Start Your Startup | What Startups Need to Know about Outsourcing
Stephen Semprevivo is an advocate of outsourcing but when the time is right.
Founders are responsible for a lot of business operations. At a certain point, you will be unable to continue carrying the burden of every single task your business requires. When that time comes, you will have a few options—hire someone in-house or outsource these tasks.
Over one-third of small businesses use outsourcing as part of their business strategy. Here are some things to consider before you decide to outsource.
Benefit of Outsourcing
A recent Deloitte survey found that 70 percent of businesses list cost savings as their primary reason for outsourcing. Outsourcing costs far less than hiring someone in-house. When you outsource a task or project, you don’t need to worry about overhead costs, payroll taxes, benefits, or any of the other added expenses that come with a direct hire.
Another benefit of outsourcing is flexibility. When you outsource, you have more room to change your mind or go in a new direction. If you need to cut a project due to costs or time constraints, you can do so easily without needing to layoff an employee. You can also quickly ramp up a project more easily.
Finally, outsourcing gives you access to experts. Because they work with several clients, outsourcing companies have a broad range of experience they can draw on to find solutions to your problems.
Downside of Outsourcing
As with all things, there are two sides to outsourcing. The main downside is losing managerial control over the work being outsourced. You have to rely on your outsourced team to manage deadlines and deliver quality work. Because they work with several clients at a time, you might have to wait or go through several layers of people to make new requests.
Another downside of outsourcing is the risk to your company’s security, especially if your outsourced team will have access to confidential information. Get a lawyer to review contracts before you or the outsourcing company sign anything.
Common Areas to Outsource
While any task can be outsourced, research from Clutch found that the following areas involving technical tasks tend to be the most common for early-stage startups.
An information technology (IT) outsourcing company can do everything from managing your servers and setting up call centers to developing and launching software. You can instantly add specialized developers and quality assurance (QA) testers to your staff.
Until your company reaches a large enough size, it usually doesn’t make sense to hire an in-house human resources (HR) representative. Many HR companies can handle the heavy lifting of managing benefits, fielding employee questions, and keeping documents secure for you.
Most startups don’t need an in-house finance department. Hire a third-party accountant who can take care of bookkeeping, manage payroll, and get your tax returns ready. It is well worth the extra money to make sure these processes are done right the first time.
The great news is there are plenty of companies available for outsourcing. Do some research before hiring an outsourcing company to make sure they can meet your expectations.
As a successful entrepreneur, Stephen Semprevivo is always looking for new businesses to mentor. If you have an idea for a startup and are ready to take the next steps, apply for the Stephen Semprevivo Startup Scholarship. Two student entrepreneurs will receive a $2,500 scholarship along with mentorship and guidance. Learn more about the scholarship program and apply today. Remember, the best time to start a business is NOW!