7 Outsourcing Fundamentals to Master with James Agate

As part of our Blogvember challenge, we invited James Agate of Skyrocket SEO to talk about his experience with outsourcing. Despite sporting a cartoon face and suffering from a morbid fear of delicious food, James has used his business savvy to become Chester’s most famous link peddler. Take it away James…

7 outsourcing fundamentals to master (if you want more than just a couple of VAs).

In the last 12 months we have spent close to $600k on oDesk. I’m not telling you that to brag but rather I wanted to be upfront about our level of spending because I am trying to make it clear that what I’m talking about isn’t the typical “I have a few VAs and spend my life on the beach” setup that you hear the “gurus” preaching about. That is frankly quite an easy setup to achieve if you have a good system, a little patience and a little money.

I’m talking about building a business with a virtually located, globally distributed workforce. Have we got it 100% right? No, far from it. But I have learned a great deal and can offer some insight into what I would consider to be the fundamentals of establishing a staffing setup of this nature.

At Skyrocket, it has been a conscious decision for the last 2 years to move towards a staffing model that can flex according to our needs and focuses on the very best people for a particular task regardless of their location.

It is as simple as that, for us, this hasn’t been about “penny pinching”, in fact the initial cost of our setup has likely been higher than a more traditional setup but long term we’re creating the most efficient workforce possible.

#1 – Think like an arbitrageur

CamelsI see what Skyrocket does as “arbitrage”. We’ve taken something (link building), broken it down into a process and sent each task around the world to be completed, we get the output back, reassemble it and sell to the client for our profit.

That is perhaps too crude an explanation and turns what we do into a commodity but my point is that most things can and should be broken down and completed in a location where it is financially sensible to do so.

I talk to so many entrepreneurs and managers who have people sat in city centre offices with city centre rents, city centre salaries & perks, plush office furniture and all those kinds of things with their team doing tasks that Skyrocket has carried out 8000 miles away at a fraction of the cost.

I’m not advocating sending all the work to X, Y or Z. It is about sending it to the most suitable person based in the most suitable location. That may even just involve sending it to someone within your country but based at a different location. Location arbitrage opportunities are all around us.

The fact is that the cost of living and therefore the expected wage varies vastly across the world. You know the price your customers are willing to pay for something from you. You can then determine how to break that up in the most efficient way possible to achieve the highest possible standards and a fair cost.

#2 – Get yourself a gatekeeper

Skyrocket oDesk
Contrary to what feels like common wisdom, oDesk or any of the other platforms aren’t plug and play solutions – they’re far from it. That isn’t a criticism because all of them (in particular oDesk) have advanced leaps and bounds in the last 18 months – they will get there eventually but for now at least you need to put quite a bit of work into finding, recruiting, managing and retaining your teams on there.

If I were to do it all over again, the very first hire I would make would be a “gatekeeper” to help filter the firehose that oDesk can be. We now have various line managers who look after their individual clusters but when you are just getting started, it is worthwhile hiring someone even just part-time to handle job posts, candidate filtering, team management, team admin etc.

My gut feeling is that most people write off outsourcing as viable around this point in the learning curve where they have a few people and all of a sudden the wheels start to fall off keeping up with the demands of having a growing team – as becomes the case when you start to grow a team in your physical location.

On a similar vein, always limit the number of direct reports you have otherwise your day can quickly get clogged up with all sorts of mundane tasks and inane questions.

In terms of responsibility/permissions of the gatekeeper, luckily oDesk has features that allow you to grant hiring and firing permissions to individuals without the need to grant them billing access. This is always my recommendation, there are precious few individuals on this planet to whom I could personally trust our banking to, not necessarily because they are dishonest but because nobody really cares about your money or your budget like you will so whilst they might not be “on the take”, they may miss things that you would spot. I know you could say that about anything but I see the finance side of things as being the place where you can maintain control and overall visibility.

#3 – Globally distributed should mean exactly that

map

The one thing I think the massive outsourcing companies do ‘wrong’ is to establish and build their operations around one location. I understand entirely why they do it but the problem with this approach is you can be very susceptible to problems.

For example, many of the countries where your contractors will be based will be far less stable than your own. They don’t always have power, internet or even a safe place to work. You need to be compassionate but equally you need to have backup locations where work can be completed if necessary.

This is for your benefit but also for the benefit of the contractor. The amount of individuals who are fretting more about letting Skyrocket down by turning in work late than putting their house back together after a serious flood for example is just astounding.

#4 – Plan your cashflow

tapWith an average of 180 contractors at any one time, our weekly oDesk payroll is pretty substantial. It really isn’t any different to planning for regular payroll except that instead of that money being needed monthly, you need it weekly.

