8 Key Strategies to Manage an Outsourcing Business

Outsourcing has been around since the ‘70s, but its rapid growth in the past decade has made it one of the largest industries in the world, raking in USD 85.6 billion globally. The ever-increasing need to hire remote developers, virtual assistants, customer service, and digital marketing specialists, among others, have all contributed to its global popularity.

As one of the many entrepreneurs during the start of the outsourcing boom, I had the opportunity to work with several outsourcing providers from different countries for my past business ventures. Eventually, I saw the opportunity to create a business and a career in the industry, and this led me to build and run my IT outsourcing firm called Cloud Employee.

As an IT outsourcing expert and as someone who has been at both ends of the business, I have come to realize eight key actions that can affect the success of running an outsourcing business:

1. Do your research.

Research is a fundamental step to starting your own company. To set up your outsourcing firm properly, it is wise to take note of all the pertinent requirements, paperwork, processes, equipment, and methods you would need to accomplish or gather. This is common sense, but unfortunately, some entrepreneurs underestimate the essence of sound research.

As a foreigner setting up shop in the Philippines, I had to submit countless working requirements for admin, HR, permits, licenses, and all other legalities before I could successfully open our doors for business. It helps to know and gather the requirements your outsourcing business would need to adequately prepare you for the paperwork needed.

Market research is also essential. At the initial stages of your outsourcing business, seek to know and understand your target audience and competitors. The insights you will gain from thorough market research will give you an idea of how to best approach your market and how to stand out among your competitors.

And even after successfully launching your outsourcing business, research should still be a necessary part of your regular tasks.

2. Offer a unique service to a unique market.

With thousands of outsourcing service providers from various parts of the world, what makes your outsourcing business different from the rest?

Defining your services will help you determine what approach to take in building your brand and marketing your services. Having a clear yet distinctive branding will naturally separate you from your competitors and help your target audience find you and remember you.

To help you know what service you should offer, answer this question as concisely as possible: What problem should you solve?

In my case, I realized that many businesses back in the UK were struggling to find the tech talents they need because of the shortage of available tech workforce locally. Plenty of businesses were gradually integrating tech in their business, and so the demand for skilled talents increased. It was a problem that I, fortunately, had a solution to at that time. 

From in-demand positions such as remote React developers to more technical and senior-level roles such as remote DBA experts, I decided to bridge the gap between the Filipino tech experts and UK businesses in need.

This is how I set my company apart from other offshoring companies in the Philippines and all over the world. Identifying your target market, narrowing down your services, delivering the quality customer experience will help you cement your business as a trusted name in the outsourcing industry.

3. Choose the right location.

In recent years, many countries have sprung up to become leading outsourcing destinations globally. While the majority of the top outsourcing countries can be found in Asia, countries in Eastern Europe, South Africa, and South America have become popular offshore destinations as well.

Personally, I chose the Philippines as an outsourcing destination as it simply stood out as an ideal location. For one, the 2019 EF English Proficiency Report ranks the Philippines as the 2nd most English-proficient country in Asia, and 20th worldwide. With this, I get the assurance that communication between me and my staff, as well as between our clients and developers, would be faster, easier and more efficient.

Communication is just one of the many factors to consider when choosing an outsourcing destination. See if you have these five factors all ticked off: 

1. Communication – Is the workforce proficient in English? 
2. Talent availability – Does the country have a large pool of available workforce?
3. Quality of education – Does the location have a good standard of education?
4. Cost of management – Are the costs of living and business better?
5. Economic stability – Does the country have a good economic future?

There can be more factors to consider depending on your outsourcing firm’s structure and services, but the five aspects mentioned above are necessary to ensure that you are investing in quality infrastructure, strategic location, and top-quality staff for your outsourcing business.

4. Invest in quality equipment.

Allow me to raise a question: 

Should you invest in expensive but quality equipment now, or should you buy affordable equipment and upgrade it as your business grows?

Of course, your answer would depend on several factors such as the nature of your service or product, and your capital, among others. However, as for managing an outsourcing business (and I am also speaking from my personal experience), I believe it is best to invest in and secure quality equipment as soon as possible.

In the outsourcing industry, most of the work and collaboration—if not all—is done remotely. For outsourcing service providers, ensuring that collaboration is easy and efficient despite the geographical distance is critical, so using hi-spec hardware, software, and facilities is a prerequisite providing top-quality service. 

At my IT outsourcing firm, it is our priority to provide our tech talents with modern hardware and the latest software versions of their tools, helping them work effectively and efficiently with their clients.

In addition, providing high-quality facilities can also attract potential clients or partners, as well as young talents.

When managing an outsourcing business, making sure your equipment and facilities are up to date and top of the line as it will help you compete with other outsourcing providers.

5. Hire the right people in your team.

Building your internal staff—the people who will help you run your outsourcing business—is one of the most crucial aspects of starting a business and setting it up for success.

