Category Archives: Outsourcing Articles

Is your outsourcing job just a job?

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I must have called close to a thousand outsourcing companies over the last two months. I called call centers, medical billing companies, programming houses, data entry facilities and more. When I call them, I can tell whose job is just a job and whose job is a passion that really matters. I want to hire people who are devoted to their work.

One way to see how devoted people are is to call them after hours. If someone answers their phone at 7pm or after, they might be more devoted to their job than someone who leaves promptly at 5pm. See who works on the weekends. Many people are not willing to. Keep in mind that just because someone puts in that extra effort doesn’t guarantee they are the right fit for you, but it helps and is a plus!

Another thing to look for is managers who answer their own phone. Many managers who are serious have a phone line that they generally answer. Others have a secretary transfer calls to them. There are also managers who are completely impossible to reach who you have to schedule an appointment with. If you are doing a serious time sensitive project with someone, you need to be able to reach them.

As a parting thought, it would be so much nicer if more people would take their jobs more seriously. If you could get through to people on the first attempt rather than chasing them around town, life would be so much easier. If managers hired the right workers, you wouldn’t have to shop around so much and fire people so often. The world would be a much better place!

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Putting the ball in their court — outsourcing advice for beginners

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Many of us are forced to outsource work overseas because of labor shortages at home, or due to excessive prices in your country. The problem is that most outsourcing companies, particularly software development companies are not that reliable. You have to test them out to find the best software development companies.

My mistake testing people out was that I was too emotionally attached and anxious throughout the testing process. I sort of made myself involved in the process which was my biggest mistake. The purpose of the test is to see what a company will do on their own initiative, not on your initiative. You have to throw the ball to them and see what they do. Many will drop the ball or make quite a few mistakes.

By testing out ten companies at the same time, you will be so busy, that you won’t be paying attention to any particular one of those companies. That way, they get back to you when they are ready, and not when you remind them.

This reminds me of a story I heard about medieval Japan. There was a Samurai who would always hire two prostitutes at the same time. That way he wouldn’t fall in love with either one of them. Do the same with programmers. The minute you become attached to one, you might be settling for less than optimal service. Always be comparing them even if you have a regular provider. Keep a ranking system that keeps evolving and gives quarterly updates to the ranks of the programming companies who you like at different stages of the relationship.

How will outsourcing be affected if Donald Trump is elected President?

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A 35% outsourcing tariff?
Donald Trump wishes to impose a 35% tariff if multinational companies engage in outsourcing. He wishes to bring jobs back to America which is a noble cause. Donald claims that China engages in currency manipulation. Additionally, for years, China has been dumping cheap products into the United States which creates brutal competition which local companies can’t normally survive.

3.2 million American jobs were lost during the trade deficit with China betwen 2001 and 2013 mostly coming from the manufacturing sector. Trump’s policy could reverse thirty years of U.S. trade policy. Having an outsourcing tariff could stop the outflow of American jobs overseas. But, the reason American jobs go overseas is because there is such a shortage of quality labor here, that it stops being cost effective to do business here. If the cost of labor would be lower and the quality higher, jobs would be flowing to the United States from other countries. In fact for those of you who wish that labor would flow to the United States — the only way that would happen is if America turned into a semi 3rd world country with shanti-towns and slums everywhere. In that consdition, we could accommodate the cheap labor that would make us the industrial king of the world. But, don’t despair, because America is already halfway through the conversion to 3rd world. Just take a drive through Central California. You will see less than 5% of the population is American and half of the population doesn’t even speak English or have a High School Degree.

I personally feel that outsourcing is good because it makes it easier for American businesses to have choices for who they hire. Although there is unemployment in the United States, it is very hard to find qualified and talented individuals to work for you as employees, or outsourced help. It is also hard to find quality people in foreign countries to help. Taxing outsourcing would put many overseas service providers out of business. The result would be that local companies would have less competition and be even more overloaded than they already are making it even more difficult, expensive, or in many cases impossible to find quality help anywhere in the world.

