Outsourcing and offshoring to India, the Philipines and beyond.

Author: vin
Topics: Featured Articles, Podcast on Oct 14th, 2009 | View Comments

In this weeks AutomateMySmallBusiness.com podcast, Matt and Brandon discuss the concept of outsourcing and offshoring to places like india and the philipines, and how even the smallest company can utilize this beneficial method of cost cutting that was once, only the privilege of huge corporations.
You will learn how to outsource your call centres, bookkeeping, marketing and even managment. but more importantly where to go to find the people to outsource the work to. Why outsourcing is the best option for small and large businesses and also how to know if a candidate is right for the task.

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Transcript:

Welcome to Automate My Small Business where we show you how to set up and run your own automated business on the cheap. So get ready to take back your life and add a little spice. It’s time to build something automated.

BRANDON: Hi there. This is Brandon.

MATT: And this is Matt.

BRANDON: And we’re going to talk to you today about outsourcing. This is episode 5. Outsourcing is a topic that comes up quite a bit on how to minimize your time and keep your cost low. It’s a little bit different than a typical automation technique that we talk about typically because you know we usually focus on techniques or technologies that completely eliminate labor. But in this case some things you do need labor for and there are things that a human touch is required and you might as well get the best thing for your buck for outsourcing to either out of country or even in the same country that you can get cheap labor or cheap intelligence or …

MATT: I think that brings up a good distinction between two different terms which is outsourcing which is basically getting someone that’s not in your company and if you’re a one person company that means not you to do some work, and offshore which means finding someone overseas in a country that does not have as high of a cost of living to do work cheaper for you. So those are kind of two different but related terms but I want to make the distinction because I think everything kind of gets lumped into outsourcing. And outsourcing is the natural thing that everybody does I mean you don’t know produce the power for your house. You outsource that to the power company you know. We outsource lots of things. We just don’t think about it that way.

BRANDON: You know a lot of people think about outsourcing as something that only huge enterprises can afford to do because you have to hire a giant company and say in India to do all your customer service and that’s just not the case any longer. There’s plenty of individuals out there wanting to you know make a living, serving a business in the US, consistent income is coming in, and in many cases much better wages in their country through the US than what they would be making in their local economy.

MATT: Yeah, I mean you outsource for a couple of different reasons. So one, you outsource just because you may not have the skill set to do something. You know I’m not a very good graphic designer so I obviously look for an expert in graphic design to design my websites, and logos, and any sort of materials that I might be sending out to customers. But I also might outsource because I can find someone that will do it something that I know how to do but they’ll do it more effectively or for cheaper or allowed me to do more of that. I can scale up my capabilities so I might be able to as a coder build some custom code for a website but if I want to build a really big website I might go get 3 or 4 coders to do that.

BRANDON: And it frees up some of your time to focus on other areas of the business potentially.

MATT: Really. You really want to focus your time on the most profitable areas of the business. So one thing I always try to remember is that my time is not free. It’s easy for me to sit there and look at something and, “Oh yeah, I can do that. I’ll just take a couple of hours. Not a big deal” but not thinking that my time is money and that I need to weigh that against the cost of just hiring someone to do it.

BRANDON: And you might be wondering yourself, “Well, I’m just getting started here with the start up and I have no real cash flow starting. How can I afford hiring people at this point?” And you’re right in thinking that because you’re biggest cost will be hiring people and you should avoid hiring people as long as you can but that rule is typical for employees. The reason why employees—and let me distinguish employees by having to pay health benefits or even half of their social security tax or payroll tax of any kind, having the paper work of filling out their 1099s or W2s and having to do all that or getting the payroll set up and sending checks; that all cost money not only in dollars but in your time. So the things we’re talking about here is hiring labor, outsourcing it to people through a website that can handle all that stuff for you for free.

MATT: And I think the key legal term here is contractors, right, as oppose to employees.

BRANDON: That’s right. We’re talking about independent contractors that you do not have to submit taxes for on their behalf and in some cases if they’re out of the country there is no taxes to be paid so you don’t even need to submit a 1099 form. So there’s a lot of benefits to going offshore or outsourcing. The biggest blaring out benefit is the price though.

MATT: Yeah and one of the things I hear a lot is that you know some of these outsourcing is just taking advantage on some of the labor but I mean there’s a lot in it from the contractor doing the work as well, alright? I mean they get to gain experience by working with lots of different companies. They get to define their own hours, their own amount of money they want to make and work from home. I’m always a big fan of working in my pajamas.

BRANDON: Yeah, it’s a win-win for everybody. I mean when somebody doesn’t have to spend an hour getting to the office and then an hour having to get home and the gas saved to get there and back and you know the overhead expense of an office and lighting and desks and multiple computers—one at home one at the office, just through the economy on a large scale we’re saving money. So it saves money on our end. It saves money on their end. It saves time. It gives them a more fulfilling, flexible schedule. It’s just a win-win all around and there’s a lot of people out there that are against this outsourcing concept but I think they’re not thinking all the way through it and we’ll talk a little bit more about the economics at the end of this. Any other benefits you can think of, Matt, about outsourcing?

MATT: One of my favorites is I get to learn a lot about other cultures. So working with people from around the world I learned you know about Philippine culture, I’ve learned about things in China, Eastern Europe, all over the place. I’ve learned lots of things that I wouldn’t have known and I know people around the world but I wouldn’t know.

BRANDON: So tell me about your experience. How many outsourced—let’s call them VAs for generic term, virtual assistant, how many VAs do you employ right now?

MATT: It range anywhere from just a couple like 2 or 3 up to 6 or 7 at a time. And so being able to scale that based on what I’m working on if I’m trying to bring on a new website or some new product that I may need more one time and then when I don’t need that I’m just on operations mode. I can scale back down to the bare minimum.

BRANDON: And so do you typically pay them by the hour or do you do a fix price? How do you typically work with them?

