Chances are, if you've called customer service to enough companies, you've come across a representative who works for a call-center which has been contracted to handle a comapany's account. Large corporations that don't want to employ their own agents and maintain their own facilities will often outsource customer service to a third party, which at times can mean a company in another part of the world. Bangalore, India was famously portrayed for its role in call-center outsourcing in the Thomas Friedman book The World Is Flat, servicing many large American companies. But tools like outsourcing or crowdsourcing are not always beneficial to every breed of company.
A recent post on crowdsourcing from the startup blog Pluggd.in, and a Forbes article about outsourcing have both warned startups of the possible complications of both. Crowdsourcing is similar to outsourcing in that a task normally conducted by an employee is shifted to a third party, but in this case the job is performed by numerous people, not just one. If I wanted to outsource the web design of my new site, I might hire a graphic designer, but if I wanted to crowdsource, I could use a service like crowdSPRING to host a competition and pick from a whole slew of designs and designers.
While crowdsourcing and outsourcing are fundamentally different, they share similar risks, especially for startups and small businesses. As the Pluggd.in article suggests, more mature companies might be better candidates for this type of work.
"Startups do not fit the 'business case' that could garner qualified social feedback for its product from the crowd," the article argues. "The product engagement within the market has not been long enough, and more often than not the sample size of [the] crowd may not be representative at all."
The idea here is that crowdsourcing works better when the audience participating is more aware of the product in the market. With startups, crowds may not have the most accurate sense of the best direction for an idea, especially one that is new and innovative. That's what you, the entrepreneur, are for. The article warns startups to not rely too heavily on information gathered from the crowd in terms of which features to keep, which to throw away, which to add, or any other kind of information. Startups should always listen to their users, but work with them, not for them.
Along the lines of do-it-yourself, the Forbes article chronicles an unfortunate tale of outsourcing gone wrong. In my interview this week with Danny Wong of Blank Label, he pointed me to this article based on an interview with his co-founder, Fan Bi. In it, Bi warns startups looking to outsource design and development to cheaper labor pools should think twice before doing so.
"It was too good of an opportunity to pass up when we were trying to bootstrap our business. Getting the work done for a quarter of the price was tempting," says Bi. "The team abroad wanted quick and dirty projects that can be turned around quickly and get them paid. They had no real ownership."
The outsourced work came back looking "terrible", he says. The designers and coders they had outsourced had no passion or personal investment in the work they were doing, and it showed in the quality. For startups, it seems that finding a partner or employee who is just as passionate about the company and its vision is well worth the extra money for the quality they bring with them.
Entrepreneurs are highly motivated and driven people, and companies succeed when a group of passionate people set their sights on one goal. Outsourcing and crowdsourcing seem to go against that mantra, and one could argue that these are lazy roads to go down for a startup. But are crowdsourcing and outsourcing a pair of techniques that should be avoided outright by startups? Or are there times when a startup can employ one of these tactics? Let us know how you feel about this issue in the comments.
Photo by Flickr user Vilma.com.