I feel that Mr. Trump understands many things about economic theory and currency manipulation. However, I don’t think that he sees the situation from the point of view of American companies who are forced to outsource because they can’t find reliable help on the home front. It is almost impossible to find a decent programmer anywhere in the world these days. If anything, creating artificial taxes and boundaries disrupt the nature of the economic ecosystem. What would help the world is to create more supply in the United States of critical jobs so that companies would not need to outsource in the first place. Proactive solutions make more sense to me as they make the United States strong in the long run.

Imagine if our government helped programming companies and call centers in the United States become more competitive? I propose huge outsourcing centers to be built in Arkansas and Oklahoma where land is ultra-cheap. Labor and other resources are also very affordable based on international standards in that area as well. By creating ultra-efficient systems and companies there offering the highest quality of service at really low prices, the United States could put foreign outsourcing companies out of business and possibly even import many of their staff members to the United States. I favor winning the competition by fighting smart and not by imposing artificial dampers to the flexibility that American corporations deserve!

Outsourcing relationships never end the way they begin

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You know how dating relationships go? It is exciting, there is suspense. Will she like me you think? You are so relieved when she not only likes you but wants to see you — regularly. Then, you go out, you learn about each other and fall in love. Then issues creep up, the family doesn’t like certain things about you and you can’t stand them. Sound familiar? Unless you’ve had an arranged marriage, you are probably familiar with all of these issues. With an arranged marriage, the family basically chooses you, so it is less likely they will have issues about who you are as a person as far as the big things go.

Outsourcing relationships are similar. We start out being wowed by the salesperson. We are excited that someone will be able to do our work. We like something about the company and forget that doing business is not that simple and that most companies are just not that responsible and just not at all loyal to the little guy. You get involved, they start doing work and all is well. Then, you find that they don’t do the work with the care you want. Your prized worker Sylvia quit and was replaced by Samantha who never emails you and just doesn’t care. The boss is no longer getting back to you unless you bombard him with emails. What happened to the love?

You have to understand that outsourcing relationships go through phases. You will go through different call center reps, different programmers, and different medical transcriptionists all under the same roof at the outsourcing company you chose. The critical point is that the boss has good standards for who he hires not some of the time but all the time. The next critical point is that you got to know the workers and technical manager instead of getting to know the salesman who will be out of the picture the minute you sign the contract. It is also critical that the boss is on your side when you start having trouble with one of his workers.

In all honesty, it might be easier to hire a freelancer directly rather than an outsourcing company. You will not get good care from most companies unless you offer them a huge contract — and even then there are no guarantees. But, try your luck and remember my point. Six months later after you have gone through a few workers and seen the outsourcing company at their worst, do you still like them? Are you still impressed by the salesperson or do you think that he and all other salesmen are full of it? Just remember — it never ends the way it begins!

The Fedex Kinko’s Outsourcing Nightmare

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Okay, this nightmare was not so bad, and Kinko’s was very nice about fixing the problem. My issue is how this problem happened in the first place.

I am a regular client of Kinko’s for book publishing. I like the way they can do a fast publication of 100 or so copies of my course that I sell. They give me a very attractive vinal backing and spiral binding with a clear cover. My customers like it and it gets the job done cleanly. I have been using Kinko’s for decades, and they have been my book publisher for about five years not without issue until quite recently.

I dropped of an order for my book. They got the specifications, did a scan of the materials and gave me a price. Unfortunately, they did not scan the back of the 58 pages in my original. So, they published 70 books that had page 3, 5, 7, 9, 11, etc. Every other page was skipped. I can understand that all of us make mistakes from time to time. But, how is it possible not to check your work before you send it to your outsourced printer? And how is it possible that your outsourced printer would do $700 of work without double checking to see if any pages are missing, let along half of the pages. Yikes! You don’t need a PhD in printing to figure this one out. I was also not given a chance to check their proof. I didn’t think it was critical as they had never blundered before. I thought I was dealing with professionals here.

In any case, I had to go back a second time to give them the original again. This time they gave me four proofs which were all correct. They will have the 70 copies done by tomorrow and shipped to their location by 10am. I also got 30% off. So, I am not too upset. But, seriously, a one minute double check of the work would have saved Kinko’s $500 in damages! How do they train their people I ask?