MATT: I go back and forth. It kind of depends on what I’m outsourcing. I generally like to have a couple of people that are just full time dedicated to whatever I need them to do. And then there’s some project based work like the graphic designer I may say you know, here’s a fix project I need someone to work on, I need a logo. But I kind of find that when I’m doing the project-specting that if the project’s too small, it takes a lot of my time to manage looking for people to do that and stuff like that.

BRANDON: Yeah I mean a lot of people might get a little crazy with this outsourcing and start outsourcing every small task that it would take more time to describe the task to the person than just going ahead and doing it yourself. So there’s always that where you have to consider, is this really worth going out and finding someone to do it. But you know what if you have to repeat it even once, it’s worth really considering seriously finding and outsource a labor of that. Because if you repeat it once you’re probably going to repeat it again and that is a huge savings when you start repeating and you have repetitive tasks to do. Speaking of things that I would recommend outsourcing for, I made a little list of the best things to use outsourcing for. You might be wondering what would I use a virtual assistant for. A lot of people use them for different things. I know a lot of people that use them as a personal assistant to do you know research or get flights or even make reservations at a restaurant. I don’t use that on that level. Maybe I might someday. But I’ve just gotten so good on finding my own way around the internet. There’s so many tools out there to make this stuff so quick for you to do like Google. There was a day where trying to find a good restaurant in Paris was a task. Well, that all that information is so easily found on the internet so it’s not necessary for you to really use assistants on that small scale. The biggest areas that I’ve used virtual assistant in the past for: number one, bookkeeping. If you’re not good at bookkeeping, forget it. Just hand it off to somebody that likes to do that stuff.

MATT: Or even if you’re good at it but just hate doing it…

BRANDON: Exactly. I think Matt and I both use this where we set up our books on Quickbooks Online. There’s a few other options out there and they’re actually becoming better and better every day. But you know Quickbooks Online is a web based bookkeeping service I think it’s 19 bucks a month. But what that allows is for your VA or your bookkeeper to be anywhere in the world and access your books and they automatically fill in the books on a nightly basis. Any transactions that happened, they categorize them, they keep the books up. It’s real simple and it kind of act as a distraction of your true focus on the business if you have to worry about you know keeping up the books. So that’s number one. Number two I’d say you know if you’re getting started you want to get a little quick logo made if you’re not good at graphic design you know outsource it for 35 bucks for a quick logo somebody can make you. You know that’s a good fix cost way you know. The bookkeeping of course might be a monthly but it would be more like an hourly. You know every month you might decide on a fix price but it might depend on how many hours they spend on it.

MATT: And the graphic design brings up another point is that you might not have the tools you need to do whatever this task is like if you don’t have a Photoshop and don’t want to spend $600 or whatever Photoshop cost you know. Just getting this person to build you a logo for hundred bucks or something might be totally worth it just because you don’t have to buy the tools.

BRANDON: Yeah, it’s a $100 in just getting Photoshop or maybe 300 I think it’s—I forgot now how much it is. But you know any kind of graphic design is perfect for this kind of thing you know website design, corporate identity. Nobody really does letterhead anymore but in anything like that where you’re designing corporate logos and things of that sort.

MATT: And one place I really like for graphic design is 99designs.com which basically runs like a contest so you’d submit a proposal and then you get a bunch of designers that come up with a design and propose it and you pick a winner. So you end up with more than just one person which is you know a great benefit.

BRANDON: Yeah, so the other things I use heavily outsourced help for is my Pay Per Click management. I did it on my own at the very beginning. It was a good learning experience. I recommend doing it on your own for a few weeks, maybe even a few months. But eventually you’re going to want somebody who really knows what they’re doing to optimize your Adwords campaigns with Google or your Yahoo, search marketing campaigns with Yahoo or your Bing account, Microsoft marketing. So there are people out there that live and breathe this stuff and they just love trying to find out a way to make the ads higher performing or better click through rate and things of that sort. So that’s a good one.

MATT: Another one is technical stuff. So if you’re not a technically savvy person and you need to build a website, you’re going to want someone that understands you know all the web technologies and can manage a website for you and maybe do a little HTML and some coding.

BRANDON: Yeah you know just to give you a reference, you can pay anywhere from $2 – $10 per hour for these assistance. I do pay $10 an hour for my Pay Per Click guy. He is fantastic though, I’d say he’s on the higher end of those that are out there but he’s good at what he does. The other thing is SEO. We talked about that in episode 3. We talked about SEO and SEM. If you’re not good at writing, outsource it you know. Get some articles written.

MATT: That’s one thing I do as I have a content website and I have writers that I outsource the writing to. And then I also outsource the editing. So once the writers come up and finish, I have someone in the US that will review those articles and mark them up in word with review changes and then the writers fix that and then post it up on the website.

BRANDON: Yeah you know the Philippines are good for writers. They’re taught English during elementary and high school. They have that built into their curriculum so they know English fairly well and the Filipinos that I’ve work with almost have perfect English and they’re great writers but you eventually might need to get somebody in the US to just get that real American accent kind of dialogue in the writing and to edit and look it over.

MATT: Yeah. Really, there’s not too much as limiting at what you’re going to outsource. Those are some of the services that we can outsource. I know that you contract with the companies to build your product.

BRANDON: Right.

MATT: So you outsource the manufacturing of your product and the packaging of your product.

BRANDON: Right.

MATT: And we talked about fulfillment in our previous episode. That’s essentially outsourcing the shipping so you can outsource almost anything.

