The “startup life” is something that many professionals and organizations aim to achieve, with many expecting an exciting landscape of mavericks in open offices with foosball tables and out-of-the-box methods. What they don’t see is the toil and sacrifice involved in ensuring that the business succeeds despite the odds mostly not being in its favor.
Startup outsourcing can be a viable solution when you’re just starting out because it can help fill talent and process gaps in your startup business. Being an entrepreneur means you don’t have a nine-to-five job to fall back on in case your business venture fails. Aspiring entrepreneurs face a difficult but exciting road ahead, and it requires a mix of business knowledge and courage to overcome the challenges along the way.
The struggle is part of the so-called startup life, but struggling because you refuse to consider alternative solutions and stick to outdated methods that aren’t working is a critical mistake. Agility is required to succeed, and adapting to the call of the times through the implementation of innovative—often unfamiliar—solutions is key.
It’s often thought that outsourcing is only for large and established companies, but history has shown that even startups and small businesses can benefit from it. A recent survey shows that 37% of small businesses currently outsource a business process. Businesses outsource strategically citing their main goals as increasing efficiency and getting assistance from subject matter experts.
What is Outsourcing?
Outsourcing is a business practice that’s designed to improve business efficiency while cutting costs by farming out certain job functions or services to a third party. Depending on a company’s needs, it can outsource a range of operations or an entire team or choose smaller, easily defined job functions from different teams within the organization.
Companies can choose between onshoring or outsourcing within their own country, nearshoring or outsourcing to a neighboring country, and offshoring or outsourcing to a more distant country. Nearshore and offshore outsourcing have been common options for companies looking to minimize costs.
Business process outsourcing (BPO) is typically used to refer to the outsourcing of specific tasks or business processes to a third party. It’s divided into two main categories based on the type of outsourced job function; back-office BPO is the outsourcing of internal business processes like billing and HR, while front-office BPO is the outsourcing of customer-related business processes like tech support and marketing.
When a company requires advanced skills for outsourced business processes, knowledge process outsourcing (KPO) becomes part of the equation. Most companies have standardized processes that they outsource, but there are also processes that require specific technical skills, research, and data-driven decision-making. Examples of these processes include research and development (R&D), finance, and data analysis and interpretation.
Is Outsourcing Good for Startups?
Startup outsourcing is not a new concept, but it has evolved through the years into what Deloitte has referred to as “disruptive outsourcing.” Outsourcing today is a far cry from what it was before—a means to reduce operational costs while also improving back-office processes. The COVID-19 pandemic has accelerated its evolution, however, and today’s startup outsourcing companies are presented with a host of opportunities that further accelerate changes within an organization that help bridge the technological gap.
Cost reduction is now a top priority when outsourcing due to the uncertainty brought about by the pandemic’s negative effect on the global economy. Outsourcing helps startups reduce costs while also being an enabler of business transformation—helping companies integrate technology into their processes and elevate the way they do business.
By partnering with an outsourcing company, startups can focus on strategy and business development and leave the non-critical tasks to the third-party provider. This makes it easier to scale the business because you can hire talent as the need arises and the company grows.
Outsourcing for startups also helps level the playing field because it provides access to the same technology and expertise that are offered by third-party providers. The key to success now becomes finding the right outsourcing company that will help in improving efficiency, reducing costs, and filling the talent and technology gaps within an organization.
Top 5 Startup Outsourcing Tips
It’s common practice to outsource tasks and processes that you have limited knowledge or experience on, which is practical in some situations. However, it’s more beneficial and scalable to outsource business processes that you already know how to perform yourself. Below are a few more tips from one of nXscale’s founders Kei San Pablo on how you can make outsourcing work for you and your startup.
Scale what you know.
Know your business inside and out—right to the smallest detail. This means that you should be familiar with the processes that make it run, and be knowledgeable enough to perform them yourself. This doesn’t mean that you should try and do everything yourself. However, your outsourcing initiatives will be easier to manage if you know the nitty gritty of the business processes and tasks you need performed.
