Why do Small Businesses get Outsourcing Wrong?

Why do Small Businesses get Outsourcing Wrong?

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  • Outsourcing business tasks and services is often cheaper compared to hiring full-time employees.
  • However, many companies adopt a mentality of outsourcing for rock bottom prices, which leads to problems down the line.
  • The smarter approach is to outsource for quality that comes with reasonable prices.

 

Having worked with outsourced suppliers and companies for most of my career, I felt I was in the perfect position to make an impact and push the whole outsourced services to becoming a more dignified and human experience for both parties.

However, when I was working with companies that manufactured products throughout southeast Asia that supplied to western customers, it never ceased to amazed me that despite already getting a significant price advantage, the purchaser would always want cheaper goods, which subsequently pushed down the quality to a point where they feed into the “cheap Chinese crap” mentality.

I remember once asking a supplier why I never saw many Chinese branded cars in China because there was a Chinese-made model that was sold as a budget vehicle in Australia and heard this reply:

“We prefer to buy the imported vehicles and the brand you are asking about does not comply with the domestic standard, so it is only manufactured for export.”

Essentially, the purchaser wanted a vehicle at a low price and continued to press the supplier to a point where they were unable to use any standard models and needed to produce an “export only” model. Unfortunately, the vehicle was built according to a price and not built according to a standard.

Then I started to see it a lot more of products that we would buy here but were not often available in Asia, except at fake markets. They all had a common theme – the purchaser wanting to buy at the lowest price regardless of the quality. 

We have bred a culture of buying cheaper and cheaper goods and services while accepting lower and lower quality. However, there are fantastic quality available (if you own any Apple devices, you can probably attest to this statement), we just want to pay less for less.

Which brings me to the outsourced services scenario. We have become obsessed with paying the minimum rate for a basic level virtual assistant to do rudimentary tasks but end up complaining about the amount of time we need to double check or revise their work. And this low cost driven mentality applies for other services we outsource.

You must understand that not all outsourced employees are the same with the same skill sets and experience. You need to think of it in the same way you would if you were employing someone locally.

If you want to pay the minimum, you get the minimum benefit. Businesses often forget that the advantage with outsourced services and virtual assistants is that you can pay a bit more to hire someone good and still save a lot of cash compared to hiring in the local market to get someone truly exceptional.

If you are happy paying the minimum and redoing and rechecking the work, then this is fine and maybe within your current purchasing practice. However, consider for a minute what you could truly achieve with someone who is accomplished in many areas of business strategy and management, has perfect written and spoken English and can produce exceptional work with minimal direction. 

And all for a fraction of the price you would pay someone less experienced with a local Australian salary! Isn’t that the real reason you look for outsourced services? To make your life easier and free up your time for more important tasks?

If you are considering outsourcing or finding a virtual assistant, at least do it correctly so you have the assistance and experience you desire, not an ineffective debit on your revenue that you complain about to everyone.

You are already saving a lot of money by outsourcing. It astounds me why businesses don’t reinvest some of the savings to get more skill and capability for a lot less money.

 


Brian Le Mon

Principal at

Isn't it time you re-evaluated your International Supply Chain setup? If there is one thing 2020 taught the world, it is how fragile supply can become when the majority of the world's manufacturing is conducted in the same country. If we are being honest with ourselves, China has not offered a significant financial or capability benefit for several years now. Ever increasing wages and operating costs compounded with the desire for those traditionally employed as factory staff to better their life and livelihood has pushed manufacturing costs up and the inherent IP risk has never really been resolved. Now with trade wars and retaliatory "anti-dumping" fees / embargos for Australian products imported to China coupled with growing consumer resentment around the "Made in China" tag, it is becoming more and more the time to re-evaluate. There are a multitude of options outside of China as well as the possibility of return to local manufacture for some products but it is best to have a definite plan on your future strategy and actions required to get there. EQP can help you to plan and execute your future sourcing and manufacture strategy by working with you and potential manufacturing partners either locally or offshore to ensure that any move away from China does not result in a drop in capacity or quality whilst potentially saving you money. There is no better time to plan for the future than today. Get in touch to explore your options and resolve some of your Supply Chain headaches.


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