I’m teaching many of you to suck eggs here because cashflow management is really business management 101 but it is one of the questions I get most often when I have conversations about our staffing model as I know for some businesses, having these kinds of financial commitments weekly can be a challenge so I think that is something to consider very carefully before embarking on this model of staffing.

#5 – Be a compassionate but ruthless employer

paintI talk a little more in detail about caring for your team later in this post but I want to touch on the need to be a compassionate employer whilst maintaining discipline.

I have constantly been amazed by the creativity and in most cases the plain audacity of some of the excuses that contractors have come up with. Paul Madden and I had a conversation on Twitter not long ago where he was talking about some of the classic excuses he had received. It’s funny but it isn’t.

Naturally, as your team is just human, people are going to have the usual issues that a physically present team would have.. people running late, needing to duck out early to sort a childcare crisis, dentist appointments, bereavements etc. But you’ll get a good feel when someone is being genuine or if there is some kind of pattern.

We operate a two strikes and you’re out policy, I’m not talking about mistakes here, I am talking about failing to finish work to a desired standard, going AWOL etc. The distance between you and the contractor can amplify these issues because they think out of sight out of mind and you think I’ll give them the benefit of the doubt – in 99.9% of the cases, your gut feeling is the right one.

If you think you are being taken for a ride, you probably are.

The reason I mention compassion and discipline in the same rule because to me they are one and the same, you aren’t doing anybody any favours by being a sloppy employer on oDesk (or any platform). I mention them together as well because some employers have a very serious personality defect – I swear some believe they are the colonial masters of the universe operating a virtual sugar plantation of yesteryear. If you can’t treat your contractors with respect then I’ve no time for you as a person and guess what, your contractors despise working for you and they’re probably just taking your money until they can find a better gig. Don’t be a dick.

A language barrier is a problem for both of you to solve – don’t think it is their fault that they don’t speak English because I guarantee they speak far better English than you speak Hindi or whatever. I’ve heard of employers branding contractors as stupid for this reason and that kind of ignorance really infuriates me.

Be culturally aware – we have a calendar of major events around the world so we can do something as little as wishing team members a good day on their religious holiday to bigger things like planning workflows around times when contractors are likely to want some time off.

#6 – See time differences as opportunities

streetWe have tried our best to strategically locate teams in different locations to allow work to be completed around the clock without the usual problems associated with differences in time.

So for example we have outreachers in the US contacting domains that their counterparts in the Phillipines have sourced for them just a few hours before. The team in Asia are now sleeping or enjoying some hard-earned leisure time whilst the work is continuing. When our team in the US wake up the following day, they’ll have yet more domains to contact.

Contrast that to a setup where everyone is in the same location, you might have an outreach team who need to do busy work or nothing at all whilst they wait for their domain research colleagues to source opportunities for them.

#7 – Send “corridor emails” and actually care about your team

beerBack when I used to work at a large company, it wasn’t uncommon to see conversations going on in the corridors and stairwells of the building because the office was open plan and if you wanted an informal but confidential chat, these were the places to have them rather than booking a meeting room. The topic of these conversations? More often than not they were the “Everything OK? Are you happy?” kinds of conversations that go on between subordinates and line managers.

I have adapted this to our setup and frequently send these kinds of emails to my team to ensure everything is OK and there isn’t anything we could be doing differently to make their work lives better.

Without that day to day face time it can be hard to spot the early signs of an unhappy team member. Don’t mistake a virtual team for a remote one, if anything it is more challenging to bond everyone together.

For me, just one barometer is the feedback we get as an employer on oDesk. As we speak, Skyrocket has a rating of 4.93/5 from contractors, that is exactly where I want it, we’re not perfect but we’re close to offering contractors an excellent work life.

Skyrocket oDesk 2

Comments

27 thoughts on “7 Outsourcing Fundamentals to Master with James Agate

  1. James this is a brilliant post.

    I get a quite a few questions about hiring VA’s from people on my mailing list (even though I am Mr. couple of VA’s) so I know there are a fair few people who would love to see you write more about your processes when you get a chance.

  2. Thanks Chris! If everyone has that kind of reception to the post then I will be more than happy to talk more about the inner workings of Skyrocket. I just assumed most people wouldn’t be that interested until you guys persuaded me to write this one 🙂

    1. Definitely James, and thanks very much for pitching in. I think there will be loads of people (not just us) who are interested in managing scale whilst ensuring quality.

  3. Excellent post James, very helpful to me (another Mr. Couple-of-VAs), as it confirms that I’ve been going in the right direction with how I work alongside the oDeskers I’ve been splitting my workload with.

    I’ve also shared the post with a couple of people who aspire to be much more than this, and are juat beginning to build their own virtually staffed businesses.

    Further posts on the topic would be brilliant and potentially extremely useful, perhaps covering how you recruit (e.g. what kind of skills/qualities do you look for in potential workers, and for which tasks?), or talking about tasks you have struggled with outsourcing (e.g. anything that you’ve found you can’t really outsource?).

