can start making you money. Let's take a look at the
numbers:
Stated before the average project that takes only 1 hour of your time can be
done for $5 and 10 minutes leaving 20 minutes of every hour for exceptions.
As you will be planning ahead for the next 16 hours this will take some additional
time to prepare the work. Let's give each project an additional 5 minutes
to setup. This means each project takes 20 minutes: 10 to find explain and check
work. 5 to plan ahead and 5 to cover mistakes. These 20 minutes are split between
when you leave work and arrive the next day. We are going to outsource just
6 projects, which means this will take just one hour before you leave work and
one hour when you arrive in the morning the next day.
Taking a wage of $35 per project this translates into $210 for 6 projects outsourced
while you sleep. After this we need to deduct the $80 of time spent (2 hours)
preparing the work and your total profit each night is $130. Over a year (without
holidays) this is a $30,000 raise.
Of course the above example is just an example. I wish it were as easy as breaking
down projects into 15 minute segments, and each segment only took 15 minutes.
Also it's important to note that no one is a machine. Unfortunately as
your work increases, so does the number of people you need to manage. Without
a reliable management structure in place this would also increase the number
of delays and chance of error. Then there is the waiting list of wealthy clients,
which for most developers, doesn't exist.
So if you could be making $210 an hour during the day, and right now you are
only making $40, not outsourcing is actually costing you $170 an hour of lost
potential.
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Outsource Today's Work
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The best way to start is to join a freelancer marketplace such as ContractList.com.
These websites are broken into two sections; one for Project Managers (that's
you) and the other for Freelancers; this includes people who are skilled in
programming, design, writing and other talents.
As a Project Manager on ContractList.com outsourcing your development work
is broken into four steps: Signup, Post Your Work, Select a Freelancer, Payment
and Feedback. Below you find a description of each step followed by the relevant
link to complete this action.
Signup :: The first thing you will need to do is to signup at ContractList.com
as Project Manager. This allows you to post projects, accept freelancers and
make payments online.
After filling out the short signup page, a letter will be sent to the email
address that you submitted. This is done to confirm that your address is valid
and you are able to receive important announcements pertaining to your projects.
[http://www.contractlist.com/wm.php?a=signup]
Post Your Work :: After signup, gather the project details together and login
into your account. After login you will be taken to the Account Management page.
Here you can see the information relevant to your account. To post a project,
click the link 'Create Project' at the top of the page. You will
need to fill in the Title, Project Type and description of the work that you
would like to be completed. Later in the guide I will explain how setting the
right budget lowers your cost, and which details to include ensuring you get
the most qualified bids. [http://www.contractlist.com/wm.php?a=create]
Select a Freelancer :: ContractList.com is setup in a way that allows Freelancers
to openly compete for your business. This known as a reverse auction, where
competition actually lowers the bids instead of increasing them. Each Freelancer
will be able to submit a bid (the cost for the posted work to be completed)
and a time frame for the delivery of completed work. As there are hundreds of
Freelancers on ContractList.com your project will receive multiple bids from
people around the world eager to complete this work for you. Go through each
Freelancer's bid and select the person that you feel is best suited for
the work.
Payment and Feedback :: After the project is complete you will then need to
log into your account to submit payment and feedback about the Freelancer that
you worked with. ContractList.com creates online accounts for both Project Managers
and Freelancers, which are used for transferring funds related to work completed.
As a Project Manager there are several ways in which you can add money to your
account: Checks, Money Orders, Bank Transfers, PayPal.com, Authorize.net, 2checkout.com,
eGold.com, StormPay.com, YowCow.com are all supported. Once the funds are placed
in your account, you will then need to transfer funds to the Freelancer you
worked with. These channels are also used for Freelancers withdrawing funds
so you don't have to worry about how to send payment to a Freelancer in
a different country.
Leaving feedback is a valuable way for you to record your experience with this
particular person. When doing so, it is important for you to include comments
about their skills, communication and working in the time deadline. This information
is then used for other Project Managers considering them for work.
[http://www.contractlist.com/index.php?a=account]
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Completing Projects Faster, Accurately and Cheaper
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In this section of the guide you will find practical things that you can do
to ensure that you project gets started smoothly, progresses quickly and finishes
on time.
Detailed Description :: Include a detailed description of the work needed.
Each word you add to your description saves you money. By spelling out the work
required for the project you do not leave this up to the freelancer to figure
out. A clear concise description will save you money on each project.
Place your website address in the description. It always helps, and saves money
to give a live example of the website you are referring to. If you are not comfortable
placing your website, place one that is similar. Or if you do not have a website
created, give a detailed description of the work that you would like done and
give a few example websites, highlighting the features you would like to include.
