Top 2 Dangers of Using Freelancers

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tips to avoid the top dangers in outsourcing with freelancers

Don't Let These Mistakes Ruin Your Outsourcing

Beware of outsourcing risks!

Outsourcing topics are big on the internet right now, in both internet marketing and big business. With the economy still foundering, big businesses are turning to outsourcing to maximize their returns and cut costs. Online marketers and developers are also outsourcing to save time on projects and allow them to concentrate on more revenue generation rather than repetitive tasks.

All fine and dandy. But there are risks in using outsourced help, and you need to be aware of at least these top two dangers of using freelancers.

Concern #1 - Copyright Ownership and "Work-For-Hire"

This first issue is most insidious, and many business owners and managers are unaware of it, unless, of course, they have high-powered lawyers or have been stung before. This is the issue of "work-for-hire" versus copyright ownership.

When you outsource the creation of software, databases, written materials, video, and audio, you are dealing with the development of copyrighted materials. By law, at least in the United States and many other highly-technical countries, copyright of these created materials is automatically owned by the creator, no holds barred. The only way to avoid this copyright infringement is to make the creator do one of two things.

  1. Contract the work over to you as "work-for-hire." This vests all copyright in the person who paid for the work hired out. And you have to back it up with a contract that clearly states that XYZ materials (with specifics) were created as work-for-hire and the creator grants all rights to the purchaser. Keep in mind that money does not have to change hands to meet this relationship requirement. Just a recipient and a creator (and a contract), even if it is barter.
  2. Have a contract with the creator that clearly and specifically grants the purchaser an exclusive, unlimited, permanent license to use the materials created. This is slightly more limited than #1, however, because the creator retains the copyright and you can't actually "change" anything without their specific permission. You can only use it in whole and not in part unless explicitly granted the right to change the materials.

Any other means of licensing, such as you often see on the internet now with "Resale rights" or "Private Label rights" are more limited versions of #2.

Note: I *am not* a lawyer, and I don't play one on TV, either. This issue is particularly frustrating since it is tied up in contract law, and when disputes arise (as they will), it is usually the guy with the better signed contract that wins. No contract usually means the more expensive lawyer wins. So, do not stray into the area of outsourced content creation without some kind of professional legal advice (from one of those real lawyers). Even a reasonable, specific, and brief contract can be enough to protect. As long as it is signed by both parties legally, anyway.

One last note on this subject before moving on. If the content creator uses materials obtained from another source (like graphics, music, audio tracks, website designs or WordPress themes), make sure that *they* have some kind of royalty-free right to use those items or own the copyright (which they also turn over to you or permanently license to you), and that if they are using copyrighted materials from another source, you understand the limitations of their use. You may be required to leave backlinks in a theme, or a watermark on an image, or give credit to the originator in some way. Ignorance won't protect you from being sued for copyright infringement.

Here's an example for you. A website developer contracts work-for-hire on a mental illness site (like anxiety disorder) with a graphic designer, who goes to one of the big stock photo repositories for royalty-free graphics. They get a nice image of a happy couple and use it in the header. They don't read the full site terms, which are long and boring legalese. And the website developer now has a graphic design that they can be sued for using. Most graphics repositories have buried in their terms of use a little phrase that forbids using graphics involving "models" — that's the people in the picture — in graphics in the mental illness arena, because it negatively reflects on the models themselves. Of course, the graphic designer will probably be sued too, but since you actually used it, you're in the legal loop as well.

Okay, getting the particularly nasty legal junk out of the way, there is another area of content creation outsourcing that can blow up in your face.

Concern #2 - Your Reputation and Credibility...

When you outsource, you are putting yourself in a more vulnerable position because you no longer control every element of the work being done. You can oversee the process or results, you can review things before release, and you can hold them to standards, but you can't stop them from taking action in every case.

A blog post on your behalf, a forum post, a blog comment, using a graphic on your website that they don't have rights to, a nasty bug in the web script they make that blows up a customer's computer or server — all of these can be nightmares for you and your business. Your customers trust you, and they trust that those you use for help will be up to the same standards they hold you to.

Sadly, such is not always the case. This problem alone stops many entrepreneurs from outsourcing. If they need help, they go the more risky and potentially more expensive route of hiring employees. But you really can't completely control them, either. So when you trust someone else, you need safeguards.

  1. Work them into it slowly. Massive oversight early on. Nothing goes out until you see it first. Everything gets tested by multiple users first. Senior staff mentor them and monitor their work. Beta test software with customers who understand the risks up front. Do anything you can to make sure that new outsourcing vendors can't blow up your business.
  2. Build a regular review system into your relationship. One entrepreneur I know of gets daily "short summaries" of exactly what projects were worked on, what work was accomplished, any questions or problems, and what is coming up next. This way he can outsource while still keeping his thumb on the pulse.
  3. Let them soar on your behalf, but gradually. Approve something and them let them release it. Watch to ensure good quality. If they are good with the written word, let them interact on the help desk if they have the expertise needed. Keep an eye on them.

Gradually, you'll develop a feel for someone's abilities, and you'll come to know their weaknesses and strengths. Once you reach that point, you can feel more comfortable deciding if this is a good long-term fit. But take your time before granting too much control. Like growing a business, this is a necessary risk, but it should be mitigated where possible to avoid bombing your credibility.

One online entrepreneur puts it something like this. "Test and fail quickly, and scale up the successes." You can do this with copy, or products, or people.

I know this post has been both long and tedious, and I know if you made it this far you either skimmed, or really like to read my posts, or really wanted to know about these issues. All are well and good. I really hope you've learned something from this information so that you can continue to grow your business wisely and successfully, and are able to avoid the potential outsourcing risks.

Have you ever had problems with using freelancers? We'd love to hear more. Save your fellow business folks from having the same problems.