What Start-Ups Should Consider Before Outsourcing

What Start-Ups Should Consider Before Outsourcing

Most start-ups grapple with limited funds, manpower, and time, so many founders are forced to multi-task just to get their concepts off the ground. I know of one acquaintance who says that the only time she isn’t working on something for her fledgling travel company is when she’s in the ladies’ room. Considering that 90% of today’s start-ups are doomed to fail, her claim isn’t that much of a stretch.

Thus, the decision to outsource certain tasks or not can often be a make-or-break one for many start-ups. On the one hand, delegating to a third-party service provider can free up your resources and allow you to focus on income-generating activities better. On the other hand, going about outsourcing the wrong way could both deplete your company’s coffers and derail its progress as well.

So, what factors should you look at before taking the leap?

1. Which departments you can actually outsource.


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Think about the business processes that are crucial, but don’t really require yours or your team’s unique skills and talents. In other words, go for the tasks that entail a lot of time and effort but yield very little results in terms of sales or brand recognition.

Accounting, for instance, is a common area where outsourcing firms especially shine. Virtual receptionists and certain aspects of customer service can also be delegated to third parties that specialize in them so you can free up more of your schedule and head space.

Unless a certain department or area happens to be your core product or service, you can pretty much consider outsourcing its functions.

2. Whether your needs would be best served by individual services or by a package of such.

Lots of outsourcing companies offer various packages crafted to meet the common needs of their target markets. Some customer services firms, for instance, might offer transcription services and call recordings as add-ons to their primary offerings.

Take time to think about what you really need. All those bells and whistles might sound impressive, but if they don’t really contribute to your company’s purpose or productivity, they could just end up becoming a money drain.

It would also to be advisable to canvas for prices too, and to see if your needs are best served by individual services from multiple vendors or by a sole provider.

3. Cost-benefit analysis.


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Compare the costs of having your own in-house team versus hiring someone on the outside. This is especially crucial when your start-up is about to scale up its operations due to customer demand.

Should you find yourself receiving a huge volume of calls and inquiries every day, outsourcing might be a speedier and more cost-efficient alternative to creating your own office-based team, which would require lengthy and expensive processes like constructing an office, acquiring hardware and software, training and compensating staff, and maintaining the whole lot.

4. Intellectual property considerations.

Bear in mind that it’s your responsibility to secure your intellectual property against misuse and theft if you opt to outsource some aspects of your product or service’s development.

Draft specific service contracts that limit your provider’s access to your company’s confidential processes, and don’t forget to have the agency or freelancer you’ve opted to hire sign a non-disclosure agreement. Seek professional legal advice as well, if only to make sure that you’re covering all your bases.

5. Technology standards.


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The rate at which technology is developing these days is so fast that it’ll make your head spin. You need an outsourcing partner who can keep up.

This is especially important if your business relies significantly on web or app development. Mobile usage has been consistently beating out desktop use in the previous years, so if you’ve outsourced the maintenance and development of your company website, your provider should be adept at creating a mobile-friendly version, for example.

The ability to incorporate up-to-date technology into the development of any app or virtual product is critical. Otherwise, your product and your brand will end up looking dated.

6. Good fit.

It should go without saying that you and the outsourcing firm you choose to work with should be in sync.

Would you prefer a more personalized, hands-on approach where someone from their end gets in touch with you periodically? Or are you more comfortable with purely digital communication and only when absolutely necessary? Will you be opting for their services on retainer? Or are your needs best-suited to a “pay-as-you-go” method of compensation?

Ideally, you should iron out these concerns at the very beginning so that both parties enter into the arrangement on the same page.

As a final note, consider a word of caution. There are some start-ups that outsource almost all their tasks to more experienced purveyors, and that’s okay.

What you should never do is to let strangers handle the very processes or software that make your product or service different, your “secret sauce” as it were. Not confident in your technical skills? Hire an in-house developer if you must, but never ever let your trade secrets fall into the hands of someone outside the company.

The point of outsourcing, after all, is to let you focus your efforts on the things that you and/or your company do best, and that should be no one else’s job but yours.

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