BRANDON: Yeah and there’s things that you may not think are available to outsource but if you just look around you, you’d be surprised. I’ll give you a little story. I wanted to do a three dimensional spinning version of my product online which is basically a set of 32 photographs of the product from different angles to make it look like it’s spinning. And after taking maybe a 100 photographs of it in different angles and different versions and things of that sort, I had a 100 pictures that I needed to background edit it out off basically Photoshop out. So I put it up on Odesk which is one of the sites we’ll talk to you about, and I put it up for bid. And there’s people within 24 hours I got over 50 people bidding to take the background off of every photograph which is very time consuming. And I think it took the person eventually about 25 hours to do and ended up costing me $45 for the whole task. So $45 for 25 hours of work for that kind of level of skill is fantastic value. And the guy was very happy to do it and excited to have the job and happy to have some income coming in. It was slow at the time for him so you know it’s a win-win. So that’s a good way to do it. Another good opportunity is to look for Photoshop specialist and SEO management, logo design, graphic design, bookkeeping, even Craigslist. Craigslist needs to have refreshed information on it at all times for it to really work the best. So somebody can upload and add on Craigslist for you every day if you want them to.

MATT: Yeah, so that’s lots of things that you can outsource. So now you might have some ideas on what you want to outsource. Where do I go to find the people to outsource? I know we mentioned a couple of tools. Let’s go through those.

BRANDON: Well I think, Matt, you and I would probably agree that our favorite one at the moment is Odesk. Would you agree?

MATT: I definitely agree with that. Yeah.

BRANDON: Why do you like Odesk?

MATT: The things that I like about Odesk is that one, it has great management tools for after you hire someone to track the work that they’re doing. It actually take screenshots of their computer so you can go on it and make sure that—one, make sure that they’re working but you know after a couple of days or weeks of working with someone, you’re going to have some trust that they’re doing their job. But the other thing I like is that I can go in and make sure they actually understood the task and they’re doing the task the way that I wanted them to do it. I found a couple of times just kind of every once in awhile reviewing the screenshots that they might have been putting you know some field incorrectly and some forms I was having them to fill out or not following the instructions quite the way I wanted them to so I was able to correct some things that I wouldn’t have done about otherwise. The other thing I like about Odesk is they seem to have the best value for what you’re getting. They have some of the cheapest prices than any of other outsourcing sites and they have a lot of the people in the Philippines which I think is a great country that measures well with you know a lot of things that I’m trying to do.

BRANDON: So there’s lot of things you could be looking for when you’re looking for candidates on Odesk. What are the things would you look for, Matt?

MATT: One thing that I look for is the country that they’re coming from. I generally have found really good providers from the Philippines, in India, and our audio engineer has done a fantastic job in Ireland. But communication we talk about is being key. One thing that’s going to help you with that communication and kind of the social norms is looking for countries that are you know kind of a bad way to say it but the old British empire, right? So we have a lot some common with them. We speak the same language. We have you know a lot of the same cultural norms that were push on to us from the good old Brits. And so looking at those countries is going to be a good start. But don’t limit yourself to that. There’s you know a lot of good workers in South America and Eastern Europe that are easy to work with and have good enough English that you can get a lot of work done.

BRANDON: You know one of the things that I like about the Filipinos is that not only are they hard workers and know English but they’re very loyal. They are for whatever reason not real entrepreneurial so they’re not going to take your idea and go start a new business of their own based on your business model. It just doesn’t happen. I’m not sure why but you know a lot of people who I know who’ve worked with the Filipinos say the same thing. They’re hard workers. They want to please you. It’s very prestigious for them to say that they’re working for an American company or US based company. And they’re very happy to work with you and so that makes a world of difference when you’re communicating with them every week and on a regular basis.

MATT: And some of the feedback I’ve gotten from the Filipino workers that work for us is that the employers inside of the Philippines are pretty strict in the way that they try to run their business and so it’s kind of a welcome change for them to work for a little bit more laid back company like us. Another country that really is synonymous with outsourcing is India, right? So If put a post up in Odesk, you’re going to get a lot of responses back from India and Pakistan and of all the former British empire nations, I think India probably has the most divergent social norms from the US and so this can cause a lot of problems if you’re not prepared for—end some of your projects…

BRANDON: Oh yeah, India has a lot of entrepreneurs and everybody’s their own business owners basically. So you might run the risk of you know if you did get on something really good in terms of a business model, you might start getting their minds wondering starting something of their own whereas I haven’t found that at all with the Philippines. The other thing is you talk about cultural clash with certain cultures. You know I did—I hired a VA out of Egypt and you know there is a war going on. Yes there is this you know this issue versus Christians versus Muslims and you know you can’t ignore that. I don’t play those politics or you know I’m not that religious. The culture clash is not big for me but for certain countries it is and I did have a few trust issues with one of my VAs where he wasn’t really trusting that I was being honest with whatever I said or you know with the payment issues or getting it to them and it took awhile—it took like a week or two for him to realize you know, “Hey, you know, this guy is okay. He will pay me. This—it will be a good relationship.” So you know when going into countries that have that type of culture, know upfront that it’s going to take a little bit of time to get in a good working relationship with them. But once they feel like they can trust you, they do fantastic work.

MATT: Yeah you got to build that rapport with people.

BRANDON: Yeah I actually remember having an instant messenger conversation with them at the very beginning and there’s just feel like, “Why is he not trusting me?” He was asking me these really awkward questions that I was feeling this is really weird. And I just said you know what—this was all in the instant messenger, and I said, “You know what, let’s step back a little bit. Tell me about your family. Do you have kids? Are you married? Let’s start off anew here.” And it totally worked. It really did because he told me about his family and what he did out of college and I opened up my life story a little bit with him about my kids and what’s going on and you know that really brought new level of trust with him. But it was very kind of touch and go at the beginning. So you’re going to have to expect that stuff.

MATT: That’s very, very true. And I find that as a great practice for certain parts of the world and then you know there’s other parts of the world where people are very private. They might not want to tell you that. So do your homework. If you’re considering hiring someone from a specific country you know go out and look at those things. One thing that I feel can be really detrimental to a project is a lot countries and India is you know one that I see this happen a lot is saving face and reputation is a huge social priority for them. And this leads into kind of the ‘yes man syndrome,’ right? So you ask someone, “Are you on track?” “Yes, yes, yes, yes.” You know you think they’re doing the work and they’re doing great because you know they don’t want to lose any face and say hey they’re not quite sure what they need to be doing or you know something’s not going right. They really want to please you. They want you to be happy and you know they think that they’d be able to figure it out and it would be okay but you know this is a huge risk and so setting the expectation specially with providers from India that it’s okay to tell you that things are going wrong, that things are not on schedule, and make that acceptable and don’t get upset about that but try to understand and make them understand that it’s okay to raise issues and risks to you upfront.

