Outsourcing web design & development contracts
By Michael Bloch
Posted Wednesday, September 29, 2004
Scenario: A client comes to you wanting a quote on a web site and it's the perfect job - apart from one element in the project - you aren't skilled in this particular web technology. This component is a crucial element in winning the contract, there's no way of getting around it. What do you do? You don't want to lose the contract, but you definitely can't afford to hire a new employee for this project - there's too many risks and associated headaches.
The answer is to outsource that part of the project. You don't need to be a Fortune 500 company to get into the outsourcing game.
Another scenario is where you have so much work on at the time that you really don't have the resources for taking on and developing a full project. In these cases, small companies tend to refer the entire job on to others. But then you lose the client forever to the other company. Wouldn't it make more sense to secure the contract, outsource everything and oversee the development? That way if one of your current projects falls through, you will still have work and you will also more than likely gain future work from that client.
Web development is rapidly becoming a huge field with many hundreds of technologies involved - there's no way a small web design company can cover everything. But without having access to expert designers and developers, small companies can lose many contracts through a lack of suitable expertise.
The idea of outsourcing projects or project components may strike fear into the hearts of many small operators, but the future success of your company may depend on it - otherwise you may find your customer base drying up.
What should I outsource?
Most small web design and development companies naturally achieve great expertise in specific areas - these project areas are the ones that they are not only particularly good at, but also the fastest in generating. We all build up our repertoire of "tricks of the trade" over time, and these are the elements of any contract that it makes the most sense to keep.
Where are the bottlenecks in your development processes? If developing graphical elements for web sites is one of your challenges, then of course it only makes sense to outsource that work. You may feel that paying $80 an hour to an expert graphic artist is too steep considering your standard rate is only $50 an hour, but consider this example:
A client wants a Flash element created and Flash isn't one of your stronger areas, so the length of time it will take you to create that element is a bit of an unknown - and you have already set the entire project price, which the client has agreed on. You end up spending 6 hours on designing the Flash animation to the clients satisfaction.
At a rate of $50 an hour, that element has cost you $300 to create. If the Flash component had been outsourced to an expert, although they may have charged you $80 per hour, it only took them 2 hours to create. Add on one hour for the time you spent consulting with the Flash expert and the total cost of this element is down to $210! Even if you spend two hours on consulting, you are still well and truly ahead, lessened your stress and freed up time to spend on other projects or elements.
If you are a web designer and you are also responsible for keeping your financials up to date, then you are probably losing money. A contract bookkeepers services cost a lot less, generally speaking, per hour than a web designer. It makes financial sense to maintain this aspect of your business yourself if you don't have a lot of work on the boards -or does it?. If you don't have sufficient development work to keep you busy, then the hours you are spending on maintaining your books would be better spent in submitting tenders and marketing!
How do I outsource?
It doesn't have to be a difficult process, although the first time you outsource project components, it will take a little time to get the paperwork together. After the first project, the necessary base documents will be in place which will expedite future collaborations. Before agreeing to outsource work to another company, ensure that base documents covering the terms of the relationship, intellectual property and confidentiality issues have been developed and signed - these are fairly generic documents which can be easily adapted to be functional in a number of collaborations. These don't necessarily have to be hundreds of pages long - just enough to be recognized as being legal and binding to protect your interests.
After you have the basic documentation in place, it's time to spread the word that you are looking for contractors. This can be gone about in a variety of ways.
Through your current networks - let your peers know you are looking for contractors
Compiling a mailing list of developers and designers from online professional directories in your region and then contacting them requesting expressions of interest regarding collaboration.
Go global and use one of the many reputable online collaboration services. In most cases you'll find that posting projects is free.
The last few years has seen a number of online collaboration services come to life, but be wary and study all collaboration companies carefully before outsourcing via these means. A good online collaboration service will also act as a watchdog over projects, ensuring that both contractor and sub-contractor are protected.
Taming the Beast.net offers online collaboration services via a well established partner. We have literally hundreds of people posting projects to this service each day. You can learn more about this service here:
(http://www.tamingthebeast.net/projects/projects.htm)
Before you post/advertise a project, ensure that you know exactly what you want a contractor to do - open ended arrangements tend not to work out. There must be timelines and effective parameters of operation in place - both parties must be very clear on each others' role.
Communications between contractor/sub-contractor must be clear, concise and rapid at all times - assuming that a task will be carried out in a particular way can lead to disaster
Benefits of global outsourcing
The benefits of advertising for developers and designers globally are many. By building up a network of professional contractors, you not only decrease your running costs as each contractor is responsible for his own work environment and insurances etc, you also greatly expand your companies portfolio of skills that can be offered to clients.
By outsourcing project components you aren't efficient in, it will leave you with more time to focus on your core skills and further develop those.
In advertising project components globally, you will also probably secure the best price possible for the work. India and Eastern Europe have many thousands of quality freelance programmers looking for work, and their rates are incredibly low in comparison to their Western counterparts.
Challenges of outsourcing
One of the major temptations of outsourcing is to approve the lowest bid in order to maximize profits. This is definitely not a good practice, especially when dealing with freelance developers and designers from other countries. If problems should arise it may be more difficult in having them rectified. Remember that your business reputation is on the line and if the designer or developer doesn't deliver, your could lose the client, and worse still, your business.
This is not to say that all low bids will translate into poor quality work, but you need to research these bids carefully. How long has the company/freelance been around for? Do they have a portfolio? Do they have referees? What are their qualifications? If you are using an online collaboration service such as ours, read the comments left behind by other contractors - these will give you some indication as to the competency and integrity of the freelance or company.
In any outsourcing arrangement, if you get "bad vibes" it's best to heed your instincts and not continue with negotiations - too much is at risk.
Communication can also be a bit of a challenge. If you receive a bid from someone in very poor English (if that is your primary language), it's best to keep away. I'm not just referring to foreign developers - the literacy skills of the modern Western world are quite appalling.
The Internet, by and large, is still about written communication. If you have to spend hours correcting the grammar and spelling mistakes on a web page or in an online application, then the whole exercise is pointless. Even if the project components you want developed are only graphical, if the sub-contractor's use or comprehension of the English language is poor there is a risk they will not understand exactly what you want. A great deal of time will be lost in the to and fro of revisions.
If you do decide to go down the outsourcing path, remember that the developers and designers you contract are partners in your business. In many cases, your "partners" will need to know the big picture of the project, and that means you will need to invest some trust in them - they are not the enemy, but a crucial element in your business success.
Related learning resources:
Post and find web projects
(http://www.tamingthebeast.net/projects/projects.htm)
Finding web development work
(http://www.tamingthebeast.net/articles/webprojectscontracts.htm)
Writing a basic web development proposal
(http://www.tamingthebeast.net/articles/webdevelopmentproposal.htm)
Communications and the global Internet community
(http://www.tamingthebeast.net/articles/globalinternetecommerce.htm)
Michael Bloch
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