Outsourcing in it self as a business model

15 years ago

Pat,

Last week I read a local Newspaper report saying some of the Indian firms are doing something similar. They take works from USA and Europe and outsourcing to individuals and small firms in China and Philippines.

Sajeena.

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15 years ago

That´s interesting, that the Indian firms are doing it since they are at the very same end of the spectrum as the Philippinos are

Originally Posted by sajeena

Pat,

Last week I read a local Newspaper report saying some of the Indian firms are doing something similar. They take works from USA and Europe and outsourcing to individuals and small firms in China and Philippines.

Sajeena.

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15 years ago

Originally Posted by Pat Vikstrom

Watched a video by Chad Kimball the other day. Interesting. Though I have thought about this biz model my self, and did a few deals as described below.

Many of us IM:ers outsource to get more free time and to scale up our businesses. And so we should, it makes a lot of sense.

But what about letting another branch on your IM tree grow out, using outsourcing as a business in it self. There´s a lot of demand in the western world for different tasks that our guys from India, Bangladesh and other countries are perfectly capable of carrying out.

So imagine the following; You scan for example CL for gigs/ computer, there you´ll find for example a business that needs a website done, they have a budget of $500 ... You COPY THEIR INQUIRY STAIGHT OFF and paste it in to a Email message to your outsourcer ... He gives you an estimate which would probably land between $50 - $100 in comparison (normal difference). That´s a $400 profit deal! Scale this model up and you´ll be making some serious money. On outsourcing in it self!

Pat

Ideally you need a way to do this without taking on liability for project failure.

I.e. be an agent rather than a consultancy.

Take a commission, and get both parties to agree to keep their side of the deal private, and that your role is just to matchmaker for the skills, not to guarantee delivery.

Build up 2 lists - one of workers and one of repeat clients.

I think this would be a less-headache prone alternative but requires harder work in the outset to build up the relationships.

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15 years ago

My two cents.

I tested that model with CL some time ago and decided to quit.
Two factors that deterred me:
- sifting through the CL threads plus emailing the gig posters will
easily make your day if you wanna see some results
- 99% of the posters state they won't deal with a middle man

That basically means,you'll either have to spend your days emailing the CL
posters and then your guy from,say, India to really get this working or
you'll need to hire someone who'll do all of this for you and still you'll have
to oversee everything.

I know people do it,but its definitely not for everybody.

cheers

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15 years ago

Out of experience I can´t concur with your statement that as much as 99% of the posters state that they wont deal with a middle man. There are some posters that makes that fact clear, but far away from 99%.
Most posters just wants the work done!

When it comes to deliverables I will have my outsourcer(s) get the job done, deliver it to the CL poster littered with watermarks etc before the deal is done.

I will do the mailing to the CL posters my self to begin with, and then maybe, I will get an outsourcer to monitor another outsourcer

Pat

Originally Posted by PaulBaranowski

My two cents.

I tested that model with CL some time ago and decided to quit.
Two factors that deterred me:
- sifting through the CL threads plus emailing the gig posters will
easily make your day if you wanna see some results
- 99% of the posters state they won't deal with a middle man

That basically means,you'll either have to spend your days emailing the CL
posters and then your guy from,say, India to really get this working or
you'll need to hire someone who'll do all of this for you and still you'll have
to oversee everything.

I know people do it,but its definitely not for everybody.

cheers

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15 years ago

I want to appear as the one doing the work. This should not (off course) be practiced with an outsourcer without credentials/ somebody that you never worked with before. The outsourcer´s skill set is to be used as my own. The margin on deals like this is to tempting to not do it. I will go for this business model, big time! But again, be sure to use a trusted outsourcer for these tasks.

Setting up contracts as a mediator is just to much hassle ...

Pat

Originally Posted by theemperor

Ideally you need a way to do this without taking on liability for project failure.

I.e. be an agent rather than a consultancy.

Take a commission, and get both parties to agree to keep their side of the deal private, and that your role is just to matchmaker for the skills, not to guarantee delivery.

Build up 2 lists - one of workers and one of repeat clients.

I think this would be a less-headache prone alternative but requires harder work in the outset to build up the relationships.

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15 years ago

Originally Posted by Pat Vikstrom

I want to appear as the one doing the work. This should not (off course) be practiced with an outsourcer without credentials/ somebody that you never worked with before. The outsourcer´s skill set is to be used as my own. The margin on deals like this is to tempting to not do it. I will go for this business model, big time! But again, be sure to use a trusted outsourcer for these tasks.