BRANDON: Yeah so we have a Twitter that came in just now. CT Cole says, how do you ensure quality and on time delivery from outsourcing?

MATT: I think what we just said is one of the big things is you know make sure that you set the expectation upfront that you want to know if there’s something that’s going to change the delivery date or impact the quality that’s going to be delivered and make sure that it’s okay for them to communicate that to you.

BRANDON: And if you feel like you can’t do a good job of managing somebody because you don’t have the skills that they need you to tell them like you know for example if you wanted to hire somebody to do your SEO management or your Pay Per Click but you have no idea what Pay Per Click is all about and you don’t know what to tell them as to the direction to go, don’t be afraid of hiring a manager for your VAs. I’ve done it and it worked out great. It was actually a big time saver because it prevented me from having to manage a whole task list of things to do for my VAs. So what I ended up doing was I hired a number of low level less skilled VAs for less and then I hired much more skilled and more visionary VA that could be acting as the manager of those 3 or 4 people for example. If the 3 or 4 people were all writers and all they did was—they’re just good at writing but they did it for a very low price but I wouldn’t want to pay high price for my manager to spend his time writing, I would hire a manager to spend a few hours a week just checking on them and make sure that they had plenty to do. And so that’s good way to ensure quality and on time delivery by outsourcing the management of it. It sounds kind of ridiculous that you continue the cycle through but it works out great. It worked out good for me so…

MATT: Another thing I would say is that understanding the concepts of deadlines in the different cultures that you’re working in. I know working with people from India that deadlines aren’t taken as seriously maybe as we as Americans would take them right off the bat. Like I think deadlines as a cultural norm for them are kind of a suggestion of when it should be done, not a absolute of when it should be done. So I think you can do things within your own planning to maybe set the deadlines ahead of what they really are for them. Anticipate that there may be some slippage or work on communicating that you know a deadline is really the deadline. This is the day that has to be done. What other countries have you outsource from and what do you experience with those?

BRANDON: Like the example I just gave, I have 3 writers, one in Bangladesh, one in Philippines and actually one in the US. And then the manager is from Switzerland who manages those 3 writers and then my PPC guy, my Pay Per Click manager is in Egypt, one I told you that from the story of Egypt. I have an SEO guy who is also the manager of the writers. He’s in Switzerland. And then I have a business manager who manages all the operations, in any research I want to do and just general know how-to-do everything kind of gal and she’s in the Philippines. So it’s a worldwide business.

MATT: Yeah and you know, it’s not always offshore and both of our bookkeepers are in the United States.

BRANDON: Oh that’s right. I have a bookkeeper too.

MATT: Canada is also a great place to look for resources especially call center researches. There’s a lot of those there.

BRANDON: Yeah and I have VAs that I’ve used in the past that I like so much that I just kind of keep around if I ever need them. For example, if I need a Photoshop, anything, I know the perfect guy. He’s good. He’s fast. He’s always available on instant messenger. In fact, if I’m in the middle of a work week, I’m putting together an ad or something, “Oh, this ad looks awful. I got to get this fixed.” I just you know get on instant messenger and say, “Hey do you got a few minutes to fix this for me.” I’ve worked with him so much now that sometimes he just do things for free with me so…

MATT: Yeah. That brings about a great point about developing relationships. So we talked a little bit earlier about project work versus full time work. You really want to build a relationship with the provider so that you don’t have to spend time going to Odesk every time and writing a proposal and then reviewing all those candidates for every you know 2 or 3 hour project that you need done. You want to be able to have a set of resources that you can just go to. Even if they’re not full time, if they’re on as needed basis that you can just shoot an email to or add something into Basecamp and it gets done.

BRANDON: You know we should probably share with our listeners you know this podcast is edited by a VA. We also had a transcriptionist that transcribes our podcasts. So you know we eat our on dog food here.

MATT: Absolutely. You know we’ve had great results. Our audio engineer, Vincent does a fantastic job I think and the transcriptionist also great job. Flo does a great job with that.

BRANDON: Good job, Flo. Good job, Vincent. Thank you. Yeah and to compare it with the others out there, you might have already heard of which are barely popular here in the US, Elance.com. I know Guru.com I’ve used before. Guru.com is more project based. In fact I think I tried putting up an item up there that was an hourly project and they denied it. They wouldn’t even let me post it so it needed to be actually a defined project from start to finish. So Odesk and Elance allow you to do either hourly or fixed price project. Elance—you know I’ve gotten some good things from Elance. I found my graphic designer on Elance. It was a good price. But overall in general, you’re right. I think Elance comes in a little bit higher priced and it’s more of a US focused. There are a lot of overseas independent contractors but Odesk definitely has more of them.

MATT: Yeah. One thing I did like about Elance is they’re system for interviewing people as you’re trying to go through the bids and rate them and figure out what everyone’s about. I like Elance’s website a little bit better for doing that. Odesk I don’t think has a very good system for interviewing people. You end up basically just kind of saying, “Hey what’s your instant message address” and kind of getting off that way.

BRANDON: Right.

MATT: Some other sites that you might look at is Craigslist in the specific country so you can go to the Craigslist Philippine site or Craigslist some other place and just post jobs up there if you’re looking something full time.

BRANDON: Yeah. And that’s free. One thing about Odesk is it does take 10% of any payment you give. The one thing I do like about Odesk is you give them a credit card and it actually just pays it for you every week.

MATT: Yes so you got to figure that’s 2 to 3 percent of the cost right there.