The other issue I have with Kinko’s is that they are always understaffed or tightly staffed. The problem with being short-staffed is that there is less slack time to double check work, get proofs out, and get work done on the spot. It would be easier for me if they could do the job in house and just let me come back after a few hours to pick up the work. Nobody does it this way, but that is the easiest for the client. The other problem is that you generally have to stand in line and wait for 5-20 minutes per order. If they had more staff, there would be less waiting, faster output, and fewer mistakes. Oh well. They are not a bad company by any standard, but they could be better in my opinion. More training, more staff, and more double-checking. These are the same criticisms I make about everyone including my own company!

Outsourcing work for $2 per hour?

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I talk to a lot of people involved in outsourcing and read about this topic regularly as well. Prices for outsourcing work can really vary. The issue with me is that I want to know what I am paying for and what I’m getting. You never really know what you are getting, especially when you outsource to India. Companies there hire a lot of beginners who haven’t a clue what they are doing. On the other hand, they also have some seasoned professionals who will work for a reasonable cost as well.

I just got an email stating that a data entry company would work for $2 per hour. I wonder what the cost would be to fix the errors that their clerk made, or how efficient their work could possibly be. When you see prices like this, you have to keep in mind that they are probably only paying their clerk about 70 cents per hour, and their offer might only be a come on, and not a long term price.

On the other hand, I talked to many providers of social media services. I heard prices like $3 per hour if you get one hour a day and you pay a fixed monthly rate of about $120. Another social media company wanted $5 per hour. A third company wanted $500 per month for one hour per day which is about $25 per hour. I wonder how much better the quality of the $25 per hour provider is. The man who answered the phone didn’t seem at all polished. $25 per hour is more than 90% of programmers in India charge — and I assure you that social media is a lot simpler to learn than PHP programming!

In America and other wealthy countries, outsourced labor can run from $30 to $100 per hour for various tasks. Call center work pricing has really gone down due to intense competition from Manila. But, social media work in the USA is no bargain. The sad part is that the providers of these expensive services in the US or India generally have very little experience, very limited knowledge, and quit their jobs on a whim. How can anyone run a business based on outsourcing I ask?

My solution is that you become an expert at whatever you are outsourcing and keep a close eye on whomever you hire to do anything. You might be able to get some good work from the $2 and hour folks, and maybe even teach them something that will benefit both of you.

The software boss whose agent ruined his client relations

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I was talking to a guy who had 120 employees. Obviously he was doing well, but it was not without some unpleasant knocks. He had hired an agent to get him clients. The problem was that the agent didn’t get payment to him in a timely way, and he was not able to keep the clients as a result. I told the software outsourcing boss that the problem was simple. He gave control of his income to a stranger who played games with his revenue. In business, whether you are large or small, you have to be in control at all times, otherwise you will suffer huge losses. I told him that he needs to have his own in-house marketing department. It might be hard to learn how to find the right people, but at least once you figure it out, you will be in control, and not some outside company that will ruin your client relations.

The world of outsourcing is a strange one, especially in India. So, don’t try to grow too fast, and focus on being solid in all aspects of your outsource business. Good luck!

There are tradeshows for products; Why not have them for outsourcing?

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I remember my first job in Los Angeles. My boss hated me. I was working for a company that made fancy industrial products. I went to a trade show. I stepped out for a cigarette break. The boss was furious and said he was paying $10,000 per day to have a booth there and every minute counted. I had no idea it was so costly. Why didn’t he tell me before hand?

Trade shows are one of the most cost effective ways to get leads according to some marketing experts. Asian companies that manufacture products are all over trade shows. But, why can’t there be tradeshows for outsourcing, and what would they be like?

Can you imagine going down the aisle and seeing endless data entry companies shoving their brochure at you? You might see programming companies, call centers, content writers and more. But, what about samples of their work? What would that look like? After all, they are selling services not products here. My feeling is that the best way to promote outsourcing services might be by video. Companies could create videos showing their building, staff, training process, and actual work being done. Sales people could talk about service packages and hand out cards. For a joke, a programming company could give you a page of programming code as a free sample. Nobody would be able to read what it meant unless you too were a programmer!

I guess if companies really wanted your business, they would get your email address, phone number and give you a free mouse pad with a photo of their office and their company name on it.

The idea of trade shows is interesting. Sometimes there are trade conferences for outsourcing in the Philippines or other countries. Once in a while there will be an international conference about call center outsourcing or other outsourcing topics. Conferences are fun, but trade shows are even better. Especially if there are snacks!