Use Escrow :: ContractList.com employs an escrow system which allows you to
place funds in a neutral account and release them once the project is complete.
It is recommended that you use this system for each transaction, the reason
being is that it gives each person 50% control over the money. Only you can
complete the payment into the freelancers account and only the other Freelancer
can release the funds back to you. Disagreements do occur and the best way that
we can help you as a Project Manager is if the funds are placed in escrow. A
good policy is to make your payment into escrow for the freelancer when you
select his/her bid. This shows that you do have the money and it is committed
to the project. Once the work is complete you simply complete the transfer into
their account.
Post a Budget :: The worst mistake you can make is not included a budget at
all. This outright says to people bidding on your project that you are clueless
about the work required and money is no object in the completion of this work.
Post the Right Budget :: I half-jokingly suggest to anyone that brings this
up that they should place a max budget of $10 for each project. By placing a
$10 maximum you eliminate the idea that the Freelancer will be able to over
charge you for this work. Instead you place them in the state of mind of "How
can I win this contract for the least amount possible?" Obviously the
$10 trick will not work for every project however if you are not sure how much
your work will cost then put a $10 maximum.
Avoid Attachments :: Including an attachment in your project description, i.e.
"please see the included file for complete details". I have seen
it time and again. Projects with attachments that are included in the description receive less bids and higher estimates. The reason is that there is an automatic
assumption that if the description is to complex to be laid out in plain text,
then the work involved must be equally as complicated.
Delay the NDA :: Personally I feel that NDAs are over used. If you feel that
your project and work absolutely requires this level of secrecy then include
this requirement down the road after you found a few good candidates for completing
your work. By saying in your description that you require an NDA to be signed
by all freelancers scares off a majority of potential candidates. A solution
would be to put in the general description of the work you need done. Such as
the type of website you would like to create or the specific steps involved.
Once you have a list of qualified freelancers talk to them each individually
about signing your NDA.
Don't Modify the Posted Description :: Some people post a project and
then the next day make a change to the description. After answering some questions
and thinking about the work a little more, then make another change and another.
This leads to inaccurate bids, uninterested freelancers and a very bad start
to your work.
The best thing to do is before you place a project, write down every thing
that about the work that you can think of. Include what you would like to end
up with, what you have now, examples of similar work and your estimate of the
work required. If you have started a project and need to make a change, the
best thing to do is to rewrite a new project description and post it again.
On ContractList.com there is no charge for posting projects and this simple
action can save you a lot of time and stress.
Once the new project is posted, go back to the old one and invite each programmer
to bid on your new project. This will give you clear and accurate bids to ensure
that you pay exactly what the work requires.
Open Communication :: Issues in development can start out small and grow quickly
you do not catch them early enough. For this reason it is crucial to keep open
communication with all of the people you are working with. One idea is to create
series of events according to the project deadline. Short deadline projects
are relatively easy to manage.
For projects extending over 5 days, I have found it helpful to work out a list
steps to measure progress. These include the dates for the first mockup, when
revisions will be completed and the final deadline. Having a series of smaller
deadlines breaks down a large project into smaller, easier to manage pieces.
Having and sticking to your smaller deadlines consistently reminds the Freelancer
that completing the work on time is very important to you.
Use MSN :: By far the most popular communication tool when doing business online.
MSN Messenger allows you to instantly connect with the people you are working
with to hammer out details and check on progress. After you have accepted a
freelancer to work on your project, immediately send him your MSN address and
ask the following questions:
Do you have any additional questions about the requirements?
What do you need from me to get started?
How much longer are you available to work today?
Consistently check in and make sure you are available to answer questions. Once
in a while ask "How is your work coming?" "When will a mockup
be available?" "Do you have the demo ready?"
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Additional Help
-----------------
You now have all of the tools that you need to get started. Each step has been
covered from posting your project to leaving feedback. We have also gone over
some advanced topics that will help ensure your work is completed on time and
to your satisfaction. You are ready to start outsourcing today.
If you have any questions about how to post your project, or the best way to
word your description I would like to help you get started. Please send me an
email via the Contact Form on ContractList.com and I am happy to review your
project and help you get started.
Also if you are not sure how much you should expect to pay, just send me an
email and I will get back to you shortly.
[http://www.contractlist.com/index.php?a=contactus]
I look forward to hearing from you and I hope that you have found this guide
helpful and informative.
Please let me know if you have any questions or concerns.
Thank you,
Peter Ferrigan
ContractList.com
Admin@ContractList.com
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Author Information
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Peter Ferrigan is the Administrator of the popular Freelance Marketplace Contractlist.com [http://www.ContractList.com]. He can be reached with questions or concerns by sending an email to Admin@ContractList.com.
Article Source: http://EzineArticles.com/?expert=Peter_Ferrigan