The Cost of Hiring a “Cheap” Outsourced Service Provider

I have a professional acquaintance who is always bragging about how successful he is at having obtained a piece of equipment for his office or a professional service at X percent or Y dollars less than “That Stupid SOB” originally wanted to charge him. He is also extremely proud of the medication that he buys overseas and of the off-brand products that he buys. “I saved (whatever the amount) by buying this off-name product that does the exact same thing as that dumb (a Fortune 500 company) sells.”

What I also need to tell you about my professional acquaintance is that he also has a habit of crying the blues when one of his contracted Outsourced Service providers comes up short in fulfilling his expectations. A few days ago, around 11 AM, I stopped by my friend’s business. His office had the only light that was on in the office suite. When I inquired about his missing office staff of eighteen, he told me that he had sent them home. It seems that the office’s internet service was on the fritz. The repair crew would not be out to repair the problem until tomorrow. He had directed his staff to work from home and return to the office tomorrow afternoon, after the repair will be completed. It seems that my friend had contracted a low cost manager of internet services. His internet service management provider was run by a person who moonlights managing internet service. His full time job is that he owns a hardware store. For a $100 monthly savings, my friend’s outsourced internet manager provides twenty four hour response service, versus the two hour response time that his prior contracted service provider offered.

Wow; isn’t my friend smart??? By savings of just over three dollars per day, he lost one and a half days of productivity from his eighteen person work force, while they were getting paid. He also lost an unknown amount of new and repeating business that could not be received or processed during the twelve business hour absence of his office staff.

A few days later, my friend called me to share that, in his infinite wisdom; he fired his Outsourced Internet Service Provider and returned to the prior service company who guaranteed the two hour service. – Now he was acting smart!

Examples of purchasers focusing their buying decision solely on the lowest cost provider and ignoring the provider of the greatest value happen every day in our business economy. Personally, I have gotten phone calls after normal business hours and over the weekend from frantic customers who need to have staffing resource on site, within a very short time window. When I ask about the short, seemingly unreasonable delivery window, I usually hear how they had previously contracted a low cost provider who never provided the required staff.

After I deliver the required staffing solution and bill at my normal market rate, I usually get a call from my client’s President or CEO thanking me for bailing them out and that they will call me for their next staffing need.

My response to my customer is humble gratitude for their business and the age old truth, “You Get What You Pay For.”

Ernie Russom is the Executive Director of the Executive Search and Staffing Firm The Westview Associates. The Westview Associates fulfills Accounting, Finance and Administrative Support staffing needs within the Greater Philadelphia Area. Ernie can be contacted at erussom@thewestviewassociates.com

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