What types of tasks are good to outsource

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There are countless tweets on this topic. Apparently this type of tweet gets clicked on. It is general, practical and fun.
I always say that you should make it a practice to outsource tasks that meet the following criteria:

(1) Repetitive Tasks where the directions are not too complicated
(2) Tasks that are not time sensitive (unless your service provider is very punctual)
(3) Tasks that are not too critical (unless you know your service provider well & they are reliable

If you are testing out a new company, the sad thing is that you just can’t or shouldn’t trust them. Never trust strangers. Don’t trust your friends either, but that is a different story. If I go to a new massage place, I only commit to one hour. What if I don’t like them? Usually I am not that impressed with their English, or ability to dig down into those stiff muscles of mine. If I’m trying out a new call center worker, what if people don’t like them? What if they don’t get anything done on time? What if they don’t follow directions. Don’t give critical tasks to those until they have a proven track record with you for six months. Yes — six months. Don’t take liberties. They might quit on a whim. People who don’t own their own company tend to lack the type of work ethic and attention to consequences that I have which is why I do a lot of my own “busy-work.” Once you have found an individual or company to be reliable, then you can give them any type of task which you found they can handle.

My problem is that most of my tasks require a lot of specific knowledge, or are time sensitive, or are too small in weekly hours to outsource. I prefer to outsource tasks like long lists of people who all need to be reminded about the same thing. I might have a list of 3000 people who all need to hear the same message. I just outsourced that to a young lady who is doing a super job of it. Everybody likes her including me!

Personally, I think it is a good idea to test out ten companies before you actually hire one for regular work. Most companies are not that great. If you try ten out, perhaps you will find a few that you like, and then keep the ones with the best personalities (who also deliver reliable results.) What I learned about business is that in the long run, meaningful personal bonds translate into happy and long lasting business relationships! Don’t overlook the human side of your business!

(1) meaningful personal bonds translate into happy and long lasting business relationships! Don’t overlook the human side of your business!
(2) Tasks that are good to outsource = repetitive or tasks that the provider specializes in.

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The Indian companies who answer professionally are even worse?

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In my September 2013 cleanup of, I removed about 800 companies from our outsourcing directory. The companies that were removed were taken off because they either didn’t answer their phone, or refused to communicate in an audible or helpful way. If you are in business, you need to invest in a clear phone line otherwise you will be saying, “What, what, what?”, and your prospective clients will be saying, “I’m hiring someone else!”

In my frustration, I found that less than 1% of small outsourcing companies in India answered the phone professionally. They did not state their company name or personal name when answering the phone. They only said, “Hello?” I understand that there are very few good role models for business behavior in India, but you can learn from England, the US, or Singapore if you need role models.

I decided to call larger companies in India so that I could see how professional outsourcing companies handled their clients. These larger outsourcing companies in India answered the phone stating their company name, either in person, or with a recording. The problem is that is the only thing they did right. Yes, I am generalizing. I communicated with about twenty larger companies, and not one of them could answer even simple questions.

Company: Rajeev Outsourcing Company, may I help you:?
Me: Hi this is Jeremy from, I wanted to know if you are still in Thane
Company: Let me transfer you
Me; I think that you are intelligent enough to know what city you are located in.
company: Please hold

Then I was put on hold and the phone disconnected in many cases.
In other cases I was connected to someone else who once again transferred me to a third, fourth or fifth person. I had to spend about five minutes being transferred just to reach a single person who could interact like a human being.

My suggestion to larger outsourcing companies in India is to hire people who have half a brain. That would be a huge improvement over what you have now. Teach them how to answer questions like: What is your name? What city are you in? What does your company specialize in? The smaller companies generally had highly intelligent owners or partners who could speak the queens English, answer all questions intelligently and make small talk. The large companies couldn’t even function.

Indians have a narrow-minded view of business that bigger is better. This is not true. Better is better, bigger is generally indicative of a thick skull.

(1) The few Indian companies that answer the phone stating their company names are actually the worst!
(2) Larger companies in India need to systematically put u on hold to answer complicated questions such as: what city r u in?
(3) Over 99% of small outsourcing companies in India answer phone, “hello”. Making them sound like a wrong number!
(4) There r better ways of spending time than being transferred 2someone who transfers u 2someone who transfers u again.
(5) Small co’s had more intelligent spokespeople. Big ones barely functioned. Like cars, “smaller” got better mileage.

