Rank My leader was my dream startup. A unique idea which was to allow all political leaders to be evaluated real-time based on news.

The web portal failed because of some blunders I did while outsourcing almost all work of the portal.

Like all small businesses and startups, i decided to outsource most of the work without realizing the problems of outsourcing and the risks of outsourcing.

Outsourcing is a subject on which thousands of books have been written by known writers.

Books ranging from how to outsource smartly to Benefits of Outsourcing and they all sing praises to how outsourcing has helped companies save millions of dollars.

Unfortunately, none of them is written from the perspective of a startup or a small business.

Because when outsourcing goes bad for them, their business suffers the most.

The pros and cons of IT outsourcing are widely debated and the experts are divided on which side of the scale weighs more.

outsourcing mistakes

source : archinect.com

My last startup tanked miserably because of outsourcing – It left me with lessons that i am not easily going to forget.

One of the key takeaway from the last experience was “How not to Outsource – A list of mistakes one must not do while outsourcing.”

To start with, let’s remember – Outsourcing is not simple.

The hype around how outsourcing can save time, money can sometimes blind you.

Outsourcing has its own share of problems.

And i say it with confidence because I run a company which takes outsourced projects from US and other countries.

I am someone who should have known “how to Outsource”.

Well! I didn’t.

I was so blinded by the trust in my concept that i forgot to apply some basic rules of outsourcing while getting work done by freelancers.

I overestimated the benefits of Outsourcing :).

Outsourcing work of a startup and a small business is a different ball game than work outsourced from the established business as you have a limited budget and you have to find the best of talent in the budget available with you.

Startups tend to make more mistakes than established businesses as they are themselves learning with time. This is where outsourcing can turn into a headache for them.

Here are 3 outsourcing mistakes Startups should not make:
  • Outsource ideas:

Ideas are dangerous.  They are not tangible.

Anything which cannot be measured is open-ended.

You can never set up a budget or a timeline to complete the same.

When you hire an outsourcing agency to convert your idea into a product,  you are making a big mistake.

I got the design done for Rank My leader not once not twice but thrice.

The first time, it was an idea which took shape.

The second time, the idea was not as how I envisioned it. I had more ideas to make the design better.

By the time i approved the design (more ideas from end users),I had consumed my marketing budget.

The idea’s outsourcing was a cruel, unforgivable mistake.

Every time the idea evolved, I was charged money.

I paid as I wanted the best product. The agency I hired for the job never complained.

In fact, they gave me more advanced ideas to make my idea better.

How stupid was I?

I forgot I was outsourcing idea not a document with proper workflows and mockups.

I lost a major chunk of my budget on “ideas” which evolved over time.

Lesson learned was “Never Outsource ideas. Especially, the one line ideas”.

The more you rely on your vendor to make something out of your idea, the worse it gets for you in terms of time and money.

  1. Do not Outsource what you do not Understand:

With a limited budget, I wanted to win the race.

I should have exercised prudence while deciding on taking the easier route to success.

It so happened. I wanted to be numero uno as soon as possible in my field.

In pursuit of winning it fast, I hired a PR professional on a contract basis.

I outsourced PR work of website.

Frankly speaking, I had no idea on how PR industry works.

I also did not take the pain of studying how to pay them or what should be my expectations of them.

The PR person I outsourced work promised to get me into “major publications”.

She wrote to a few famous websites to publish our story.

One of them, a famous website in startup space refused to entertain us.

The PR person put the onus on me and the concept.

I timidly agreed to “the article not getting published” as my mistake.

I thought this was the norm of PR industry.

How wrong was I?

In PR, if someone cannot get you published. The person is not well-connected.

Donkeys get front page coverage if their PR is good.

So my outsourcing of what I did not understand costed me dearly.

I was wasting precious money.

Earlier it was designing now PR.

The stage was set for the project to get a burial.

  1. Outsourcing to a wrong Vendor:

No doubt you save money by Outsourcing. This is why Outsourcing industry is so huge.

The problem creeps in when you try to save a fortune by finding cheap freelancers or inefficient freelancers who have no clue about freelancing or how to freelance.

Worse, you do not do your homework before hiring freelancers to outsource the job.

I was on a shoe tight budget. I wanted a cheap yet reliable service provider.

I hired an SMO person to promote the website.

I asked him “What type of contract do you want?”

He said “Hourly”.

I asked, “What is your hourly rate?”

He gave me an unbelievable number. The price was too good to be true.

I never knew you could get vendors at such a low price.

Our company charged way more than the price quoted by the guy.

I was getting a real deal. I hired him immediately.

From day one the work was low quality. English was as horrible as mine.

It looked like the guy was promoting my website in Chinese.

I started teaching him English. He started teaching me “how to promote without knowing English”.

I wasted a lot of time and money in unlearning what I had learned in SMO.

To save “a lot of” money on outsourcing, I ended up spending more money.

I hired another guy, who promised to work closely on the project.

He came through a recommendation.

We agreed on some monthly pay-outs. Again, affordable service provider.

Few days into the job, he said: “I am going to goa with my friends on a vacation”.

By the time he came back from his vacations, I had moved on.

The third contractor was the best of all.

Since he was visiting my city for some work, we decided to meet and discuss my concept.

I explained to him the concept. He liked what he heard and decided to work with me.

Once he was back home, he suddenly turned unresponsive.

He made campaigns which would put worst of minds to shame.

When one of the prominent leaders in the country died in a car accident. He made a Facebook post with some stupid comment.

I had to pull down the post before I was beaten black and blue from some political goon.

One thing common in all the above contractors was “Cheap OUTSOURCING”.

I was looking for cheap contractors.

Luck or bad outsourcing?

By the time I stopped the SMO and SEO campaigns, I was out of money.

Cheap Vendor. Unreliable Vendor. Dumb Vendor.

I know I planned the finances badly for my startup.

So was it only bad planning or bad outsourcing which led to the closure of my startup?

The outsourcing model does not always succeed.

Startups need to check their outsourcing models. If outsourcing is not done the right way, the cons of outsourcing are bound to outweigh the pros of outsourcing which will sink your boat for sure.

Outsourcing might not be the one making to the list of Why startups fail in all the articles you read on the Internet.

But that does not make it a reason less scary to kill your Startup dream.

What is portrayed as a model to save cost, money, time can actually lead to spending more money, time and energy?

I just learned it the hard way by seeing my dream startup fail.

Jasmeet Singh on EmailJasmeet Singh on LinkedinJasmeet Singh on TwitterJasmeet Singh on Youtube
Jasmeet Singh
Just another Entrepreneur at Lessons At Startup
Jasmeet has been a part of multiple Ventures. He earns his bread and butter by hanging onto his first venture, a Software Company located in India.

He is at present working on a new startup idea which like all startups will be "Disruptive" (at least he thinks so :) )

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