“It is vain to do with more what can be done with less.” - William of Occam
Please Note: This article promotes utilizing outsourcing as a tool to make your job easier, not to completely remove yourself from it. Outsourcing is often seen as a tool that companies can employ to reduce overhead. However, outsourcing can be used on a more personal level to make life easier.
Globalization and the Internet has made it possible for anyone to tap talented workers in emerging economies at a low cost. Why pay for a job in dollar figures what can be done remotely for rupees. Today, virtually all large companies outsource portions of their business development to other nations.
Thanks to the Internet, outsourcing is now available to the rest of us as well. I know of many startups and individuals, like myself, who have had considerable success outsourcing. I have integrated outsourcing as part of all ongoing projects - and recommend it to any individual or business that hasn’t done so yet. When done right, outsourcing will save significant amount of time, money and stress.
There are risks involved, however; micromanaging an incompetent employee living in an inverted timezone can be stressful. Or worse yet, there is a risk of getting stuck with an employee who stalls the project until it ends up costing more money than it was meant to save.
These issues, however, are not problems with outsourcing itself, but rather with the orthodox approach used to manage an outsourced project. The tips suggested in the following paragraphs will help you develop an outsourcing strategy to get quality work done for less.
10 Tips on Outsourcing Online:
1. Check Employee’s Background
Choose someone with a high credibility and at least a dozen projects completed on the site. Websites such as, Elance, RentACoder, and ODesk have expert rating tests service providers can take to prove their credibility.
2. Start with a small project
Unless you have worked with a coder before, start with a small project. Remember, you cannot outsource passion. Your employees don’t share the same enthusiasm as you do for your project. So communicate expectations and divide the work into small chunks so that they may stay motivated and demand less micro-managing.
When hiring, prefer workers who ask questions to those who do not. Questions show they are interested and already thinking of your needs. Those who do not ask usually end up chucking half baked work at you; ‘guessing’ instead of ‘knowing’ what you need without really caring.
3. Don’t let the lowest bid intimidate you
Plan your project and work out your priorities. While it is great to negotiate costs, when you are finally hiring, be sure you are hiring the right person for the job. Do not let a low bid lure you into hiring.
4. Claim Intellectual Property
Make sure the project contract includes the ownership clause that tells the employee that you own complete rights to the work once it is paid for. RentACoder and Elance have a default clause written into the contract. This will avoid potential copyright complications later on.
5. Provide the big picture
It is your job to share the project’s vision. If you are able to clearly communicate the project goals things would go far smoother than they would if you were directing a project from the seat of your pants.
6. Set a schedule for status reports
With preset status reports, you can keep track of the project’s progress and it is then easier to keep the outsourced employee motivated. Time saved for them is time and money saved for you as well.
7. Clearly define what constitutes completed work
Test and retest the deliverables before you finally pay the employee for the work. When possible, work out a support clause with the coder for help after completion of the project.
8. Follow the rules
It might seem easier to just chat with the coders you hire and get your point across but sites like RentACoder.com insist you correspond everything you agreed upon through your project thread. If your correspondence is not in the arbitrating website’s record then do not expect them to take your word for what was agreed.
9. Time zones can make or break your sleep
When choosing a worker, it is important to keep the time zones in mind. Make sure there will be times when you can communicate with the coder in real time if necessary. Prefer someone from the same time zone as yourself (for North Americans, hiring someone from South America makes good sense).
10. Prefer freelance workers over outsource firms
Freelance workers are better motivated since they are working for themselves, and they are not top heavy as most Indian outsourcing firms turn out to be. Outsourcing firms will bid for projects their teams are incapable of finishing; many will brute force their way into finding a project by spamming potential employers with irrelevant samples of work.
Freelancing coders on the other hand are more likely to only take up work they can complete; plus, they remove the non-technical middle man.