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Bringing Jobs Back to America: How ‘Bout the South Ya’ll?

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Why do people outsource anyway? Approximately 46% of companies that outsource say they do it in order to save money. For example, in the Philippines, you can get a call center to do a 3-minute outbound call for about $12 an hour; in India, it will cost you about the same once you add in set up charges and find a place where you will have competent and intelligent English-speaking callers; in the Caribbean, it will cost you $15; in South Africa, it will cost between $11 and $16 per hour. But will outsourcing solve your problem if you depend on quality and callers you can trust?

Many firms actually outsource because, in some industries, American companies are too busy to take on new clients or give enough time to clients…and the combination of high prices, inflated American egos, slipshod workmanship, and bad attitudes is too much to palate. Has outsourcing solved these problems? Are workers in other countries more humble, more careful, more diligent, or more polished? Finally, some CEOs may outsource because they have an affinity for the culture (it might be their country of origin, they might have lived there for a time, or they might belong to a religious group that has a presence there) and may choose to give work to that country. For whatever reason, according to one source, outsourcing grew by more than 40% between 2001 and 2009. More than 2 million jobs were outsourced by the U.S. in 2011 alone (a conservative number); however, the numbers are deceptive, and do not include jobs in companies that actually built factories, offices, and call centers in other countries. In that same year, 2011, 53% of U.S. manufacturing companies, 43% of U.S. IT companies, and at least 15% of call centers had “a large portion” (75%?) of their work done outside the U.S. Add to that reports that show, for instance, that Russia’s income from taking on IT outsourcing doubles every year, and we now have an idea of the volume of jobs being outsourced by the U.S.

The reality of outsourcing, however, is that communication is never as good as it might be. Americans have higher standards for communication than other cultures, and it is like driving 40 miles an hour into a brick wall when you discover how low or non-existent the communication standards are compared to yours…or you find out that your “senior programmer” has only six months’ experience…or when, every time you call to find out “what’s going on,” you are put on hold and then the phone disconnects while you are on hold…or when you generally discover how incompetent, inexperienced and slow are the “excellent” staff who have been randomly assigned to your project.
Many U.S. companies that have tried outsourcing in the past few years are now looking for alternatives: in the end, they found that they did not save money but lost money because of jobs not completed or not done according to high work standards. Even though this may have been simply a result of not getting to know the company well enough or not finding the right fit, many companies in the U.S. are now wondering where to find competent, affordable help. Look no further, ya’ll: just mosey on down south of the Mason-Dixon line. In the U.S., the good ole South may be the place to do business.

In our experience, Southerners have an easy manner and a politeness that goes a long way. They try to make you feel comfortable, and will try to come up with solutions that work for everyone. Second, in the IT industry, for example, they have a great work ethic, and take pride in doing a great job. In the South, because the cost of utilities is less and wages are lower than in other parts of the country, “insourcing” is worth looking into. Office space in some parts of the South is as low as $1 a square foot, so companies can afford to work in an office and have a professional staff on board… whereas on the West Coast, for instance, where office space can be $5 a square foot for a modest office, many IT companies have virtual offices or a loosely monitored team of “experts” who claim to have known each other for over a decade but never meet in the office to collaborate and don’t really work for the company. IT developers, for example, are often independent contractors who are not interested in “your dumb project” and are not held to any standards. In this type of company, the business manager is at the mercy of the programmer and really has little control over which clients are accepted and whether or not work gets done or even started at all.

But it’s not like that in the South, ya’ll. It is not hard to find real offices with real employees, a manager who tries to get things done fast…but is likely to be good-natured and may want to go at a slightly more relaxed pace just to get to know you and find out what you really want. Statistically, not only is the price of office space less per square foot in the South, but the cost of labor is less. Although it is still more expensive than outsourcing to India, the superior communication and effort are well worth the difference. Doing business with the most expensive companies in India costs only a bit less than doing business with the South–but the communication and productivity will be a lot better in the U.S.–not to mention the time-zone factor. If you compare the least expensive parts of India to the least expensive part of the U.S. (the South), the U.S. comes out on top. If you look at the relative costs of doing business with India and California, the cost of doing business in the South may be the perfect solution.

