This week’s guest post comes from Vaishali Badgujar.
When you are a start-up, and your revenue models are not stable, managing costs becomes a priority not just to thrive but to survive. Fixed costs like salaries can be extremely expensive and can drain down a startup dramatically.
Besides money, time is an important factor too. Having to juggle several tasks like recruitment, managing people, closing sales, and addressing day-to-day issues can dramatically drain the energy of a startup entrepreneur.
What is outsourcing?
First, let’s define outsourcing. It is the practice of hiring an outside organization to handle business processes rather than do it in-house through employees.
Benefits of outsourcing
Outsourcing helps startups to get tasks completed on time, eliminating the hassle of managing employees, their salaries, and much more. Lets looks at the benefits of outsourcing that startups can enjoy:
Tasks at startups can be varied. Hiring a different person for each task may not be practically possible due to the costs and the availability of labor. Besides, the environment at a startup is dynamic, and new tasks and processes are being implemented every day. People’s skills can become irrelevant very quickly. Founders and their teams can focus on core activities and leave the rest to outsourced specialists.
The fact that the core team only has a handful of processes at hand allows for more focus on their core activities. Having to keep up with just a handful of services encourages specialization while cultivating productivity.
2. Hire only when you need
We don’t require certain services all the time. For example, web designing, financial statement preparation, and legal services are not required all the time. Besides, these are non-core activities that take a long time to specialize.
3. Cost and Speed of setting up
It can take three to six months to hire and train a team to get things done. With an outsourced team, process implementation can start almost immediately. Besides, additional costs like paying an HR team to scout talent, trial and error, managing staff, and providing office space can add up to the costs.
Downsides of outsourcing
One significant downside to outsourcing is the loss of managerial control due to the disfranchisement of core departments. Other startups have also cited the exposure of sensitive business data to third parties. However, in certain cases, the benefits of outsourcing far outweigh the real and perceived disadvantages. As an entrepreneur, you must weigh the pros and cons and determine what is best for your business.
What are some of the tasks a startup can outsource?
1. Human resources
While the human resource department is considered an integral part of a business, you probably don’t need one during the early stages of your startup. If your business isn’t rapidly hiring and neither does it have a category of employees who need constant oversight from the human resources department, it might be easier and cheaper to outsource.
Outsourcing the recruitment process can also be beneficial due to the professionalism and experience of human resource management services and their access to a wide pool of talent.
2. Call center and customer support operations
Setting up and running a call center department can take a toll on the overhead of the business. This explains why even some of the biggest companies prefer call center outsourcing.
3. IT and web services
A startup not only needs a highly responsive website, but the recent surge in cybercriminal activities also calls for proper internet security. For instance, you need regular updates to your web pages and blogs, reliable backup services for your business data, and real-time internet security features to wade off hackers.
Setting up an IT department with these capabilities can prove quite costly. Startups may, therefore, choose to outsource these services by engaging outsourced IT service providers and web service providers who understand the exact needs of the business. These often come at a fraction of the cost of setting and maintaining an IT department internally.
4. Bookkeeping and accounting
Tracking expenses, managing the petty cash records, reconciling accounting books of accounts with bank statements, or preparing the necessary financial accounts is not profitable. However, these activities are vital as they tell and help forecast the health of your small business.
The fact that they don’t add direct value to the business’s bottom line should not make them another DIY task. Engage accounting professionals with the ability to not only prepare financial statements but also advise on how to keep the business financials on track.
5. Inventory management and order fulfillment
The process of customer satisfaction and earning their loyalty starts with how you handle your calls and requests that culminate with reliable deliveries. However, even with a great customer support team, a startup can miss sales and drive away would-be loyal customers due to running out of stock of a given product or using an ineffective order fulfillment service.
An entrepreneur can, however, avoid these costly errors by engaging an inventory management and order fulfillment service provider, particularly in the case of e-commerce store operators. Alternatively, engage virtual assistants specializing in order processing to ensure that you never miss a sale or are late on a delivery.
6. Marketing and lead generation services
There are a lot of digital marketing companies that focus exclusively on generating leads, nurturing them, and converting them into sales. Many of them are specialists in these activities as they have been doing this for years.
Besides lead generation, a good marketing services company can help you with branding and maintaining your online footprint. It might be a good idea to outsource this activity rater than doing it in-house.
7. Legal services
Every startup needs to comply with the laws of the land. Not every business owner is familiar with the laws. So it’s better to be safe than sorry. Lack of compliance with the laws can cost a lot of money in penalties. Besides providing legal services, the legal counsel should also advise the startup on various compliance issues and ensure the startup is legally protected at all time.
Outsourcing can provide access to specialized services to startups at reasonable rates. Some companies outsource almost everything. Many companies have been able to survive and thrive only because of outsourcing.
Vaishali Badgujar is a digital marketer at Time Doctor, a SaaS time tracking & productivity tool for companies & freelancers. She is a content marketing expert & specializes in link building.