Working as a Completely Independent Contractor vs Working Through an Outsourcing Company Part 1

I have worked as project manager for three different outsourcing companies and have worked a s freelancer both directly with clients and through outsourcing companies.

The first company (Let’s call it Company X) that I worked for as project manager had an interesting business model whereby they worked only with freelancers so that the only people receiving a salary were the CEO and the office manager. The company had a marketing guy (also freelance) who would generate leads and pass them on to me. I would contact the lead, make my pitch and send a proposal. If the proposal was accepted I was given 70% of the amount and Company X kept 30%. I could then either do the project myself or find a freelance writer to do the project. In any case I was responsible for the quality of the output.

If I took an experienced writer to do the project I generally would give them 60% and keep 10% for myself.  If the writer was new and need more input from me it would be closer to 50% and 20%. My policy was to always tell the writers what percentage of the project they were getting and how much I was getting. I also offered to show them the proposal sent to the client so that they wouldn’t have any doubts. Interestingly no one asked to see the proposal and no one asked for a bigger percentage. In my experience one of the drawbacks to working through an outsourcing company is the feeling that you are being exploited. By being upfront with the writers we avoided this problem.

For my 10% I would review all material before it was sent to the client and resolve any problems.

Company X paid both the writer and me within 30 days of billing, regardless of if they had been paid by the client or not (as long as the client was satisfied with the work).

During the 10+ years I worked as project manager and my subsequent work as a freelance writer I gained a number of insights which I will share with you in my next entry.

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