Outsourcing: From personal assistant to developer, here's what you need to know (outsourcing best practices and more)

I recently wrote a post about whether it's best to quit your job when starting a business or to start it as a sidegig. I got an interesting comment (thanks @papertrailapi 💪) recommending that people keep their jobs and use a portion of the income to pay for freelance development. It made me think.

Back when I was gainfully employed, I outsourced a ton of design, development, and QA. And since we were an app design and development shop ourselves, people were outsourcing to us too. And I've done plenty of freelance work since then to boot. So I've got a pretty good handle on the topic, but I also did some digging.

Most of the resources I found while researching this piece talk at length about why outsourcing is smarter than hiring for a startup. But most indie hackers and early-stage entrepreneurs aren't trying to decide whether or not to hire. They're just trying to figure out how they can possibly get everything done without breaking the bank. So if that's you, here's what I've found

Why do companies choose to outsource work?

I think the main selling point for outsourcing is summed up nicely by Peter Drucker when he said:

“Do what you do best and outsource the rest.”

And it seems like people have taken these words to heart. According to a 2020 survey by Deloitte, 66% of companies outsource some of their processes.

Let's talk about the why.

Benefits of outsourcing

• It frees up the founder's time and allows them to put their attention on growth, as well as their own strengths.
• It reduces burnout.
• It's cheaper than hiring (arguably). Particularly when a company is small and has little need for a full-time employee.
• It provides the founder with existing infrastructure (tools, systems, etc.).
• It allows the founder access to hyper-specialized talent.
• It creates an influx of fresh expertise.
• It allows for short-term work (as opposed to long-term hires).
• It puts the task into the hands of an expert instead of a founder who is wearing many hats. That means less errors and higher efficiency.
• It reduces the risks inherent to hiring.
• It allows founders to scale more quickly.

Challenges of outsourcing

According to Joel Gascoign of Buffer, founders should wear every hat at first, as it creates the right mindset and makes them intimately aware of all areas of the business. He cautions that the goals of the founder and the freelancer are misaligned.

And in regard to technical outsourcing, Michael Seibel of YCombinator says that when founders outsource engineering to cut costs, it's a big red flag for future investors. It can be more expensive in the long run than it would be to bring on a technical co-founder. Check out my post on finding technical co-founders if you're interested in going that route.

Beyond that:

• While it's cheaper than hiring, it's still expensive for most bootstrapped founders.
• While these are specialists, they probably lack the business or domain knowledge of the founder.
• It adds another layer between the end customer and the person who is bringing the product to fruition.
• Founders have less control over the end product.
• Managing teams in different time zones can be hard (but that goes for co-founders and employees too).
• Language barriers can make it difficult to communicate if you're working with people in other countries.
• There's often a slower turnaround.
• There can be less accountability and buy-in.
• There may be concerns about protecting intellectual property.

Outsourcing best practices and effective delegation

Still interested in outsourcing? Then let's talk about best practices. Here's a list based on my experience and what I've found in my research:

Best practices for finding a partner

• Consider looking within your own timezone (or within a few hours). Other timezones are manageable, but I personally find that it wastes a lot of time when you have to wait until the following day for responses.
• When looking for a developer, do a code audit before moving forward. Otherwise, review their portfolios.
• Check references.
• Look for reliability over just about anything else.
• Pricing is a big deal, especially for bootstrapped founders. But the more important the task is, the more important it is to hire for experience over price.
• Start with a trial project — something small and relatively unimportant.

How to delegate the work effectively

• Document objectives and requirements meticulously. This is huge. Then ask them to walk through the requirements with you so you know they understand fully — this is particularly important for tech feature sets, but it applies to just about all outsourcing.
• Review their work regularly and keep an open line of communication around how they're doing. The occasional code audit is helpful with technical resources — ask a friend or hire another freelancer to do it.
• Ask them for hard (and realistic) deadlines on everything and hold them accountable for hitting them.
• Stick to your processes, even (especially) when things get busy.
• Set a regular meeting to regroup.
• Build real relationships with the person (and their manager if applicable).
• Once you know and trust the person, retainers are a good way to go for tasks, as they will ensure availability. For project contracts, get a fixed bid. Even better, try for "time & materials" with a cap.
• Be specific about terms and when your payment will be released (preferably at certain project milestones).
• Ask agencies about hidden costs and hold them to their fixed bids. Studies show that companies tend to spend at least 10% more than the original bid.