Setting up contracts as a mediator is just to much hassle ...

Pat

In that case don't do programming gigs! You'll be ferrying questions and requirements ad-infinitum between the two parties and really it will be a hassle. OK very simple programming gigs - like editing a single .css or php file maybe.

Article writing, link building, blog posting and graphics springs to minds as good choices.

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15 years ago

True, programming gigs would mean more work, but you always have your outsourcer to lean on, just pass all the questions on to him, or ask them as if you´re the one asking. Takes some work but if it is an extensive project, there could be good money to be made.

Pat

Originally Posted by theemperor

In that case don't do programming gigs! You'll be ferrying questions and requirements ad-infinitum between the two parties and really it will be a hassle. OK very simple programming gigs - like editing a single .css or php file maybe.

Article writing, link building, blog posting and graphics springs to minds as good choices.

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15 years ago

That model's much more popular than you might think. I've always known it as outsourcing arbitrage, although some people call it being an agent.

The important thing is to get a system in place so that everything is as near automated as possible. Dealing with the administrative aspects is the worst part of any business. You also have to make sure that the profit on each deal is sufficient to make it worth the time and effort.

Thom

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15 years ago

Off course you make sure that the profit is sufficient enough. But that´s simple. Dive a little under their budget when you´re bidding on the gig, and make a done deal with your outsourcer as well before taking action.

It´s called "outsourcing arbitrage", correct. And you know what´s funny; some times you can bid on a gig from ex the US on CL, then hire someone from a developing country, ALSO from CL. The difference is that the CL poster will choose you because the developing country dude would in many cases write in broken English in the communications with the poster, which makes the "westerner" back off ... not matter how professional the developing country dude even might be.

Originally Posted by impact-productions

That model's much more popular than you might think. I've always known it as outsourcing arbitrage, although some people call it being an agent.

The important thing is to get a system in place so that everything is as near automated as possible. Dealing with the administrative aspects is the worst part of any business. You also have to make sure that the profit on each deal is sufficient to make it worth the time and effort.

Thom

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15 years ago

I know some designers who use this very concept. They are the 'face' of the company, but 90% of the work is outsourced. They are making a good living at it I guess. Assuming those others do not let you down.

That is always the danger in the outsourced piece when you are the 'face'.

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15 years ago

Originally Posted by Barefootsies

I know some designers who use this very concept. They are the 'face' of the company, but 90% of the work is outsourced. They are making a good living at it I guess. Assuming those others do not let you down.

That is always the danger in the outsourced piece when you are the 'face'.

Barefootsies

Yeah, there is risk involved in any kind of biz, but when it comes to the outsourcers, the majority of them clings on to an employer who keeps feeding them continuously with new projects.

Pat

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15 years ago

I do this all of the time for my offline clients. You can easily charge $1,000 for a nice website and outsource it for $200-$300. Big profits for not a whole lot of work. It is very important however that you are working with a quality web designer who can deliver the work as promised in a timely manner.

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14 years ago

Originally Posted by mlord10

I do this all of the time for my offline clients. You can easily charge $1,000 for a nice website and outsource it for $200-$300. Big profits for not a whole lot of work. It is very important however that you are working with a quality web designer who can deliver the work as promised in a timely manner.

Let's bring this subject back to life.

I just landed an outsourcing arbitrage deal. Had a real estate website made for a client and outsourced everything to a guy in India. Paid the outsourcer $200 and charged the client $700, a sweet $500 profit for acting as the middle man.

What kind of outsourcing arbitrage deals have you made? Share your story with the community, both success and pitfall cases.

Pat

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14 years ago

OK Ken, share some case studies with us.

Pat

Originally Posted by Ken Rogers

This is a great business model and one that a lot of people actually use, maybe not in this exact way but what you have said is a great idea as well. I am actually doing something like this myself at the moment.

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14 years ago

To watch Chad Kimball's videos on the subject, go to chaddo (dot) com and search for "How to get outsources to pay for them selves" (I can't post the link here since I've got to few postings ..)

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patvikstromdigital

patvikstromdigital

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14 years ago

Ok, so it's been 7 months since there was some action in this thread, any one have some success outsourcing arbitrage stories to share?

My self, I have actively started to build up a team of professional IT people and have been doing some successful arbitrage deals.

Let's bring this thread to life, once again.

Pat
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Outsourcing in it self as a business model

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