Most startups are built upon good intentions and a better idea, but no founder can be an expert at everything. Trying to do everything on your own is a recipe for burnout and a skills gap that expands with time. This isn’t an ideal situation for startups that are trying to stay above the competition and make an impact that’s felt in their chosen industry.
This is where strategic outsourcing comes in. In simple terms, outsourcing is the business practice of employing a third party to perform processes, from customer support to back-office tasks. It’s typically done to help cut costs, but it’s now a business strategy that can also address skills gaps and location-based issues with global companies.
The global outsourcing market has grown to over $90 billion in 2019 from $76.9 billion in 2016, which shows that companies are seeing the benefit of outsourcing not only on the bottomline but also on an organization’s growth. Outsourcing is now part of the arsenal of companies looking to grow their business beyond borders and expand their teams with talent from diverse backgrounds.
What is Strategic Outsourcing?
The first question that comes to mind when discussing outsourcing is: How do you outsource strategically?
Outsourcing can simply be a means to delegate work and cut costs, but it can also be a business strategy that can help your startup get a foothold in your chosen niche. Leveraging the many benefits of outsourcing and making it a part of your overall strategy will ensure that you get the help you need in whatever aspect of your business while you focus on the business itself—closing deals and ensuring your startup grows at your desired pace.
Strategic outsourcing involves building a relationship with a startup outsourcing company, which is responsible for the success of certain areas of your business. Despite being a third party, you and the outsourcing company should work as a team with a common goal. Their technical skills and know-how should complement your business and fill the gaps that hinder the growth of your business.
For most startups and small to medium-sized companies, the following are the commonly outsourced tasks.
Repetitive tasks
Repetitive tasks are the easiest ones to outsource because of their relative simplicity. You can find offshore skilled workers that cost less and are as good as those you can hire locally.
Highly specialized tasks
There are times when you need people with special skills and the advice of experts, and there are times that you don’t. As such, there’s no need to keep highly skilled people on the payroll if you won’t be utilizing their expertise on a fulltime basis. Outsourcing highly specialized tasks is significantly cheaper than hiring specialists or experts as fulltime staff.
Infrastructure-related tasks
As you accumulate data, you will need to think about your infrastructure: moving data to the cloud, digitalization of processes, maintenance of your digital systems, and the like. Data has become the lifeblood of businesses today, and it would be a huge misstep to not have a plan when it comes to their backup and storage. It can be overwhelming to keep track of all the systems and platforms your company uses. Outsourcing tasks related to infrastructure can save you money and help you ensure that you pay only for the infrastructure you use.
Enterprise resource planning (ERP)
ERP is a process used to manage the important components of a business by integrating them into a single, standardized system. ERP software helps companies run processes and plan resources using a single software or application, making it simpler, quicker, and more efficient. These software applications require specialized skills however, but not on a fulltime basis.
How to Outsource Strategically
Startup outsourcing is not simply hiring a third party to do certain tasks and then forgetting about them. This will only lead to bad service and dissatisfaction. To do it strategically, it should be an ongoing conversation between your key people and the outsourcing company. You should provide relevant technical information that will help increase the quality of service and avoid business disruption.
Strategic outsourcing is a commitment between two companies to work together toward achieving set business goals. Below are a few tips on how you can make outsourcing an effective component of your overall business strategy.
Find the Right Outsourcing Partner
More than finding a capable outsourcing company, you should ensure that it’s also a good fit to your organization. Your mission, vision, and company values are vital to the way you work and do business. As such, your partner outsourcing company should have similar values.
The outsourcing company’s physical location is also a consideration because it will determine how accessible they are and if they will be readily available in case of challenges or emergencies.
Know Where to Focus
Prioritization is key when it comes to building and scaling startups smart and fast. Know what works for your business and double down on that. Invest in processes and systems that help optimize your processes and resources and improve overall business efficiency.
On the flipside, what isn’t working and see if processes can be improved or if taking a new approach is required. Whatever processes fall outside your focus area should be considered candidates for outsourcing.
Set Realistic and Measurable Goals
As with any business venture, strategic outsourcing needs SMART goals to help you monitor its progress and see if anything needs to be modified or replaced. Setting specific milestones and deadlines will also help you determine the rate of your growth and allow you to forecast if deadlines will be met at the rate your currently going and prepare if plans aren’t turning out the way you expected.
Maintain Balance in Your Relationship
Any long-term business relationship needs balance to survive. The startup outsourcing company you choose will be your partner in achieving your goals. This means that you need to be firm with the goals you set but also understanding of circumstances beyond control.
Hiring “yes men” isn’t ideal because this removes the checks and balances that prevent you and your stakeholders from making impulsive, uninformed business decisions. Find an outsourcing partner that will fight for your business but also knows when to push back when needed.
Building a Partnership for the Future
One of the main reasons why most startups fail to make outsourcing work for them is the notion that it requires less work. Strategic outsourcing is a partnership, and a partnership requires work to maintain and keep profitable. It’s a boon for startups and businesses looking to scale, but implemented haphazardly, it could have the opposite effect.
Talk with us today and see how the right startup outsourcing partner can help put your business on the right track to scaling smart!