Business Unusual: Freelancers & Outsourcing

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Katie Hurst:
Hello, everyone. And welcome back to our small business series, Business Unusual. My name is Katie Hurst, and I’m the director of communications at Ruby. And today I’m joined by Damien Filiatrault, the CEO of Scalable Path. So Damien, why don’t we start off by you telling us a little bit about yourself and your company?

Damien Filiatrault:
Sure. Well, my background is in geography and computer science. I worked as a software developer at various digital agencies in San Francisco. And at one of those, I did a five-month stint in India, where I managed a team of developers. And what I found over there was it didn’t work so great, that outsourcing experience. And I started working with people in Latin America and found it worked really well. And I also saw how much digital agencies were charging, versus what they were paying their developers. And so about 10 years ago, I decided to start Scalable Path and provide better value to clients.

Katie Hurst:
The best stories are always when the entrepreneur has experience with the pain point, right? So today we’re talking about outsourcing, and as you already mentioned. So we’re talking a little bit about the benefits, the challenges, when it’s right for your business, and how to evaluate platform options. So let’s just jump right in and start with, what do we mean when we use the term outsourcing?

Damien Filiatrault:
Yeah. Outsourcing means when you hire an outside company or contractor to perform work that you would normally do in-house. I think the word outsourcing is actually trending downward. I verified that on Google Trends. Words like freelancing and staff augmentation, I think are a more modern way of talking about it. In software development, for example, at Scalable Path, we use the term staff augmentation, because I think there’s a little bit of baggage sometimes associated with the term outsourcing, potentially because of early forays into outsourcing. They tended to be in software, and in India and places like that, and it didn’t always go so well.

Damien Filiatrault:
So yeah, there’s other ways to refer to outsourcing. Also, there’s sort of a spectrum of outsourcing. There’s on one end or a spectrum of hiring, on one end of the spectrum, you have full-time employees, on the other end of the spectrum, you might hire an agency, who then has people working for them. And then somewhere in the gray area, I think, is when you’re hiring a contractor. Is that outsourced? Is that not? Sometimes it can feel like outsourcing. I’m not sure what your opinion is on that, but just wanted to say also early on in this, that the perspectives that I’ll be sharing are from the perspective of a remote software development freelancing company. So that’s what my company does. And I think my opinions are related to that.

Katie Hurst:
And I think most people, that’s when they think about outsourcing, they typically think about web development. But these days, outsourcing can, as you mentioned, there’s a spectrum, can apply to a lot of different things. And myself, I’ve been a contractor before. So I’ve sort of been that outsourced talent, because either it wasn’t the right time to bring someone in-house, or the company just decided that they didn’t want the overhead of an in-house employee, and felt it was better to have somebody working remotely, which are some of the things that we’ll talk about today.

Katie Hurst:
So you mentioned that there’s some baggage. There’s a little bit of some negative feelings can be around outsourcing. So why don’t we start by dispelling some of those. So what are some of the common myths or misconceptions that you’ve come across when it comes to outsourcing?

Damien Filiatrault:
Well, one is that you have to compromise on quality. I don’t think that’s true. You got to be careful, but you can get good quality. Another is that you’ll have reduced productivity. I think that you do have to, again, make good decisions about who you work with, and you do have to work with someone that you trust. I think, especially in the current times of this pandemic, when a lot of people are working from home, there’s going to be, I hope what comes out of this, because what I believe is that people can be equally productive at home. I hope out of these companies start seeing that people have been continuing to get their work done, and that they have been doing a good job remotely.

Damien Filiatrault:
Another misconception is that it might be unsafe for your intellectual property or your data. What I’d say to that is that there are always risks of that, whether someone’s in-house or not, and that these kinds of bad actors who would take advantage of their clients like that are rare. They do exist in both settings, whether it’s in-house or outsourced, but you should still be careful, and there are ways to mitigate that. That’s another topic, but you can avoid sharing information that does not need to be shared with people that you are outsourcing with.

Damien Filiatrault:
And lastly, I mean, some people might think it’s expensive. That’s more, when you’re thinking about maybe working with a high-end digital agency. They can be expensive. I mean, definitely places like software outsourcing to India, that’s not expensive. So some people might think other the end of the outsourcing spectrum might be expensive.

Katie Hurst:
Yeah. I wouldn’t have thought about the mitigation piece. That’s a really interesting thing that you bring up. But really, if you’re a bad apple, you’re a bad apple, no matter if you’re in-house or outhouse, right? It’s really about, you can’t just trust that the person on the other end of the line is going to be a good person. You really have to interact with that person and you have to set expectations. That’s just general best business practices, whether you’re deciding to outsource or hire in-house. So that’s a really great point that you bring up.

Katie Hurst:
And also, you’re right about working at home. I think that there’s a lot of studies that are being done. This is a great time to finally be able to conduct those studies that are finding that there are some companies that are experiencing higher levels of productivity, because of the lack of interruptions from certain things. But then we’re also dealing with some interruptions from other things, right? So it certainly is weighing what’s best for your business.

Katie Hurst:
So you kind of talked a little bit about some of the benefits of outsourcing, such as that cost factor. So why don’t you walk me through some of the other benefits of outsourcing, and then we’ll talk about some of those challenges, and ways that you can mitigate some of those.

Damien Filiatrault:
Right. Well, you mentioned saving money. I mean, going a little deeper into that, one of the things we think that different clients of ours compare us to, is what if I just hired a software developer myself as a full-time employee? And you might say, well, just to take a round number, I could pay someone a hundred thousand dollars a year as a software developer, or that breaks down to about $50 an hour. That’s my rule of thumb. But what you’re not considering there is all the other costs if they’re a full-time employee, like health insurance, social security, bonuses, you got to provide them a place to work, and equipment, computer, pay for sick days, pay for vacation. And when you add all that up, you’re not really comparing apples to apples. You could be paying significantly more, 30, 40% more of these hidden costs, when hiring someone internally.

Damien Filiatrault:
So you can save a lot in that sense. And then another benefit of outsourcing is that you can ramp up and down more quickly. So when you’re hiring a full-time employee, that can take a while. I don’t know the number off-hand, perhaps you do, of how long it takes on average to hire a full-time employee. I think, for a position, it’s more in the ballpark of months than weeks.

Katie Hurst:
Sure. It takes me, as a communications professional, it takes me like a good three months at a minimum to get the voice, to get the brand. Yeah, for sure.

Damien Filiatrault:
So, if you go to a company or a platform, you’re looking at way less than that. With our company, it’s usually about a week. You can be up and running with a software developer that meets your needs. Some companies are faster than that. But you can, and when your need reduces, there’s really no commitment on your end. You can just say, “Okay, the project’s over,” guilt-free, or say, “Okay, you’re a freelancer. You go do your thing. We’re good.” Whereas if you hired someone full time, you might feel an obligation to keep them employed, or you might actually be legally obligated to keep them employed. So yeah, those are a couple of important benefits of outsourcing.

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