BRANDON: Yeah and you know Elance you actually have to submit the payment so it’s not a big deal but it is a little extra step that gets under my skin but Odesk handles it all for you. Assuming that you can trust that everything’s going to be done properly which they do guarantee that the work done is the work that you’re paying for. And the reason they can guarantee that is because they have that tracking tool that Matt was talking about earlier where it actually takes screenshots of their computer every 10 minutes and you can see how busy they’ve been or how many hours they’ve worked, and what they’re working on. I go through there sometimes and find that one of the applications sitting on the task bar was a solitaire you know. One time I actually saw a solitaire game on one of the screenshots and they’re playing solitaire as they’re working which you know they got the job done pretty well and pretty quickly too so I didn’t say anything. But it’s that kind of level of detail you can really see what they’re working on so it’s pretty nice to be able to have that confidence and that you’re not going to get screwed by somebody who’s trying to be unfaithful or dishonest and crank up their hours while they’re going lunch or something.

MATT: Yeah, that’s definitely a fear of a lot of people especially when you’re contracting with someone on the other side of the world while you’re asleep. It’s hard to keep track of what they’re doing and they’re actually taking in on time that they say so that tool gives you a lot of confidence. You know I don’t look at that much anymore but when I first started I know I was a little worried about that stuff and it put my mind at ease.

BRANDON: Yeah. Alright. So what kind of things do you look for when you find some candidates that are applying for the jobs that you put up there?

MATT: Fist of I want to know that they are quality candidate and so some of the ways that you can do that is most of these sites have a portfolio section where you can look at their prior work, especially to your graphic designers, you can see the designs that they’ve worked on and see if they are the style that you want. Are there any other things with quality that you look for?

BRANDON: You know I look at the reviews that a lot of people give prior to me coming and I look for that they can speak English.

MATT: Yeah, I think the reviews are a huge thing. That’s a huge benefit that you have in using the systems over the traditional you know go out and interview someone and hire them processes that you can see kind of what their work ethic was in their previous projects and I really like the reviews. I put a lot of faith on the reviews.

BRANDON: Yeah and I’ve only had one bad experience with hiring through Odesk so far and fortunately I actually hired two people to do the same job at the same time. In fact it was that Photoshop of the background of the shots that I was telling you about that I did that with. One guy was just a pain to work with and really didn’t know what he was doing and I think it was his first time in using Odesk and the other guy was a fantastic professional and got it done quickly and did a great job. And when you’re dealing with rates as low as $2 an hour, you can almost afford to have two people do it and make sure that the task is going to get done quickly and on time and with good quality.

MATT: And the new guy, did he have a rating that you saw before you hired him?

BRANDON: No I took a chance with him so I was his first rating and I gave him I think 3 stars. I said it how it was you know. I said you know this guy didn’t get the job done on time. You know the first day he wanted me to pay him half when he didn’t ask me to pay for that before and he was kind of stumbling about wanting to put the time in and you know he didn’t trust that I was going to give him the payment and if he was an Odesk user he’d know that in order for me to even be a buyer on Odesk I had to verify a credit card and go through the process of having some sort of way to pay them and you know they’re guaranteed payment and all that. So he was just very skittish and just was a pain. I was like, “Look, okay. I’ll pay you half. Let’s just get the project done.” you know and we’re talking $45, right? So when I paid him half, it was $22 and something. So it was more of a pain to deal with than it was worth my time. So you can get some bad experiences on there but very few so far.

MATT: So what else you can look for is you can actually see their work history and you know how long they worked on different projects, and get an idea if they’re a newbie or they’re familiar with the way things work. One of the other things I like is they have some built in tests So they even have a test for a Php programming or how well you write English or a spelling test or all these different tests that they can take to prove that their certified in a certain area and you can filter for people that might have scored 5 stars on that test. So I really like that feature in a way of kind of getting an objective rating on their skills sets.

BRANDON: Yeah. That’s good to look for.

MATT: So you also mention communication, so how do you screen for you know their ability to communicate you know one, speak English but beyond that like what are you looking for in their communication skills?

BRANDON: You know it’s pretty easy to quickly see that they have good grammar by just the response they might email you. They may say they have good English and they might misspell English when they tell you that. So you can pretty much quickly see that. But they do have a rating, unfortunately, it’s self rated on Odesk that tells you 1 out of 5 stars or 5 points what they consider good English skills. But other than that it’s just you know through interviewing process.

MATT: Yeah, one of the things I’d like to do with the interviewing process is use the tool that you’re going to communicate with them most during the you know actual project cycle. So if my primary tool is email then I would want to interview them over email. If the primary tool I’m going to use is instant messaging then I want to interview him over instant messaging. If it’s Skype then I’ll call him on Skype. I think that will give you a good idea of how they’ll communicate with you during the project.

BRANDON: So that’s a good point. What kind of stuff do you use to communicate with your VAs once you hire them? What do you use typically?

MATT: Primarily I’m going to use instant messenger and then some sort of project management system that goes along with that. The one that I use currently is Basecamp. Though I’m investigating using another one called Nozbe which I’ve been using for my own personal to-do list which I really like.

BRANDON: Yeah I actually ask every VA that I hire to sign up with a Google, Gmail account mainly because I love to be able to talk to them using Gtalk which is the Google instant messenger program. The reason I like that is because I have all my other VAs set up on Gtalk so I can have them all on one place and you know want to quickly put an instant messenger meeting together. The online version of Gtalk actually allows me to have group chats with multiple people so I can actually have them introduced to each other and start talking to each other so that I could actually get out of the loop in certain instances. For example if I had a web designer working on my web design and I have an SEO manager working on SEO and he says, “Look you’re landing page or your home page needs to have these keywords in it,” and instead of me having to translate that over to my web designer, I say, “Hey, look. These are the two people working on this. SEO manager meet my web designer or web designer meet my SEO manager. You know hash it out, get it all done.” And they’re usually very happy to work with each other. They like the fact that they’re a part of the team and one of the things Odesk offers is what they call a teamroom where they can see all the activity of the other team members. So if you end up hiring a number of VAs out there to manage different parts of your business, you can get them all working together so that you’re not in the middle of it all.

