Tips From The Trenches for Outsourcing to Independent Contractors


Analyst firm NelsonHall recently forecast that business process outsourcing (BPO) will grow to a $450 billion market by the year 2021.

I’ve been noticing that small businesses are doing an increasing volume of outsourcing of project work and even certain parts of their business processes. It’s a strategy that helps you grow your business flexibly. You can increase your capacity and throughput, without adding fixed expenses that would be difficult to scale back.

But being smart about outsourcing is crucial.

So, I asked a number of savvy business owners how they successfully hire contractors. Specifically, I asked the question:

“When you use contractors (independent contractors/service providers) in your business, what is your #1 question you ask or tip you have for screening or choosing contractors?”

Below are the tips I received. As you can see, some opinions differ but it’s all valuable wisdom – there’s bound to be something you can apply.

Start out small

Jonathan Fleming, Elance buyer and Real Estate Agent in the San Francisco-Oakland Bay Area says, “Never pay before the job is done, pay in Milestones and keep in constant contact. Also, hire on a trial basis. During the trial, you are testing to see if you have found the magic candidate. Be sure to hire with the sense of it being a ‘try out’.”

Get a reference number

Tim Berry, Founder of Palo Alto Software and blogger at Planning, Startups, Stories says, “It’s like diet and exercise. We all know what we’re supposed to do, but we just don’t do it. And with contractors, that’s check references. Not just get them, but call them and check them. And ask about past clients who didn’t like them, and why not. And call every one of them.”

Taking any vacations?

Yvonne DiVita, President and Founder of WME Books says, “Everyone, on every project at Windsor Media Enterprises is expected to be the best and give the best. Consequently, we only choose professionals who are already delivering that quality of work and have client testimonials to show for it. The most important question then becomes, “What, if anything, might prevent you from completing this project on time?” That way we uncover pending vacations, or issues the vendor sees that we don’t. So far, that’s worked for us.”

Get a fixed price

Barry Moltz, author, angel investor, entrepreneur and Founder of BarryMoltz.com says, “Will you do it for a fixed price? I believe for many projects, a fixed price works better than an hourly rate since I can pay for a result. I can evaluate return by measuring the cost of delivering that result. I like to pay a deposit and then the balance upon completion of the project. I do not like to get into time based contracts unless the nature of the service makes it absolutely necessary.”

It’s all about chemistry

George Langan, CEO of eXpresso Corporation says, “References don’t matter! Sounds like heresy but think about it, when was the last time you heard or gave a bad reference? It’s all about chemistry, don’t do an interview – have a conversation, find someone that fits your work style. In today’s market there are lots of talented people in the independent contract world. It’s important to pick someone that has the same values and goals rather than “the perceived best in class.”

What went wrong?

Jonathan Fields, Founder of New York City’s Sonic Yoga who also blogs at Awake at the Wheel, says, “Tell me about a job that went bad.” This gets people out of their canned answers, reveals how they define a problematic relationship, demonstrates resolution and problem-solving skills and reveals more about what it’s like to work with them. All the other stuff, like portfolios and references are the easy ones.”

No flakes please

Robert Rutkowski, an attorney with Weltman, Weinberg & Reis and blogger at The Credit Union Blog says, “Honestly, the first thing you have to do when hiring an independent contractor is to make sure you’re not hiring a flake. The more you can find out about a person or company, the better. Check references, talk to people with whom the IC has worked and look at performance samples.”

Communicate with me

Ramon Ray, technology evangelist and editor of Smallbiztechnology.com says: “The number one question or tip is how much are they willing to engage me online and answer questions. I don’t know the provider at all and the more we can have an email dialog, the more they can answer questions in full and upfront, the more they show they GET what I want, the more I’m inclined to use them. Also, when someone follows up – that is an even BIGGER plus.”

Start small, rinse and repeat

Now finally for my own advice: “Try out freelancers or contracting firms on a small project before committing big. Even if you only have one project, do your best to break it down into 2 projects, with a smaller piece first. Not only can you assess the contractor’s work, but you sometimes discover you overlooked something in the vetting process: e.g., that you should ask a certain question or require a particular kind of work sample. This approach may seem counterintuitive, but it has saved me tons of frustration in the long run. Oh — once you find great contractors, treasure them!”

So now you have some tips for outsourcing and hiring contractors. What is your key advice? Share it in the comments below.