What to outsource

These days, you can outsource just about anything, but let's talk about a few common functions that founders shop out.

First, a quick note: If you're not sure where to find freelancers, check out this post — it includes a section with all the best freelance marketplaces for different roles. If you're looking for an agency, check out sites like Clutch or VenturePact, which help you find vetted agencies for your project.

Personal assistant

This won't be necessary in the beginning, but once your business is up and running, getting a virtual assistant can be a huge help — and it doesn't have to break the bank either. Assistants will field your emails, schedule your day, make phone calls, do research, and so forth. They might even do some light project management or customer service. You'll pay something in the range of $10-20 USD/hr. If that sounds good, check out Zirtual or TaskRabbit.

Customer service

As companies grow, they'll get customers contacting them through messengers, social media, emails, and so on. It can become overwhelming for founders to field all of this, so customer service outsourcing is quite popular. Companies like Groove and Zendesk make it all pretty straightforward. But you can also fully outsource with live agents — here's a list of companies that'll help you out.

Technology

According to an article by Altar, tech solutions can be successfully outsourced unless: Tech is the business's core value proposition, the target market is tech people, and the tech is unique or proprietary. If it isn't all of those things, go ahead and outsource. But not everyone would agree with that. As I said, Michael Seibel of YC says outsourcing engineering is not a great idea. If you decide to outsource your development, check out Gun.io, Upstack, or Topcoder. Price ranges greatly from $10/hr in some places to $300/hr.

Design

As bootstrappers, we tend to go for solid UX and simple UI. But some products (such as mobile apps, luxury products, or white-glove services) may require something a little more polished. If you want something beautiful, outsourcing it is a great option. You can get a cheap set of designs from Fiverr, or head to sites like 99designs or DesignHill. The average price for a designer is around $45/hr.

Marketing

There are plenty of marketing companies that'll gladly take any type of marketing or advertising off your hands. You can even find people to write your content if you're not a big writer. A freelancer will probably be the cheapest option (as opposed to marketing agencies) with rates ranging from $50-$100/hr Sites like @dohertyjf's Credo, MOVEMEON can pont you in th right direction.

Quality Assurance

The more complex the product, the more QA you'll need. And even for simple apps, fresh eyes can certainly help — particularly right before launch. Of course, you can always utilize beta testers by giving them free access in exchange for some solid feedback. But if you want someone trained in testing, QA testers generally run between $25 and $45/hr. Upwork is a good place to find them.

Finance

I hired a local accountant to handle my taxes on a business a few years back, but it really wasn't necessary. Since then, I've done my own taxes with no issue. But when time spent on managing your accounts becomes too much, consider working with an accountant. I'd suggest heading to your local accountant. But you can always work with a company like HRBlock, or you could try services like airCFO or myStartUpCFO. In my experience, a local accountant will cost $500-$1,000 for taxes alone, and airCFO, looks like it's $1,000-$1,500/mo (but it includes more).

HR

A lot of companies outsource HR for handling payroll, benefits, hiring, and so forth, but this isn't likely to apply to many indie hackers. Tools like HR Partner are good when you have 20+ employees. Otherwise, you can outsource to HR firms. The cost of outsourcing HR varies greatly but tends to range from 4-8% of each employee's pretax monthly salary.

Data entry and processing

Data entry is a task that is easily delegated and fairly cheap, with most freelancers falling between $14 and $25/hr. Data analysts are a little more expensive, with most falling between $36 and $46. Look for them on Upwork.

My two cents

I have to say that I agree with Joel Gascoign of Buffer that founders should wear every hat at first. And I think that teaming up with a cofounder who complements your skillset with their expertise is really the best way to go. But once things are up and running, I don't see any reason not to outsource, if you can afford it. And like @papertrailapi said, that's a good reason to keep your day job.

🤔 Do you have any experience with outsourcing? Let me know your thoughts.