The quagmire of nearly every entrepreneur is how much of their business to share with not only employees, but also with consultants or out-sourcing companies. The reality is the patent will not go unchallenged indefinitely. The balance between guarding the secrets well and not stifling growth and development, especially when corporate espionage and fraud are very real threats to businesses whether or not the tasks are completed in-house, is the subject this article proposes to address.
In-house, Not the Out-house
Procrastination can seem a harmless strategy for a fledgling business yet the old adage is never more true. Procrastination never pays. For any business owner considering out-sourcing any of its tasks domestically, the first objective is to complete the organizational chart and implement it regardless of how tentative it may be according to business needs. Out-sourcing off-shore is a second bowl of wax that deserves an even closer look.
Completion of the organizational chart means the business owner desegregates tasks in order to protect himself against fraud vulnerabilities. That means sign-offs, official signatures, check-signing authority, etc. are not delegated to a single person, though it seems the logical arrangement to have in a small business. The problem is those people have no accountability, a fraud vulnerability in itself.
Organizational completion also means hiring and firing policies and protocols are on paper and employees are aware of them. There has to be a system of checks and balances in the aspects of running the business from HR decisions to check-writing decisions. This ensures the business is not staffed with the HR director’s family members regardless of their experience or that the accountant does not use only vendor companies run by members from his golf club.
Delegate Yet Desegregate. Isn’t that a Contradiction?
Admittedly business needs can create a lot of pressure. However, resistance is imperative in order to avoid premature decisions or choices. Once the decision has been made that out-sourcing a task is the most cost-effective solution for an organization, the next question becomes to whom.
The second and equally important reason for having the organizational chart in place is that it positions the entrepreneur to evaluate prospective companies to whom to outsource. Are the hiring policies agreeable? Do they hire the needed acumen for the task or do they hire at a cheaper rate with the idea the employee can grow into the role? Is the company technologically equipped to handle the tasks the entrepreneur needs done? Do they reserve all rights to provide feedback to those doing the work? That is especially true for communications between out-sourcing agent and entrepreneur. Do they have their own safeguards in place to prevent and combat fraud or corporate espionage? Do you think their arrangements are adequate, or at least acceptable? Are the details of their own business readily and cheerfully provided, or are they resistant to probing questions?
If a business owner is considering off-shoring a task, then all the questions for evaluating a possible candidate apply plus even more. Employee laws can vary by country. Recourses in instances of breach of contract or fraud can also vary. Even laws protecting such can vary significantly from country to country. What is the status of practical issues like facility arrangements—location, reliable internet and phone, consistent, reliable power supply, and all such questions.
Asking the Right Questions
There are benefits and concerns to any decision, even to a simple new-hire. There is no surprise, then, that there are both benefits and risks involved in out-sourcing tasks. Having one’s own house in order, so-to-speak, helps the entrepreneur identify and ask the right questions when considering an outsourcing company. Asking the right questions is paramount for each entrepreneur to make the right choice for his or her organization. In theory, for example, a payroll out-source resource company should be far more expert in payroll than the accountant in a company who does all the accounting tasks. But does the company talent pool reflect choices that are better or worse than the entrepreneur would make? Does the company take fraud seriously? Adequate due diligence can help entrepreneurs commit to a course in terms of an out-sourcing contract with confidence.
Have any more advice on outsourcing development? Let us know down in the comments.
This article originally published on GREY Journal.