Many startup companies have been popping left and right, either from scratch or after graduating from a startup incubator program. However, some of these companies generally do not succeed and sometimes fail gradually. It could be due to some uncertain business objectives and sometimes lack the right manpower to do its primary mission.
This is an everyday experience for startup companies. Generally, most startups have a lower resource and limited budget. And hiring a new employee is not an option. However, outsourcing some tasks to a third-party company could quickly solve this problem. This generally costs much lower than hiring a full-time employee.
Still, many startup owners are afraid to outsource as it could cost them a lot of it would not work. Likewise, this article focuses on helping you understand the basics of outsourcing and guiding you in the proper way of outsourcing.
Reasons for startups and small businesses to outsource
At the start of the business, most startups will likely employ a few in-house employees to secure the company’s stability. However, as the company grows bigger, in-house employees are probably not enough. As such, below are a few reasons why your startup should outsource:
1. Lower Cost
Lower cost is one of the best benefits of outsourcing for startups. When startup outsources, they substantially enjoy the advantage of lower overhead, hiring, employee, and utility cost. They will also have relatively minimal expenses in physical infrastructures such as hardware, facility, and office equipment.
2. Higher Expertise
As mentioned earlier, most startups require more expertise as their company grows. Outsourcing for startups often up a pool of experts all over the world. For instance, Australia has a shortage of IT experts in the country. It could be difficult and more expensive to hire an in-house team.
Through outsourcing, however, startups will have more opportunities in hiring experts that are a better fit in their company for a lower price.
3. Better Focus
Having a better focus on more important matters of your business is one of the best benefits of outsourcing for startups. Keeping all business processes in the company in-house can eat up more time and complicate more things. Backend operations such as HR and administrative tasks can often overwhelm employees. This would require a significant amount of time and attention to run seamlessly.
Contracting these parts of your company not only cuts costs from your business but also lets your employees focus on the company’s core business functions. It also provides them some time to plan out the growth and development of the company.
Tasks that Startups can Outsource
Business operations differ in every company, depending on their products, services, and industry. However, there’s a few positions and task that most startups outsource. And these functions may include the following:
1. Human Resources
As mentioned earlier, poor management usually causes the failure of a startup company. Finding and recruiting talent is easy for some people. However, maintaining and keeping an employee is not a job for everyone. You can overlook a lot of necessary processes and clerical work.
Often, it takes a few months to find a replacement when an employee leaves a position. This can result in businesses missing many jobs and opportunities. And sometimes, other employees will take up those tasks, which could lead to burnout.
Outsourcing the HR function of your startup will ensure your company will be able to recruit and hire top candidates. They will also handle the compensation, benefits, and employee program effectively. Most HR teams from startups are healthy experiences in employee engagement and retention.
2. Data Entry and Processing
Data entry outsourcing is one of the most popular business outsourcing for startups. It’s a time-consuming and tedious task but crucial to many businesses. These data can leverage a company to keep up with their consumers and improve their services.
Outsourcing companies have professionals who can easily handle these tasks – automated or manually. They have trained data entry professionals who can efficiently collect, sort, and analyze data. Not only that, outsourcing data entry and processing will free a lot of your employee’s time and focus on more critical tasks.
3. Bookkeeping Services
Bookkeeping and accounting team are not necessarily needed full-time with startups. However, both are vital to their success. You need these positions to keep a good record of your startup and manage your expenses, tax, payroll system, and other financial matter. However, hiring full-time bookkeeping and accounting can be a little bit out of your choice if you are a startup.
Outsourcing a bookkeeping service to a third-party company is a good option for a startup.
4. Digital Marketing
Building a brand and reputation does not happen overnight. It includes a lot of tasks like creating your logo, color scheme, social media accounts, content writing, ads, SEO, etc. These tasks are not easy as you think. It takes a lot of planning, resources, and expertise to succeed in any marketing campaign.
Outsourcing digital marketing services will save you a lot of time, money, and resources. Moreover, these agencies have extensive experience and expertise in their field. They will surely deliver an outstanding result that otherwise can be impossible to achieve on your own.
5. Customer Service
With the rise of technology and mobile devices, customer support is limited to voice calls. Most companies provide customer service in email, SMS, live support apps, social media, and more. It’s now a norm for a company to be reachable on multiple platforms and streamline its customer care 24/7. Hiring an in-house around the clock customer service team can be too expensive for a startup.
Fortunately, many outsourcing companies provide omnichannel customer support services. They handle multiple platforms and ensure that your company has top-notch customer care.
6. Product Development
Startups usually hire an in-house software developer to develop their product or application. However, as the company grows, its need to create and maintain its yield increases. In addition to that, customers may demand added features that a startup might not know or have limited resources to do so.
This is where outsourcing can save you. Developers are the most popular demand in the outsourcing market. Most outsourcing companies have an expert that can provide you with the skills and experience to build your idea and need. In addition to that, some IT outsourcing companies even offer a complete IT development team to care for your needs.
7. Physical Infrastructure
Physical infrastructure, like hardware setup, network, connectivity, is quite expensive for a startup. This equipment needs to maintain and recorded to make sure that your investment can last for years and operations will run smoothly. However, hiring a full-time facility and IT staff can be steep for startups.
Likewise, outsourcing these positions might be your best bet. You can sign a contract with an outsourcing company to only have these experts on call or whenever you are facing issues. This way, you can save time, money, and space.
8. Data Management Services
Data management and hosting for startups can be expensive. Aside from the hardware requirements, you need to maintain the tool and software to store and manage your data.
There is plenty of outsourcing in the market that offers data management services packages, including hosting and maintenance. Some of these even include customer care if you face any issues.
9. Web Design and Development
Building your brand has an accessible, well-designed, and user-friendly website. However, building a website is not that easy. It takes a lot of time and effort to develop and manage something that will impress customers. In addition to that, it has to have a strong backend structure that will make sure it’s safe, secured, and functioning well.
IT outsourcing companies have the needed people to take your vision to the next level. Most of their developers can design, build, and manage your website for an affordable price.
Making the Outsourcing Decision
When outsourcing, you must make sure that you hire the right company. You need to determine your objective and check all the possible holes before picking your outsourcing company. Here are a few tips when making the outsourcing decision:
1. Clear and Defined Plan
Defining an outsourcing plan before signing a contract with a third-party company is the first need when outsourcing. You need to define a clear goal, objective and need for outsourcing to fill in.
Likewise, you can meet up with your current team and identify the operation and scope of business that needs to be outsourced. Then, determine the timeframe of the contract – whether it’s only for a short term or long term. You can also include the requirements for the specific business operation and prepare a budget. This is crucial when negotiating with an outsourcing company.
2. Check for a Track Record and Customer Feedback
It’s also to list your prospects and candidate company you can choose from. Then, you might want to check their business reputation, mission, values, and objectives. Check for a proven track record on the internet.
If you can’t find anything, you can ask them for client feedback or a portfolio.
3. Reiterate on Data Privacy and Intellectual Property Policies
Outsourcing horror stories are often faced by many startups. Issues like piracy, stealing trade secrets, and data breach are rampant in the outsourcing industry. So before outsourcing, make sure that your contract covers all data privacy and intellectual property policies to protect your company.
Conclusion
Outsourcing is not only exclusive to big companies nowadays. But as a startup, you need to always make sure that you are investing in the right company, mainly since you have limited resources. Failure is usually not an option.
So before you start outsourcing, make sure that you are fully aware of what it includes and if your third-party outsourced company has a good background.
Are you ready to hire your outsourcing company? Flexilabs can help you. Let us help you with your idea and lead you to the right company to develop your product. Contact us now!