Outsourcing International Suppliers: An All-You-Need-To-Know Guide

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How to pay an international supplier

Outsourcing, in simple words, means procuring goods or obtaining a service that is integral to your business, from a supplier who are specialised in such work. Many times, such suppliers may not be present in the same country and you have to contract with them across borders.

To create a quality product, every company aims to partner with a supplier with the most expertise. For example, India and China top the list in sourcing technology products and technology related services. Bangladesh, Vietnam and Cambodia are highly recommended for buying clothing in bulk. Italy and Germany are famous for kitchen equipment while France tops the roster for perfume, wine, cutlery, porcelain and other art-inspired collections.

There are several considerations for businesses to keep in mind when choosing an outsourcing provider from one country over another. Reliability, price, service/product quality and turnaround time are a few of them. In this guide, we discuss aspects of international outsourcing that can impact your business decisions.

 

  • Finding A Supplier

When you already know the specific product or the service you need, you just need to find the right supplier. A simple Google search will throw up a confusingly long list of results and sponsored listings.

A more effective way to find a supplier is through portals like Alibaba or Salehoo; for gigs there are sites like Upwork, Fiverr, Peopleperhour and Freelancer. These sites have already done the hard work of curating supplier profiles. You need to only choose the one that fits your bill. Usually, you will find that for every service you need, there is a cheaper and a better service available in a different country.

A big advantage of on-demand services like these is they display past reviews and supplier ratings so that you can make an informed choice.

 

  • Review Your Costs

Signing a contract with a supplier for one service may seem reasonable enough, but if your final product needs multiple service providers to work on it, the costs can escalate quickly.

It’s the same with products. If your supplier is only a distributor, you need to worry about sourcing the product yourself, or sometimes even to find another manufacturer to coordinate with the distributor.

These tasks are not only time-consuming, but they cost more than just time.  Every time you source a new supplier, keep in mind to consider the value vs. the cost they bring to the table. Understanding the impact of utilizing their services should be your bottom line.

Do keep in mind that your service provider most likely receives payment in their bank account in their own currency. When converting the dollars you send to their local currency, they end up getting significantly lesser due to the high conversion margins levied by their bank. For a service provider the conversion cost significantly erodes their profits and they can end up passing on that cost to you and thereby partly diluting the cost-advantage of outsourcing.

 

  • The Fine Print

Many businesses also fall into the trap of signing contracts in a hurry. Not paying attention to detail and not discussing everything beforehand can lead to delays, frustration and rising overhead costs.

If you’re sourcing a product, most vendors are happy to provide samples for you to test. They usually come at a very low cost. Likewise, for services, you should seek references and cross-check. In the agreement, specify the expected turnaround time, delivery costs and also the consequences in case of cancellations or delays.

If you will be providing designs which are then manufactured and sent to you by a vendor, ask them for samples of every new template they use. Many suppliers expect such conditions to be in place, so there is no harm in asking. Also, ensure that non-disclosure of your proprietary know-how  is guaranteed under the agreement.

 

  • Choosing The Right Country

For a while now, we have known that many customer support operations get outsourced to Asian countries, so much so that “getting Bangalored” became a synonym for outsourcing. Whether it is India, Philippines or any other English-speaking Asian country, the trend to outsource has been unstoppable.  On the other hand, for goods countries like China have become the global hub for manufacturing almost everything.

Start with some research on which locations are more likely to be good at providing what you need. This principle applies to both products and services. The last thing you want is a degraded quality of your finished product. Be sure to source only from the best-rated suppliers for a hassle-free experience.

 

  • Sending Money to an International Supplier or Freelancer?

Customs and taxes are daunting enough, but sending money and dealing with currency conversion rates can add to the problem too! Many a time you encounter a higher cost in paying the supplier purely because of gyrations in the Fx markets.

A traditional payment method such as a wire transfer adds its share of expenses to the mix. BUT, when you use REMITR to send money internationally, you get access to best live exchange rates, lowest costs, and an overall stress-free money transfer experience. With well defined payment delivery timelines and guaranteed rates on REMITR, there’s no better way to bring certainty back into your international supplier relationships.