For example, South Carolina is among 10 states with the lowest cost of labor in the U.S.–yet is ranked among the top 10 states in terms of business environment. Compare these rates, for example: India, $30 an hour (IT) for a senior developer…but the work often seems to take double the time; $75 an hour (IT) for a senior developer in the South…while in CA, you may pay $150 an hour for roughly the same quality developers. If you are talking about call centers, in Charleston, SC, for example, it is possible to find a call center that will do outbound calls for $25 an hour and will create extremely flexible terms. This is not only less than NY or CA prices ($35-45 an hour for the same number of calls and information), but is better quality–and a better deal, call for call–than call centers overseas that will cost you approximately $15 an hour.

Why? Because it’s not just about the rate they quote you. One of the first things you will find out is that some companies will not guarantee that they will “penetrate” the entire list for this money, and it seems that the level of commitment and feedback on the part of the callers is not as great at that of their U.S. counterparts in the South. In addition, many Americans have been turned off by calls from overseas call centers, particularly when Americans need the caller to inform or explain or reassure. In fact, although there is as of yet no official law requiring foreign call centers to forward calls to a representative in the U.S. if asked, many U.S. citizens have made this request and many companies have a policy of transferring calls to U.S. operators when asked to. And these requests have become more and more frequent in the past few years. Americans are also uncomfortable with the loss of call center jobs to foreign countries. Looking at these issues, many companies have chosen to insource calls to places like the U.S. South.

In 2013, many U.S. companies are already discovering the virtues of “insourcing” and are bringing call center work back to the U.S. Wages of call center employees in many other countries go up as much as 15 or 20% a year; this plus communication issues, security/ privacy issues, poor workforce training, and time-zone issues have made many companies reconsider outsourcing to India or other overseas destinations. According to one report, in 2013, given all the hidden costs of obtaining competent callers, it is about 15% cheaper to use a call center in the South than one overseas. At one point in the last few years, 30% of call center jobs in the U.S. were sent overseas, but now, in 2013, only about 10-12% of calls are made by call centers outside the U.S., according to one source.
These and other factors make the South worth exploring if you want to “insource” to a U.S. company that can take over a portion of your IT or call center workload.

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What type of salesperson to avoid in outsourcing

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I have learned that there is only one reason to talk to a salesperson when hiring an outsourcing company. That is to ask them 10 questions, so you can compare their answers to the technical manager to check for consistency. Most companies are dishonest, while others are just uncoordinated. I check for both when hiring. I just got off the phone with a salesperson who refused to answer most of my questions. He referred me immediately to the technical manager — he didn’t get any point deductions for integrity or accuracy reasons! Smart!

So, talk to salespeople as little as possible as a rule. But…

There is a rule of thumb when talking to salespeople. In my experience, the salespeople who were too slick, and too good at sales had teams who did NOT deliver the best results. On the other hand, those who had clunky sales people who had trouble giving answers to easy questions, also didn’t deliver well. Those who gave nonsense sounding answers turned out to be a nightmare. I also didn’t have good luck with very solid sounding corporate types who worked for a very reputable company. I talked to one guy who sounded smart, but who spoke in a sloppy way who delivered poorly as well. So, now we know who to avoid — so who do we NOT avoid?

Look for a point of contact who is a salesman who is not “salesman-ny” or “salesman-ish”. Basically, they should not come across as being too much of a salesperson. They should be more of a technical person who gives intelligent answers to your questions without using any psychological techniques to woo you into a contract. Find someone who is straight who is not too slick. A salesperson who is 70% technically oriented and 30% sales oriented is your guy (or gal).

Once you get more experience talking to people who do outsourcing, and seeing what type of results they deliver, this will become natural. Unfortunately, less than 10% of outsourcing companies out there are worth dealing with. You really need to find ways to learn how they deliver. If their website isn’t that nice, they probably don’t do nice work. A website is proof of a company’s finished work. If they don’t do good work for themselves, they will not do good work for you. If a company can not afford a good salesperson, they probably can not afford good service providers either. Learn to be shrewd. Your success in business depends on it!

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