At some point, a successful business will have to hire employees or outsource to meet the growing needs of their company. Selecting the right people becomes important as you build your team. But what if one of your partners outsources the work you’ve given them to someone else? Is that really all that bad?
In a growing ecommerce business, the practice of drop servicing could be a lifesaver or get you in real trouble. Let’s look into this further.
What is drop servicing?
Let’s say you need graphic design for a new social media campaign. You pay a marketing agency a retainer of $5,000 per month to provide this service. The agency then turns around and hires a freelancer at $600 a month who creates the art. The agency never tells you that they’ve outsourced your work. Once it’s all said and done, the agency pockets the difference, and you are none the wiser for it. This is called drop servicing.
Drop servicing is not a new concept. Businesses have been subcontracting work for ages. But with the rise of freelancing platforms like Fiver, it has become easy to hire incredibly talented producers of content such as graphic design, web design, audio/video production, and more. What makes drop servicing different from other kinds of outsourcing is that the original agent hired to do the job passes off this work as their own.
Selecting an outsourcing partner you trust can be a difficult process. Building trust and rapport takes time and a lot of effort. Finding someone who gets you is no simple task! Sometimes it makes sense to outsource to one provider and ask them to subcontract work to others. You gain their expertise in overseeing your projects and they expand their business and ability to make profits. In this sense, drop servicing or subcontracting is a win-win for everyone: a freelancer gets paid for their work, the work is overseen by a subject-matter professional, and the business receives delivery of their service/product as promised.
How can drop servicing hurt your business?
Drop servicing can backfire in a number of different ways from the freelancer quitting mid-project to material subject to copyright being passed along as original. In drop servicing, the existence of a subcontractor is kept secret. This increases the incentives to cut corners. Heck! Why not? Their name isn’t on the deliverables.
Imagine a software engineer uses drop servicing to complete coding tasks they cannot manage on their own. If they lose the talent behind their brilliance, your business could be a world of hurt. Who’s going to fix your code now? Or what if this code is part of another company’s trade secrets?
The direction of the work can also become an issue. The client may have shared specific requirements but that information can get lost when communicated with the freelancer. Remember the game of telephone we played as children? The message becomes a mess later down the chain. And how much more difficult can it be if the freelancer is also drop servicing their work?!
Then there’s the matter of cost. Drop servicing can eat into your company’s profits. Cut out the middleman and you might save money on your services, but it comes at a cost of your time to supervise the work. If you’re a do-it-yourself kind of entrepreneur, look for ways you can reduce costs and work directly with providers when it makes sense.
What questions should you ask your service provider to avoid a drop servicing nightmare?
When selecting a partner to outsource some or all of your operations, it’s important to ask about the manpower behind their operations. Do they outsource or subcontract? If so, what services? Who will be supervising the work of subcontractors? What if there’s an issue with the quality of work, how is that resolved? Can you request a specific subcontractor to provide the services? What kinds of working conditions are subcontractors subject to?
These are all important questions to help you avoid drop servicing nightmares.