    As Chris says, more detail about specific processes at Skyrocket would also be hugely insightful, and helpful to in-housers like me, as well as those running other agencies.

    1. Thanks for reading Neil and sharing.

      That’s interesting regarding things that cannot be pushed through oDesk, I will have a think and look at pulling a post together with some potential reasons.

      Appreciate the suggestion on recruitment specifics, I think that is probably one of the biggest challenges for sure 🙂

  4. James, brilliant stuff. Having met you a few times I got a sense you’re running a very innovative business.

    Have you ever written anything about how you got the vision for your unique business model?

    1. I appreciate you taking the time to read and comment David.

      I have never actually written anything about where the idea for the business model came from. Similar to my response to Neil’s comment above, I guess I should really put together a post on that as well if people find it interesting.

      To give you a short answer..I’d be lying if I said I had grand intentions in mind when I first thought about the whole distributed model but it is something that has made more and more sense as things progressed.

      1. James, I’d personally be interested to know more about your story. From what little I understand about your business model I can say it’s one of the most fascinating and intriguing I’ve heard of lately.

        I think marketers like me, who aren’t necessarily wired well for entrepreneurship, could learn much from your failures and successes.

  5. Great read, James. As having engaged your team for several months now, I too can vouch for your company’s level of service.

    Looking forward to reading more insightful pieces.

    Jamie

  6. To use what seems like it *may* be appropriate language, smashing post James.

    Seriously though, I appreciate you taking the time to hash this all out and provide behavioral insights and considerations based on real-world experience.

    180 contractors is nuts, that’s the size of a Fortune 1000 business.

    Cheers.

    1. Hi Nick,

      Ha! Thanks old chap 🙂

      It certainly seems to have gone down well so I will almost certainly look to put more stuff out like this although probably not a good fit for Skyrocket site so guess I should break out with another identity in the way you do kind of with your SEO / UX/ Nicks Links kind of thing…

      I suppose the thing to bear in mind is that most Fortune 1000 businesses have most people on $$$ salaries etc, ours is a bit more of a flexible model.

      James

  7. I know you use oDesk to find you the contractor and use it to for your time tracker, but if you spent $600K last year, then that’s paying an oDesk fee of $60K which is a ton of money.

    Do you feel like you can now, with your various contacts that you have gathered in each country, go around oDesk and find potential employees without using a hiring manager? This would save a lot of money and also ensure that people are coming well-recommended. This is what we do ever since we realized we were spending just too much money at oDesk. Yes – we get to pay with credit card and not have to deal with payroll and the process is just easier, but when you’re talking about a 10% margin, it is just a little excessive.

    1. Hi Ryan,

      Honestly my preference is to stay with oDesk. Not only is billing streamlined, you can easily review work and keep an eye on contractors something that you simply cannot do if you are outside of oDesk and scaling a team rapidly.

      Sure you could probably circumnavigate the platform if you have a small team of trusted people and give them the extra 10%. Sorry if anyone from oDesk is reading this because that obviously defeats the point of what you do.

      But for scaling a team, it’ll be a massive headache to remove oDesk from the equation in my opinion.

      Yes you can piece together all the various bits like screen management, communication, time logging, payments and so on but it’s 10% well spent as it is (for the most part) hassle free compared with piecing together an alternative solution.

      James

  8. James, really loved the article and I’m looking forward to any future follow-ups. I’m transitioning to a new company soon and will be managing teams found on oDesk, so this information is invaluable to me. Thank you!

  9. James – I check your blog all the time always hoping for more stuff about outsourcing. It’s something that doesn’t get talked about enough!

    I would love to hear more about how you break apart chunks of the linkbuilding process. I know you’ve talked about it on your blog before and I’ve read all of those, but I’d love to hear more details about the inner workings of Skyrocket!

    1. In effect Gordon yes, as I mentioned in the post we have broken down the teams into clusters and therefore most are managed by a fellow oDesker if that makes sense 🙂

      Although I don’t think we have anyone with the job title virtual assistant, everyone has a clear job role and then I just delegate as necessary.

  10. Great post James. oDesk is a great platform to find talents in a lot of different spheres of work. I have an experience on both sides of the fence, as a freelancer and as an employer and some of tips here are great. With your spent of $600k you are giving a serious part as fees.

  11. James,

    Awesome post – as someone building out an outsourcing team (slowly), it’s cool to see an example of how a company that’s spending quite a bit more is thinking about it.

    It may be a while before I get to that point, but the mentality behind it really helps me shape my current outsourcing processes.

    Thanks,
    Kevin

  12. Great points! I’ve been working with a VA from the Philippines for over 3 years now. Developing a relationship based on mutual respect is vital. Never forget that these are people – not just units of labor.

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