Embrace momentum.
The startup life is a fast-paced environment and it’s been said that founders should learn the art of taking breaks. While this is a reasonable and actually helpful tip, the key in standing between burning yourself out and not putting in the work is balance. Identify the processes that you need to boost and outsource those to take advantage of business momentum while you focus on your next strategy.
Fall in love with the problem, not the solution.
Take a problem-solving mindset, but don’t get to attached to the solution or the process that got you there. Be flexible enough so you’re open to alternative solutions even if you’ve already invested in another. Often, the solutions you come up with aren’t relevant anymore because the problem has evolved through time or a new element was introduced. Keep an open mind and an agile organization.
Where you are right now doesn’t dictate where you’re going.
Change is a large part of building and running a startup; you might be doing everything in-house now but outsourcing majority of your processes in the future or vice-versa. Whatever the situation your business is in right now, remember that it won’t stay that way forever. Startup outsourcing may play a major role in your operations, but remember to take it for what it is—a means to an end. Outsourcing means you’re prepared to do what you can to scale your business and make it grow. Stay curious. Stay open. The possibilities are endless.
Face it ‘til you make it.
Outsourcing can only take you so far if you don’t have an idea about what you’re doing. Do your research and equip yourself because the startup road is a challenging one, to say the least. Don’t just jump into the current trends, either. Find the right startup for you: something you’re passionate about or something you believe that will make an impact. Once you do, get to work and outsource the rest.
Commonly Outsourced Services
The term outsourcing might be a common theme in business conversation, but the term itself doesn’t say much about what is being outsourced and how. Aside from manufacturing, there are other outsourced business processes that help a company be more nimble and easier to scale. Below are a few of the most outsourced business processes:
Customer Support
Customer support is arguably the area of business operations that pushed business process outsourcing to the mainstream—specifically, contact centers that provide customer support through phone. Employing and training customer support professionals in countries like the US can increase operational costs significantly. On. The other hand, an outsourced call center in a country like the Philippines can perform the same job, maybe even better, at a fraction of the cost.
Computer Programming
The reason for outsourcing computer programming is quite similar to that of customer support. A standard programming project can easily be outsourced at less the cost of hiring an experienced programmer in the US, for example. Having standardized processes or tasks grouped into an application will help make IT outsourcing more manageable and scalable.
Web Design
Web design is commonly outsourced because it’s something that can be delivered quickly by remote teams. Some companies even offer pre-made website design templates that can be customized according to a company’s requirements. Generally, web design is outsourced to save time, especially if a company is looking for a simple or standard design for a corporate website.
Research and Development
Nearly all research and development tasks are outsourced nowadays because it’s more efficient to hire offshore teams with specializations in the company’s required fields. Different outsourcing companies will have different specializations, and finding the right one for your company is easier than trying to hire specialists or experts yourself.
Creative Services
Creative services like content writing and graphic design are increasingly being outsourced due to the number of providers that offer the service and feature topnotch content creators from a multitude of backgrounds. Companies with a temporary need for creative services find that outsourcing helps them save time and money because they can simply hire the people or outsourcing company as the need arises.
Data Entry
Routine tasks like data entry are the simplest to outsource because they can be done by almost any outsourcing company. By outsourcing menial tasks like data entry, a company can focus on more important things like strategy and business development. The main caveat when outsourcing data entry tasks is if the data being encoded is sensitive, like credit card details and other customer data.
Why Should Startups Outsource?
Aside from the apparent cost-saving benefits, startup outsourcing should be a solution for companies that are looking to start fast and scale smart. Making it a part of the business equation keeps your company agile and open to the changes that you may need to implement in the future. Disruptive outsourcing may be the way of the future, but it doesn’t have to disrupt your business operations. Learn how nXscale can be your partner in outsourcing and building your team.