Conclusion
I have outsourced everything, from copy writing and marketing to software development and graphic designing. The research material for this article, for instance, was compiled for by my virtual assistant. Surprised? Don’t be. I would be surprised if the likes of Timothy Ferriss wrote the entire book, The 4-Hour Workweek, without the help of an outsourced editor.
If you have a great idea, don’t let your lack of skills, or even time, stop you from executing it. Yes, outsourcing can be challenging, but the benefits far outweigh the potential risks once you know how to use it to your advantage.
Notes:
* Popular websites for outsourcing include, RentACoder, oDesk, E-Lance, LivePerson and GetAFreelancer, YourManInIndia. I personally recommend RentACoder.com for its cheap, but disciplined labor force.
Source : http://jawadonweb.com/?page_id=976
Tuesday, January 13, 2009
How Porsche hacked the financial system and made a killing
Adolf Merckle, one of the world’s richest men, committed suicide yesterday by throwing himself under a train, Bloomberg reports. Financial difficulties, and particularly great losses he suffered on Volkswagen stock, are being cited as the key reason he ended his life:
[Merckle's company] VEM was caught in a so-called short squeeze after betting Wolfsburg, Germany-based Volkswagen’s stock would fall. Merckle lost at least 500 million euros on the bets on VW stock, people familiar said on Nov. 18. VEM lost “low three-digit million euros” on VW stock, the company said in November.
A “short squeeze” sounds inconspicuous enough; you wouldn’t tell it by Bloomberg’s language, but Merckle’s Volkswagen bet lost out to one of the most masterful hacks of the financial system in history.
For those of us who don’t live and breathe finance, this is that story.
● ● ●
In 1931, Austro-Hungarian engineer Ferdinand Porsche started a German company in his own name. It offered car design consulting services, and was not a car manufacturer itself until it produced the Type 64 in 1939. But things got interesting for Porsche long before then.
In 1933, he was approached by none other than Adolf Hitler, who commissioned a car designed for the German masses. Porsche accepted, and the result was the iconic Beetle, manufactured under the Volkswagen (lit. “people’s car”) brand. Today, Porsche’s company is one of the world’s premier luxury car brands, while Volkswagen (VW) is itself the world’s third-largest auto maker after General Motors and Toyota.
Three years ago, Volkswagen found itself fearing a foreign takeover. Porsche, the company, decided to step in and start buying VW stock ostensibly to protect the landmark brand, widely fueling market expectations that it would eventually buy Volkswagen outright. Of course, this isn’t quite what came to pass.
For three years, Porsche kept accumulating VW stock without telling anyone how much it owned. Every time it purchased more, the amount of free-floating VW stock would decrease, driving the stock price up slightly; your basic supply and demand at work. Eventually the share price became high enough that, to outside observers, it wouldn’t have made any sense for Porsche to buy Volkswagen. It would simply have cost too much.
To explain what happened next, I’m going to first tell you about a financial maneuver called shorting.
● ● ●
At any given point, only a certain amount of a publicly traded company’s stock is floating freely in the market. The rest is held in various portfolios, funds, and investment vehicles. Now, everyone’s familiar with the basic idea behind the stock market: you buy stock when it costs little, and you sell it when it costs a lot, profiting on the difference.
But that assumes a company’s value is going to increase. What if, instead of betting a company will go up, you want to make money betting the company will go down? You can — by selling stock you don’t own.
Say you borrow a certain amount of stock from someone who already owns it. You pay a fixed fee for borrowing the stock, and you sign a contract saying you will return exactly the same amount of stock you took after some amount of time. So, you might borrow a thousand shares of Apple stock from me (I don’t actually own any, but play along), pay me $100 for the privilege, and sign an obligation to return my stock in 3 months. At the time, Apple stock is worth $10 per share.
After you borrow the stock, you immediately sell it. At $10 a share, you get $10,000. Two and a half months later, another rumor about Steve Jobs’ health sends AAPL crashing to only $6 per share for a few hours, so you buy a thousand shares, costing you $6,000. You give me back those shares. Because you successfully bet the company would go down in value, you earned $4,000 minus the borrowing fee. This is called short-selling or shorting the stock, and the downside is obvious: if your bet was wrong, you would have lost money buying back the shares that you have to return to your lender.
