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When does it pay to outsource your small-business tasks?

By Christopher Null, PC World
December 17, 2012 01:41 PM ET

PC World - To paraphrase the old saying: The road to China is paved with good intentions.

Outsourcing contracts down 19%

For many businesses, outsourcing work overseas promises a road to business success, offering low-cost production with high quality results. For some, a business wouldn't be financially possible at all without outsourcing.

But outsourcing isn't easy, and trusting your business to someone half a world away takes a giant leap of faith that many aren't ready to take. And many times, that leap has indeed ended in disaster.

How do you ensure you aren't making a huge mistake when you start an outsourcing program? We talked to numerous entrepreneurs who'd been down the outsourcing road before, sometimes with great success stories to share, sometimes with miserable failures ("Never again!") to report. Their collected wisdom can be found within.

What work to outsource

While outsourcing of just about everything has been attempted, it isn't always successful. One of the big determinants of success is what exactly you're attempting to outsource, as certain tasks are generally easier than others to offload overseas. Here's a guide to the most common outsourcing options.

Manufacturing

Offshoring began with manufacturing, and it remains perhaps the most common target for sending overseas. Why? Cost, pure and simple. "Made in America" may be great for the country, but for many small businesses, it's simply impossible to use a local factory or production center to make tangible goods and still turn a profit.

That said, outsourcing manufacturing is not an endeavor to be undertaken lightly. Colleen Lloyd-Roberts of Top Notch Nail Fileshas been outsourcing production of her products for nine years to both China and European factories. She says a comparable U.S.-manufactured nail file would cost 100 to 150 percent more to make--the equivalent of the price she charges her wholesale clients. Says Lloyd-Roberts, "I feel bad with all of the Americans who need money and employment, but they all want to charge so much. As far as manufacturing however, I don't know that I'll ever be able to get costs as low in the U.S. as I am getting now. I have made peace with the idea that I am employing people all over the world, because at the end of the day, all people have families to support, and no matter where we live, we all need money."

Her key to success? "Settling in to a long-term relationship with a particular manufacturer,"Lloyd-Roberts adds. "My manufacturer will take back any products that are flawed. In nine years I've only had two issues."

Technology Work

Increasingly, offshore providers have become popular for pretty much any work that can be done via computer. From virtual assistance (making scripted phone calls, researching information online) to menial electronic tasks (data entry, sending bulk emails) toweb development ( setting up websites, coding, graphic design), just about everything tech-related has been sent offshore.

Again, success varies mainly based on who's doing the work. Professional comedian Dan Nainan says he has two virtual assistants overseas. "They do amazing work," he says. "One charges me $1.25 an hour, the other one charges two dollars an hour. Would you believe when I got the resumes, their English was better than those of Americans?" Thanks to VOIP, there's no international calling barrier any more. Adds Nainan, "One of them has a Vonage account and they can call anywhere in the States for free. I had one of them call Costco to return a couple of items for me. If you call Costco trying to return stuff, they keep you on the phone for at least half an hour!"

Originally published on www.pcworld.com. Click here to read the original story.

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