MATT: Yeah. That brings up another thing that I often look for when I’m hiring people is they’re availability. You can see all the other projects that they are working on so I try to find VAs who are pretty dedicated to what I’m doing especially when I’m looking for them you know close to full time which I would recommend. Even if you’re not quite sure what you’re going to use them for, once you have them full time you’ll figure out stuff. There’s always stuff that you can do. If not, it’s a great social experiment to just try to outsource as much as you can.

BRANDON: It took me awhile to finally take the plunge and hire a full time VA because it was hard for me to find that there’s that much work for somebody to do in 40 hours.

MATT: And now how many do you have?

BRANDON: Now I have say I think 6 or 7 VAs working for me but not all of them are full time. Just a few of them are and some of them don’t need to be. But when I finally did go full time with some of them, it did make a difference. The psychology behind it changes on your part that you think, “Wow, I really ought to automate this so outsource this part that I’ve been doing the whole time. And I never even thought of handing it off to somebody because it was so simple or so easy to do for me just to do it. But now if I have to pay to this person anyways, I might as well have them do it.” So it forces you to let go of those familiar tasks that you think you’re the only one that can do or you’re the only one that can do it the best. So here’s a few tools that I use that I think is important because since many of these VAs are overseas and you’re dealing with time zone changes. A, you’re going to have to get Skype. I use Skype all the time with them. Mainly because it’s free for them and it’s free for me. You can call and talk to them if you feel you need to. Most of my VAs I’ve never talked to. I’ve only emailed and that seems to work fine for them because they’re smart. They know what they’re doing and they don’t really need any training. It’s me asking them for their professional expertise not the other way around. But some of the VAs that you hire might be some that you need to really train yourself to do maybe a repetitive task that you’ve been doing for a month or two on your own. So in that sense you’re going to want to Skype with them. The main reason you want to have a Skype is for the kind of the adhoc screen sharing that comes built in.

MATT: Yeah it’s a great feature.

BRANDON: Where you can kind of walk them through say a website that you are a member of and you say, okay here’s how you click this and here’s how you click that. And they can ask questions and you can kind of direct them and show them how it’s done. Once they know how to do it they can do it on their own over and over. And the other tool that I use that is similar is called Jing, j-i-n-g. And that’s a recording tool that is similar that you can record your screen sharing or your screen. You’re recording a video really and it’s under five minutes. And I use that in two ways. I use that so I can record say a training session because they’re asleep while I’m awake or vice versa. So if they send me an email and it said, “Hey, how do I this?” Instead of me spending 20 minutes writing out an email step by step, step 1, step 2, step 3, I’ll just take a few minutes and record myself doing it. I might even do it for them.

MATT: One of the things I noticed about that is that you know a lot of times when I use to show people stuff on Skype on the screen sharing is they go, “Hey, hey, I understand,” and then you know later that day or that week, they’ll go “I forgot this one part that you did, what did you do there?” And when you record it they can just go back and watch the video again and say, “Oh that’s what it was.”

BRANDON: Yeah. So Jing is great for that because not only is it a recording that gets recorded into a standard file format but it post it up on a storage, I think you get 2 gigabytes free of storage. And this is a free tool by the way. You get 2 gigabytes of free storage. The video goes up to the Cloud and it generates a link that you send in an email and the link goes to them. You don’t have to send huge file size video files in an email. It just makes it so easy to just send them a link and they can watch it anytime they want.

MATT: And another thing that’s a great benefit of it is a lot of these people you’re hiring are freelancers and sometimes they’re situation changes and they go back and get a real job or something happens and they can’t work anymore and you have to replace those people. Well if you’ve recorded all the training you did for the first person, you can then just point the second person with all that training and then you don’t have to spend much of your time really retraining somebody.

BRANDON: Yeah it’s really beneficial in that respect. The second way I use Jing and I just started using this a few weeks ago is say I’m asking my VA to do a research project or you know find out how to use particular type of website, what’s the best plug-ins to use or whatever. You that might be a task I send out to him and in traditional results they would email me, here’s what I found out, maybe here’s excel spreadsheets of the results of some sort. That’s all nice but if they could show me just as much information with a video, they could record on Jing. And while I’m sleeping, they’re working. When I wake up, I sit down at my desk and I see that they sent me a Jing link, I click on it, watch the video, get the whole thing in a few minutes, don’t have to go through and click all these links to see what they’re talking about. They’ve already gone through all the websites that they’re talking about and show me what they’re doing. So it makes a great communication tool on both directions.

MATT: Yes. So there’s a couple of other tools related to Jing. So Jing is made by Techsmith. And Techsmith makes a more expensive tool called Camtasia. So you know if the 5 minutes is too short for you or if you know you want some more full featured stuff, look into Camtasia. It’s by far the best screen capture program out there. And they also make a tool called Snagit which is just for taking a simple screen shot not a video of your screen. So those are all great tools.

BRANDON: Yeah. So on top of all those tools the real fundamental productivity enhancer is the ability to assign and manage the project. So if you do have somebody that’s full time or is going to be with you for awhile, you’re going to want to set up a process that really kind of works on its own, a project software tool such as Basecamp or Zoho Project where if you can get an idea instead of emailing that to him you might drop it in their project list and assign them the task and then you have record of what you have sent them. They know what they were supposed to work on. If they finish it early, they have another item in the list they could start working on.

MATT: That’s a really critical thing is that always keep a list you know 2 or 3 days extra work in their task list that they’re working on. Because these guys are working around the world, if they run out of work to do in the middle of the night while you’re sleeping you know what are they going to do? They’re going to sit around and do nothing for the day and you know, that’s not going to be very productive for you. So always make sure that you have you know a couple of things that they could do. If they get stuck on something they can always move to something else. Really important because with the timezone differences you could really waste a lot of time trying to communicate back and forth if you don’t have a good list of thing for them to work on.