● ● ●
Now things get kinky.
When Volkswagen’s share price exceeded the point where it made sense for Porsche to buy the company, a number of hedge funds realized that Volkswagen shares have nowhere to go but down. With Porsche out of the picture, there was simply no reason for VW to keep going up, and the funds were willing to bet on it. So they shorted huge amounts of VW stock, borrowing it from existing owners and selling it into circulation, waiting for the price drop they considered inevitable.
Porsche anticipated exactly this situation and promptly bought up much of these borrowed VW shares that the funds were selling. Do you see where this is going? Analysts did. According to The Economist, Adam Jonas from Morgan Stanley warned clients not to play “billionaire’s poker” against Porsche. Porsche denied any foul play, saying it wasn’t doing anything unusual.
But then, last October 26th, they stepped forward and bared their portfolio: through a combination of stock and options, they owned 75% of Volkswagen, which is almost all the company’s circulating stock. (The remainder is tied up in funds that cannot easily release it.)
To put it mildly, the numbers scared the living hell out of the hedge funds: if they didn’t immediately buy back the Volkswagen stock they were shorting, there might not be any left to buy later, and it isn’t their stock — they have to return it to someone. If their only option is thus to buy the VW stock from Porsche, then the miracle of supply and demand will hit again, and Porsche can ask for whatever price it wants per VW share — twenty times their value, a hundred times their value — because there’s no other place to buy. They’re the only game in town.
And that, my friends, is called a short squeeze.
● ● ●
Porsche’s ownership disclosure sent the hedge funds on such a flurry of purchases for any Volkswagen stock still in circulation that the VW share price jumped from below €200 to over €1000 at one point on October 28th, making Volkswagen for a brief time the world’s most valuable company by market cap.
On paper, Porsche made between €30-40 billion in the affair. Once all is said and done, the actual profit is closer to some €6-12 billion. To put those numbers in perspective, Porsche’s revenue for the whole year of 2006 was a bit over €7 billion.
Porsche’s move took three years of careful maneuvering. It was darkly brilliant, a wealth transfer ingeniously conceived like few we’ve ever seen. Betting the right way, Porsche roiled the financial markets and took the hedge funds for a fortune.
Betting the wrong way, Adolf Merckle took his life.
[Merckle's company] VEM was caught in a so-called short squeeze after betting Wolfsburg, Germany-based Volkswagen’s stock would fall. Merckle lost at least 500 million euros on the bets on VW stock, people familiar said on Nov. 18. VEM lost “low three-digit million euros” on VW stock, the company said in November.
A “short squeeze” sounds inconspicuous enough; you wouldn’t tell it by Bloomberg’s language, but Merckle’s Volkswagen bet lost out to one of the most masterful hacks of the financial system in history.
For those of us who don’t live and breathe finance, this is that story.
● ● ●
In 1931, Austro-Hungarian engineer Ferdinand Porsche started a German company in his own name. It offered car design consulting services, and was not a car manufacturer itself until it produced the Type 64 in 1939. But things got interesting for Porsche long before then.
In 1933, he was approached by none other than Adolf Hitler, who commissioned a car designed for the German masses. Porsche accepted, and the result was the iconic Beetle, manufactured under the Volkswagen (lit. “people’s car”) brand. Today, Porsche’s company is one of the world’s premier luxury car brands, while Volkswagen (VW) is itself the world’s third-largest auto maker after General Motors and Toyota.
Three years ago, Volkswagen found itself fearing a foreign takeover. Porsche, the company, decided to step in and start buying VW stock ostensibly to protect the landmark brand, widely fueling market expectations that it would eventually buy Volkswagen outright. Of course, this isn’t quite what came to pass.