Without a core team of outstanding individuals with a great interpersonal communication, a business cannot run efficiently, manage the people properly, and develop the business effectively into the successful business you envision it to be.

Aside from this, hiring the wrong people will be very costly for your business. Findings from CareerBuilder show that 74% of companies who have had a wrong hire cost them an average of $14,900 for each bad hire.

Here are three important tips to help you find and hire the right person for your team.

1. Check if their career goals align with yours – See if the candidate fits into the role and if they can grow into the position to become a valuable long-term member of your team.
2. Get a good sense of your candidate’s potential – This means checking on their references, verifying their background, and understanding how they work and how they fit in with your team.
3. Don’t rush into hiring – Even if the position is urgent, take time into hiring the right person. Until you are absolutely sure of a candidate, never rule out the possibility of looking for others.

When managing an outsourcing business, keep in mind that your internal team is the lifeblood of your business. Here’s a great quote to remember:

“Great vision without great people is irrelevant.“

—Jim Collins

6. Establish a connection with your people.

Once you have built your team, the next step is to make sure that they become valuable assets to your business. As the business owner or manager, one of the best ways to do this is to build a strong relationship with them.

Let me share with you an interesting finding:

In Gallup’s 2017 State of the American Workplace Report, the management or manager has been identified as a common reason for leaving the workplace. 

This may sound disheartening especially for managers, but studies like this show that establishing an effective management that also creates strong working relationships is indeed vital in retaining valuable staff.

Additionally, when your staff feels engaged and empowered in the workplace, they feel 4.6 times more empowered and they perform their best, according to a Salesforce report. 

I empower my staff through small ways; I invite different groups of developers to dinner every week whenever my schedule allows it. We call it ‘Supper Club’, and this Supper Club has given me the chance to catch up with our staff in a more casual setting and know how they are with their work, their clients, and even in their personal lives. These weekly dinners helped me know more about my staff’s potentials, the current challenges they’re facing at work, and the measures I can take to improve the company for the business and the people. 

Lastly, make sure to establish genuine relationships. At the end of the day, you may be their ‘boss’, but they are the lifeline of the business. They are the ones who face your clients, and who represent your services. They are ones who will keep your business running.

7. Make your clients your partners.

In any business, building and maintaining client relationships is an important aspect of making a business successful. Customer loyalty would naturally sustain your outsourcing business. In fact, according to Bain and Co., repeat customers spend 67% more than new customers.

To attract and retain valuable clients, it’s important to provide your clients’ needs—and this is excellent customer service from delivering quality output at competitive rates.

Delivering what you promise (and much more) establishes and solidifies trust with your new clients. This trust becomes a key factor in making your clients your ‘partners.’

And I say ‘partners’ because, once the relationship is established, they will be the ones who will naturally promote or refer your outsourcing business to people they know who might need your services. After all, nothing is more credible than being recommended through word of mouth.

Remember: While attracting new clients is important, a long-term strategy to develop a lasting partnership with your current clients is equally valuable.

8. Don’t be afraid to change.

“It’s only after you’ve stepped outside your comfort zone that you begin to change, grow, and transform.”

― Roy T. Bennett

In the past few years, I have been fortunate to be surrounded by such a talented and dedicated team. Through all of our efforts combined, our outsourcing company has grown more than what I have expected in just a short period of time.

And quite frankly, it scared me.

The company’s growth caught me off-guard; after all, it was a big change—whilst a good one. But I knew that it was an opportunity any business shouldn’t pass on, an opportunity to change, so together with the skilled and reliable people with me, we started planning for the company’s next steps. 

The outsourcing world is one of the industries where trends quickly change and outsourcing providers must cater to the dynamic needs of their clients with speed and quality. For an outsourcing business to be competitive and successful, it must constantly adapt and improve.

Here are just a few things that you should always keep up to date:

1. Tech equipment such as computer hardware, software, wires and server, among others. Even better, you can switch to a cheap dedicated server option and never have to maintain or update your own servers.
2. Facilities such as working and recreation spaces to keep your staff comfortable
3. Employee benefits that will encourage and support your staff
4. A solid sales and marketing strategy
5. The Client experience you offer

In the business world, there are many internal and external factors that can affect your business. What I have shared with you above, may or may not apply to you. That said, I still hope that my tips and experiences will be of value to you, or to anyone who is thinking of starting or managing an outsourcing firm. 

As a parting gift, I’d like to share with you a simple yet noteworthy quote:

“There is no substitute for hard work. Never give up. Never stop believing. Never stop fighting.”

― Hope Hicks

About the author

I am Nick Hargreaves, CEO of Cloud Employee, a British tech remote staffing company in the Philippines. Prior to Cloud Employee, I have turned several ideas to fully functioning businesses in different countries from a young age. My career in the IT outsourcing industry has led me to establish a dynamic and culturally aware company and work with more than a hundred startups and companies from all over the world. I am a regular Quora contributor with content views reaching up to 1.5 million views. Aside from this, I also publish articles on LinkedIn.