BRANDON: Yeah. You have to remember that you’re going to be extremely productive when you hire somebody. I mean if you think about it you’re used to only having 8 hours in a work day. Well when you hire somebody on the other side of the world, you have more than 8 hours in a work day. You now have 16 hours because if you were working on something that needed to get done for them, let’s say you are trying to summarize a project for them to get started on or a list that you need to complete so they can start making investigations or research on it, if you take a few hours to do that, you send it to them, you go to bed, they’re going to work on it while you’re asleep. They’re going to have it done by the time you wake up. So now you’ve just doubled your productivity hours as a company by outsourcing overseas whereas if you did that in the US you’d be done with your list and you’ll hand it to your assistant, she wouldn’t be able to get started on it until the next day.

MATT: Yeah. So some of the features I like about Basecamp, we mentioned the you know the traditional way to do it might be to send an email and say, “Hey do this, do this, do this.” I like that when you add a task in Basecamp it actually emails someone and gives them that email so that in a way pushes that information out to them. They don’t have to always go and check Basecamp to know they got a new task.

BRANDON: True.

MATT: One other thing that I like is that there’s an Iphone out for it and I’ve told Brandon a couple of times that my goal is to automate my business enough that I can run my entire business on my Iphone. So being able to add tasks and view tasks and you know the status of things is a big deal for me. So I like that.

BRANDON: So, Matt, tell us a little bit about what Cloud is and Cloud storage and what you found and how you use it?

MATT: From the perspective of what we’re talking about here with the project management tools and some other sites is that the data and the application is up on the web. You don’t necessarily have something installed on your machine that you have to you know always have running because these people are working in different timezones you want something that is always running. They can always go check the data and they’ll see what their task list are. So running it up in the Cloud on the internet is the way to go. You don’t want anything that you have to install on your PC and then the PC has always to be running. One-stop running on the internet.

BRANDON: Yeah I think you found a really good find with RackSpace Cloud. I’m really impressed with the– that was your find and I thought that it works really well. How do you use that?

MATT: I use that for some file sharing and then also you know this podcast that you’re listening to are hosted up there so as a content distribution network.

BRANDON: So that’s basically a huge amount of storage that you’re going to have access to on its unlimited amount and you’re paying a very small amount for it. How much what a couple cents for a gigabyte, right?

MATT: Yeah. It’s like 15 cents a month per gigabyte or something like that.

BRANDON: You can’t beat that.

MATT: But it allows us to share huge files, right? So I mean some of these audio and video files that we produce are up near a gigabyte which would be very hard to share any other way so we put them up on RackSpace and we’re able to share them that way.

BRANDON: But the real point is that you can share files and if you don’t’ use something like Rackspace Cloud you might want to use something like Google docs where at least you’re sharing a document that can be used by multiple people without having to send the file back and forth and worry about version control and “Oh I added something on it” and you have another version that you added something too and now we have to somehow figure out a merge or maybe we miss something…

MATT: Right.

BRANDON: It just makes a big mess. So if you can move your thinking to Cloud, computing your Cloud storage, Google docs is a great example of that.

MATT: Yeah I highly Google docs. It’s not really all that full featured of a word processor or excel sheet but at least hosting your documents up there and having a place for them to be makes it really easy to get to. And you know you can do some limited editing inside of there. When you get to the point where you know if you have a review process then kind of breaks down a little bit because they don’t have review and editing tools but you know for basic document storage it works pretty well. Also Google sites you can use as a Wiki. I have a standard operating document for my company so all the business processes that the company does has a Wiki that explains how they work, links-to information about that so for the operating procedure for SEO you know will show all the different types of techniques that we might use for SEO and some information about how to do that, uploads and videos on there about the things to do and it just works really well. And then you know if something comes up new or the VA says, “Hey, this one is not working anymore,” they can go and edit the Wiki and now everyone see the change.

BRANDON: So we’ve just listed maybe about 10 applications and 9 of them are free and that’s pretty powerful not only because it’s cost savings but because your VAs are going to be open to using it because it doesn’t cost them anything either. They’re going to be wanting to do this for zero cost on their part too. So …

MATT: And to be clear about that they’re really fremium, right? Most of them start out as free. You know Basecamp is free for a certain number of projects and Jing is free if you only want to record and flash. But there’s also premium versions of all these if you want to live on a more full featured stuff. So we know what outsourcing is all about. We know where to find people for outsourcing. We know what to look for. How do I get started? You know what are some of the things people might need to overcome?

BRANDON: That’s just the thing I mean there’s nothing here to lose. You just get on these websites like Odesk. Post a job. Even if you can’t even think of a job, just do it for the experience and just go ahead and ask somebody to doctor up a photograph you have or Photoshop something of your dog. You know just have the experience of doing this with somebody and telling them how it work from overseas and watching the interview process go through, it’s so worth the experience. And so don’t be afraid. Go out and do it. You really have nothing to lose other than a couple of bucks, right?

MATT: And even that I mean you can put the job post out there. You can you know review other things then you can decide hey you know I got the experience and I don’t want to take the next step yet. Even though we encourage you to take the next step, it’s no risk to even post. So the first step is to post the next step is to hire someone.

BRANDON: And once you get the first one done you get almost addicted to it because you realize how easy it is and how much time you can save like we did. You know we ended up hiring the next one, then the next one, then the next one because you know it’s so cost effective to be able to scale your time and outsource your time and your tasks. You’re going to really enjoy doing it so get out there and do it.

MATT: Absolutely. That’s it.

BRANDON: I know there’s some debate here about the economics of outsourcing.

MATT: And not just the economics but the politics of outsourcing.

BRANDON: It gets pretty gnarly, doesn’t it?

