Everyone in business these days is trying to cut costs. However, two recent examples from my career demonstrate why cutting costs doesn’t always result in cost savings.
Example No. 1 – Outsource
My firm has been trying to send our HTML implementation overseas to low-cost foreign providers. To do so, we’ve been getting quotes from elance. Unfortunately, our experiences have been mixed. Meanwhile, our trusty local implementer consistently saves our bacon by going over and above what is required of him. He asks questions about our designs; he talks with clients; he finds unique solutions to problems; and he finds new and innovative ways to do things rather than simply being an order taker. (Today, for example, he pointed out a mistake in our wireframes, something no overseas developer would notice or take the time to mention.) Our clients appreciate him, and our portfolio of work benefits from the level of quality he brings.
Could we find a cheaper implementation partner? Without a doubt. Would it have a negative effect on our business? I believe it would, undoubtedly.
Example No. 2 – Spec
Clients, once afraid to ask for spec creative, are now emboldened, and hardly an RFP comes through that doesn’t require some level of free work. While there are many good reasons not to give work away for free, the pragmatics of business are such that sometimes we don’t have that choice. If we want to be in the running, we have to play the game.
The other day, we presented semi-spec creative to a client (they’d paid about 20% of our costs to do the work). However, when we decide to do spec, we put all the resources to it; we don’t act as if we can do less work, or provide less quality, simply because we’re not getting paid. (As my friend and colleague Renee likes to say, if you’re going to go for it, go full guns.)
Our presentation was a smash, and the client said our work was far superior to the work from the competing agencies. We, of course, asked to see the other agencies’ work, and it was clear all they had done was taken the wireframes provided by the client and colored them in. We, on the other hand, had not only provided a far higher level of design, we questioned the IA and provided some very unique and compelling alternatives. The client now sees us as more than an implementation shop: we are a trusted partner.
So how does this come back to money? The client, in trying to save money, paid as much to several agencies as they would have paid to one agency. In the end, instead of getting a lot of great work, they got one solid solution, and it could have gone far worse: we might not have been the type of agency to go full guns, and they would have ended up with NO decent solutions.
Pennywise and pound foolish is no way to do business. Even in the toughest of times.
The Wal-mart mentality pervades. A lot of CRAP for less money.
From my experience, outsourcing overseas not only reduces quality, but actually costs more in the long run. The cost comes from the increase in the amount of time spent documenting and explaining the project to the overseas team. What could have been a conversation in a hallway becomes three meetings and 20 pages of specifications.
You could also argue that keeping jobs local keeps the money local. That means more money that is injected back into the local economy, in turn creating more local jobs.
I completely agree with the article written above. Cheap is expensive! I can echo those thoughts as I also have been in a position of having to outsource to an overseas development partner. One of which, was an “order taker” , but could not interpret or provide guidance. These experiences left me questioning the offshore “outsourcing” strategy. I was very open-minded to the idea at first, but after a number of experiences with numerous different offshore teams – I have yet to find one that is not an “order taker”. They have not exhibited genius: http://health.howstuffworks.com/genius3.htm