There are several different kinds of outsourcing companies, and business process outsourcing companies are those that can handle specific business processes, like customer service, accounting, IT, accounts receivable, or other processes that are necessary for the daily operation of your business.
Business outsourcing companies can make any small business owner’s life a lot easier. They make it possible for you to keep your business rather small because you don’t have to hire a lot of employees. They also free you up to focus on doing what you do best so that you don’t have to take time away to get necessary business processes done.
Business process outsourcing companies are located everywhere in the world. So it is up to you to do your research to find the best qualified and most reasonably priced service provider that fits your business needs.
Of course there are outsourcing risks, like having less control over your business processes. Depending on what you outsource, you could end up with a bad reputation, either in the view of your customers or your suppliers.
You also face the risk of illegal things being linked with your business if you don’t pay attention to what the company is doing. It’s important to check their work to make sure that it agrees with your values and your business’s mission statement and policies.
The process of hiring business process outsourcing companies varies according to what you’re outsourcing. The easiest way to outsource is through online sites like Vworker, Guru, Freelancer.com, Elance, and ODesk. You can receive multiple bids for the work you need in a handful of places.
These sites handle most of the paperwork for you. The outsourcing company invoices you through the site, which provides a safe way for you to pay them. If the company is located outside the U.S., tax time becomes easier for you because you won’t have to file 1099s at the end of the year.
However if you do outsource to individuals or companies located in the U.S., you will need them to sign a W9 form so that you can submit their earnings to the Internal Revenue Service at the end of the year. Any company or individual that you pay more than $600 to in a year must receive a 1099.
The IRS has listed complete instructions for handling 1099s at irs.gov.
Many of the outsourcing sites listed above will handle your 1099s for you if you opt to have them do so, which makes your business more simplified.
When you’re looking for an outsource company, it can be tempting to go with the cheapest price you find. However, just as you get access to a lot of talent by searching the entire world, you also get access to a lot of bad service providers.
For example, there are many call center outsourcing service companies in India and the Philippines. Business process outsourcing in India has especially become popular because of the low prices, but unfortunately there are many companies that don’t deliver quality work. India in particular seems to house many call centers, but not all of them hire workers with good English skills. The Philippines, on the other hand, seems to have quite a few good companies for other business processes.
The most important thing you can do when looking for business process outsourcing companies is read their profiles. Also look for referrals from other small business owners. If you can find evidence of past work, then you have a much higher likelihood of being able to trust the company. You can also conduct a phone interview with the supplier before you hire them. With tools, such as Skype, you can easily do this and get a very good idea of what you’re getting into.
It is also highly recommended that you communicate your instructions in great detail for the tasks you want your new supplier to work on. Moreover, a good practice is to hire the new vendor conditionally for a minimum period (ranging from half an hour to a week, depending on the job you need done). This way you won’t accrue a significant loss of time or capital, in case the supplier does not perform to your expectations.
All of this might sound like a lot of work for you to do, but it is not, especially after you hire a couple of suppliers or freelancers and gain some experience working with them. Small business owners and large corporations alike use outsourcing as part of their business strategy. The amount of time and expense you save, if you do your due diligence, are tremendous when you outsource.