MATT: Yeah it definitely does I mean I remember when I first started my first internet business. It took just two weeks for someone to tell me that I was sending jobs overseas and that I was unpatriotic and I just don’t buy it. I don’t buy it at all.

BRANDON: Let’s dig in to that. Why is that? Why do you not buy it?

MATT: Okay so my response to that person was I had basically started a company. I had created two jobs after two weeks of work. I created one job that paid extremely well in the United States, which was mine and I created a job that for where it was paid well as well but it was only paying $2 an hour. So I really created two jobs. I wasn’t sending jobs anywhere. I created two jobs: one in the US and one in the Philippines. And then second part of that is you know I don’t buy that the economy stops at the border of the United States. We are in a global economy and I think this down turn has kind of shown us., the whole world’s economy fluctuates together. You know it’s not that the United States economy is down and everyone else’s is doing great. The United States is down and everywhere else is down. Before when we were up, we were all up. You know we’re all in this together. This is not a United States versus other countries, I don’t know. What are your thoughts?

BRANDON: Well you know I think that the water runs around the rocks you know the river will find a way. You know if there’s a cheaper way to do business, business will find a way of doing it. So if you’re not going to outsource and make use of cheaper business processes then your competition is, and you’re just going to end up out of business. Because you know even if we put tax on export import, it’s just causing barriers to what the market wants to do and if you just let the market do what it wants to do it’s going to be win-win for everybody. And I really just feel like by putting in barriers like by not allowing US businesses to outsource just will cause other companies you know in China or others that are competing with us to benefit from the lower cost and their products in turn are not going to be lower cost and the markets going to want to pay less for the same product that they could get somewhere else. And you know in the end you know if you look at some large companies like Microsoft or Hewlett Packard by them outsourcing their product let’s say Apple outsources their Iphone factory to Singapore. Well all that cost savings adds to their profit and their bottomline. Well where’s that money going? It’s going to a US company so that US company is gaining profit and market share by being able to do this and so even though the jobs are flowing out, the money is flowing in. So in the end we become more financially stable and also financially advantageous to be able to outsource out to other countries.

MATT: I think another part of that is the standard of living. I mean the reason that we’re not all still farmers is that we are able to automate you know a lot of that farm work. You know how people are saying, “Oh my god, they took all the farm jobs. We can’t go work on the farms anymore.” You know as we automate stuff, as we find better productivity, you know that’s the way this—our whole standard of living increases. So by finding someone that can do something for less or more effectively or more productively that improves the standard of living as a whole for the whole world.

BRANDON: Yeah and it’s going to improve your standard of living so I mean you can’t argue against that even though it may be political in nature and argumentative.

MATT: Yeah. One of the other things like the web was invented in Switzerland. Are we worse off as Americans because you know the web wasn’t invented in the United States? No. I mean the whole world benefited. The toilet was invented in England or something. We’re all better because there’s toilets.

BRANDON: Yeah.

MATT: It doesn’t matter where these things are invented, it matters that they are invented and so by automating all these work and outsourcing work and living it to the most productive and cost effective place, we’re going to get more of these things created. There’s going to be more people to work on you know building the top of the stack not trying to protect something that we don’t need to do anymore.

BRANDON: Right. So the reason why we’re mentioning this is because you know once you get started and you might mention to a family member or a friend that you have this unique business model that you’ve find ways to outsource a lot of the—what have normally been expensive costs, you’re going to find people that say, Oh wow, that’s real neat. That’s great. I like the creativity in the business model and also you’re going to get people that are going to say, Well you’re outsourcing jobs, you’re shipping jobs out of the US and you may get a little bit of flak for it and we’re here to say that’s just not true. Don’t fall for it. Don’t buy it. It’s adding income to US companies. It offers ingenuity and innovation for entrepreneurs to take advantage of and it allows entrepreneurs like yourself to start up small businesses for very low cost, allowing more businesses to start, new innovations to begin, new ideas to flourish and we can lead as a country in that by being able to take advantage of these benefits and these tools that we’re talking about and lead like we always had throughout history on entrepreneurship and innovation being the start up world capital of the world. So…

MATT: I completely agree with that and I think as we move forward in the future that more and more of the economy is going to move towards what I call like a freelance economy where companies are going to pick up resources when they need a project done and then they’re going to be able to downscale those and you know release those resources back into the giant pool. Even in the US I mean I think the era of the employee as a true employee is going to end at some point and you’re just going to have a bunch of contractors.

BRANDON: Yeah, there’ll always be some place for the employee that wants to be stable and have a job and not do anything in fact try to get away with less. There are those people that just like that idea. I know you and I aren’t one of those. We’re always pushing the envelope. But in the end those who are smart in the way that they innovate and bring ideas to the market place that the market wants and are willing to pay for are going to be the ones that flourish. And it’s not just about having a good product or a good business idea, it’s about how you execute that business.

MATT: In fact, it’s probably more about how you execute that than having a perfect product.

BRANDON: Yeah by lowering your cost to near nothing allows you to start a business on your own and bootstrap it that would have never been possible 10 years ago without certain techniques and tools and outsourcing that we’re talking about here. So it’s for the good. It’s the benefit of everybody and if you take advantage of it, it’s your to have.

MATT: Well I think that’s about it. I think we’ve covered all the bases. If you have any more questions or you know you don’t agree with us about our thoughts about outsourcing and you want to flame-mail us because I’m sure we’re going to get a few of those…

BRANDON: I’m sure we will.

MATT: We love to hear it. Send us the email at podcast@automatemysmallbusiness.com.

BRANDON: Or you can Twitter us using the # tag, #amsb and find us there or visit our website automatemysmallbusiness.com. See you next time.

MATT: Thanks for listening.

You’ve been listening to Automate My Small Business. We hope you enjoyed this episode. To get a list of the links we’ve just talked about or download more episodes and How To videos, go to automatemysmallbusiness.com. Thanks for being with us and catch us next time on Automate My Small Business Podcast.

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