For three years, Porsche kept accumulating VW stock without telling anyone how much it owned. Every time it purchased more, the amount of free-floating VW stock would decrease, driving the stock price up slightly; your basic supply and demand at work. Eventually the share price became high enough that, to outside observers, it wouldn’t have made any sense for Porsche to buy Volkswagen. It would simply have cost too much.
To explain what happened next, I’m going to first tell you about a financial maneuver called shorting.
● ● ●
At any given point, only a certain amount of a publicly traded company’s stock is floating freely in the market. The rest is held in various portfolios, funds, and investment vehicles. Now, everyone’s familiar with the basic idea behind the stock market: you buy stock when it costs little, and you sell it when it costs a lot, profiting on the difference.
But that assumes a company’s value is going to increase. What if, instead of betting a company will go up, you want to make money betting the company will go down? You can — by selling stock you don’t own.
Say you borrow a certain amount of stock from someone who already owns it. You pay a fixed fee for borrowing the stock, and you sign a contract saying you will return exactly the same amount of stock you took after some amount of time. So, you might borrow a thousand shares of Apple stock from me (I don’t actually own any, but play along), pay me $100 for the privilege, and sign an obligation to return my stock in 3 months. At the time, Apple stock is worth $10 per share.
After you borrow the stock, you immediately sell it. At $10 a share, you get $10,000. Two and a half months later, another rumor about Steve Jobs’ health sends AAPL crashing to only $6 per share for a few hours, so you buy a thousand shares, costing you $6,000. You give me back those shares. Because you successfully bet the company would go down in value, you earned $4,000 minus the borrowing fee. This is called short-selling or shorting the stock, and the downside is obvious: if your bet was wrong, you would have lost money buying back the shares that you have to return to your lender.
● ● ●
Now things get kinky.
When Volkswagen’s share price exceeded the point where it made sense for Porsche to buy the company, a number of hedge funds realized that Volkswagen shares have nowhere to go but down. With Porsche out of the picture, there was simply no reason for VW to keep going up, and the funds were willing to bet on it. So they shorted huge amounts of VW stock, borrowing it from existing owners and selling it into circulation, waiting for the price drop they considered inevitable.
Porsche anticipated exactly this situation and promptly bought up much of these borrowed VW shares that the funds were selling. Do you see where this is going? Analysts did. According to The Economist, Adam Jonas from Morgan Stanley warned clients not to play “billionaire’s poker” against Porsche. Porsche denied any foul play, saying it wasn’t doing anything unusual.
But then, last October 26th, they stepped forward and bared their portfolio: through a combination of stock and options, they owned 75% of Volkswagen, which is almost all the company’s circulating stock. (The remainder is tied up in funds that cannot easily release it.)
To put it mildly, the numbers scared the living hell out of the hedge funds: if they didn’t immediately buy back the Volkswagen stock they were shorting, there might not be any left to buy later, and it isn’t their stock — they have to return it to someone. If their only option is thus to buy the VW stock from Porsche, then the miracle of supply and demand will hit again, and Porsche can ask for whatever price it wants per VW share — twenty times their value, a hundred times their value — because there’s no other place to buy. They’re the only game in town.
And that, my friends, is called a short squeeze.
● ● ●
Porsche’s ownership disclosure sent the hedge funds on such a flurry of purchases for any Volkswagen stock still in circulation that the VW share price jumped from below €200 to over €1000 at one point on October 28th, making Volkswagen for a brief time the world’s most valuable company by market cap.
On paper, Porsche made between €30-40 billion in the affair. Once all is said and done, the actual profit is closer to some €6-12 billion. To put those numbers in perspective, Porsche’s revenue for the whole year of 2006 was a bit over €7 billion.
Porsche’s move took three years of careful maneuvering. It was darkly brilliant, a wealth transfer ingeniously conceived like few we’ve ever seen. Betting the right way, Porsche roiled the financial markets and took the hedge funds for a fortune.
Betting the wrong way, Adolf Merckle took his life.
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