Is using outsourcing a good idea for startups? It already provides winning strategies for established companies but would it also enable start ups a competitive edge they are looking for.
To outsource or not to outsource, that is the question.
“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”
~ Lee Kuan Yew, Noted Diplomat
Rapid and cost effective access to knowledge and talent is crucial for established business enterprises as well as start ups. Only then can you gain a timely edge in winning customers and beating your competitors.
For start ups however you have a much shorter ‘launch window’ and also much higher expectations than those seasoned businesses. Your aggressive startup goals are also accompanied with less money with which to work with than an established company. Add to this the shorter timeframes being relatively common among startups, outsourcing frequently makes even more business sense to a startup operation than for an established company.
The answer for a startup is clear from a couple of simple questions. Can an outsourced solution do what you need as a reduced cost, more quickly and better than if you did it yourself? What should you be focusing on – growing your business or dealing with functions that could easily be outsourced?
So which processes could Startups Outsource?
Primary tasks for companies doing it themselves are “core competency” functions, mission-critical tasks that require creative thinking and tasks that involve direct contact with the client.
Once you have identified these then everything else should be ‘fair game’. Only subject to whether it is more cost-effective than an in-house alternative. One key advantage of outsourcing for startups is that it frees up crucial resources that can be directed into more profitable activities.
When is it too far for outsourcing?
We all know a lot of startups fail in their first year of operation. Many less make it 10 years.
How can outsourcing assist in reducing these business failure rates? Here is a year-by-year outline of a way to use outsourcing and where to use outsourcing:
- Year 1 — Outsource only IT Development, Digital Marketing and Finance functions.
- Year 2 — Consider “non-core” Operations in outsourcing decisions.
- Year 3 and Beyond — Outsource expanding Operations as you grow the company.
For example, during the 1st year startups should limit most outsourcing to key areas such as IT and digital while core business processes are established.
Where should you find the best Outsourcing destinations?
Geography poses no limits when outsourcing. In today’s high-tech world companies can work with their outsource teams in far away locations as easily as working with a business just located down the street.
Some specific countries might emerge as better candidates for your specific outsourcing needs. Based on findings reported by Click and Duening, the leading international destination for Business Process Outsourcing is India. Once you choose a preferred country, say India, do your due diligence on that country and other research about the leading outsourcing destinations in India.
How to find a good Outsourcing partner
Key things to look for when evaluating an outsource partner are:
- International Expertise: In a global economy, you want multilingual skills and the ability to work with customers in multiple countries.
- Quality Standards: Ask for examples of their work.
- Pricing Flexibility: With scarce financial resources, startups should demand outsourcing partners that provide pricing choices.
- Specialized Skills That Meet Your Needs: Startups should confirm that their outsourcing partners have an existing team of specialised professionals who can start on the project immediately.
What Is Your Next Step Before Outsourcing?
Outsourcing is used by a growing number of startups — including your competitors. Access cost effective options and skill set to enhance your business while you focus on the most important job of any startup, finding customers and growing your brand/business.