Startup outsourcing can be a boon for businesses that have a plan in place regarding which tasks or processes they need to outsource and which to keep in-house. However, it’s vital to keep in mind that it’s not a “set and forget” type of solution wherein you delegate tasks at the beginning of a project and expect your chosen outsourcing company to resolve any issues without your involvement.
You also have to find the right fit when it comes to choosing an outsourcing company because there are times when an outsourcing model doesn’t fit your company culture. You have to know first and foremost what problem you’re trying to solve. Strategic outsourcing aims to solve problems that affect the organization as a whole; it’s not simply an IT or customer service solution. This means that you need to know your business inside out before jumping into any outsourcing venture.
The Ongoing Outsourcing Conversation
While startup outsourcing is a partnership between your company and the outsourcing company, you should also ensure that there’s an “executive partnership,” that is, you should have the full support of the executive team. Otherwise, it will be a challenge to manage executive expectations and it could be a hindrance to the success of the project. Even if you’re delegating or outsourcing tasks or processes to a third-party, there needs to be a level of engagement between your company’s leadership team and the outsourcing company.
This is why it’s important to get buy-in from leadership and the other members of your organization to ensure a seamless transition. You need to have a strong business case for strategic outsourcing at the onset, with regular status updates as the project progresses. Timelines and expectations should be managed before and during the outsourcing venture.
Successful startup outsourcing is an ongoing conversation.
Startup outsourcing isn’t plug-and-play because it requires regular back-and-forth between you and your outsourcing company. It’s a relationship that should be nurtured and a process that should be monitored regularly if it’s to be successful.
Real-life Outsourcing Challenges
Even outsourcing companies face challenges when it comes to dealing with startup companies. The common pitfalls are miscommunication and a lack of understanding of the client’s needs. Most outsourcing challenges can be avoided through proper planning and identification of potential issues, but things don’t always go according to plan—even in our case.
The key for startup outsourcing companies is being prepared to address issues and keeping an open line of communication with the startup companies they’re working with. Below are a few challenges nXscale faced and the lessons we learned along the way.
The Communication Barrier
Direct communication is vital if an outsourcing company is to understand the client’s specific requirements. However, there are times that a client will hire another third-party to manage the outsourcing process. This can result in miscommunication and delays because communication lines are managed by a “middleman.”
In our case, this led to communication delays, missed messages, and misunderstandings because messages were not directly delivered by the client and unintentionally reinterpreted by the middleman. This arrangement also presented issues when it came to accountability because indirect communication resulted in a lack of context.
Lesson Learned: Always ensure that project details and updates are accurate and provided regularly. Clarify vague points if necessary and document discussions for future reference.
Lack of an Onboarding Plan
Although startup outsourcing may seem simple, the entire process can become overly complicated if you have no idea what you’re doing. Startups often know which tasks or processes they want outsourced but aren’t sure how to go about it specifically. This is where an outsourcing company can help.
It can still be a problem, however, when a client jumps blindly into an outsourcing project. Building a team doesn’t stop at screening and hiring the right people; companies should have an onboarding plan in place to help new hires learn the ropes quickly and get settled within the workplace—even if they’re working from home.
When we helped one of our clients expand their team, it became apparent that there was no onboarding plan prepared for the new hires. This resulted in confusion regarding employee tasks and other administrative concerns, which significantly affected employee morale and made team management more challenging than it had to be.
Lesson Learned: As an outsourcing company, the people you hire are also your clients. Ensure that you provide the same level of service to them as you would to your startup or business clients.
Not Enough Collaboration
For collaboration to be effective, there needs to be transparency between the client and outsourcing company. The purpose of regular status updates is not just to monitor the progress of a project but also to identify potential setbacks that can lead to delays or significant project modifications. Coordination between in-house and outsourced teams and between client and outsourcing company is crucial to maintain a high level of service that’s not bogged down by miscommunication and lack of visibility.
Lesson Learned: Always be upfront with clients to avoid making small issues worse and to avoid any further problems. Issues are more easily addressed when identified early, so discuss them as they arise and before they become more serious.
Not Sticking to the Startup Outsourcing Plan
There are times that changes need to be made due to unforeseen circumstances, but last-minute changes in project scope can often seem like going back to square one. Consequently, this affects the progress of the project and can lead to wasted time and effort. Always make the scope of an outsourcing project clear at the onset and stick to the outsourcing plan, unless there’s justifiable reason to divert from it.
Lesson Learned: Always prepare for reasonable changes in the project, but a change in scope means a restarting of a project or the creation of a new one.
Regional Price Differences in Equipment
Startup outsourcing entails working with providers in different geographical locations, which often lead to certain logistics differences like price of equipment and shipping policies.
When a client wanted to purchase laptop computers locally and ship them to our location, we faced some logistics problems. These problems weren’t limited to shipping delays, either, there were also the issues high shipping fees and customs and other taxes. When entering into an outsourcing agreement with clients, outsourcing companies should ensure that the clients are aware of the fees and taxes they need to include in their budget plans.
Lesson Learned: When discussing the budget with clients, outsourcing companies should always include regional taxes and other mandated fees to avoid surprises and align expectations.
We’re On the Same Team
Ultimately, what we’ve learned through our outsourcing journey is that we aren’t a separate team. When we work with you, we become an extension of your team—with the same goals and with the same dedication to achieving those goals. We are your offshore team, working with you to save costs while improving the efficiency of your overall operations.
Talk with us today and let’s discuss what your nXscale team can do for you.