Outsourcing for startups has become an effective approach especially for those aiming to focus on core businesses and their primary tasks, all while preserving flexibility and cost efficiency. While external hiring was once seen as a privilege only big companies could afford, startups today understand the positive aspects of tapping into external proficiency for vital business operations.
Young ventures need to launch quickly and effectively, often with limited internal resources. That's why many businesses choose to outsource some aspects of their operations to other companies. As reported by Forbes, many notable companies, including Slack, Skype, Opera, and Basecamp, relied on outsourcing as a gateway to success when they were startups.
External hiring helps startups gain traction without bearing the cost of hiring and training professionals or investing in additional tools and infrastructure. Let's take a look at some essential advantages that your startup can get with outsourcing.
Benefits of Outsourcing for Startups
Why do businesses choose to outsource? According to a Clutch survey of startups and small businesses, 24% cited better efficiency as their primary reason to outsource. Other motivations included tapping into external expertise (18%), gaining flexibility (16%), and freeing up staff for different tasks (15%). Here are some key advantages of outsourcing for startups:
Time and Budget Efficiency
Outsourcing allows startups to save time and money which is one of the best advantages. It can considerably cut down the overheads connected with hiring in-house staff like office space, benefits for employees, and equipment, including the benefits of bulk order discounts due to larger volume. Service providers often offer competitive rates to startups mindful of their budgets. Moreover, outsourcing for startups sidesteps the need for training and managing employees, allowing founders and teams to concentrate on product development and business expansion.
Cutting Down Risks
By outsourcing, startups can try new concepts without heavily investing in people or tools. If it happens that the idea doesn't gain traction or proves less viable, you can seamlessly end the service agreement and shift gears to explore other opportunities.
Well-organized outsourcing with reliable partners can enhance both efficiency and output for startups. It lets you concentrate on the things you do best, delegating non-core tasks to dedicated specialists. This means accomplishing more in a shorter timeframe and using fewer resources.
Adaptable Growth and Reach
Startup outsourcing offers the adaptability to expand or reduce according to demand. For startups, fluctuating between swift expansion and quieter intervals is common. Relying solely on in-house teams can make swift adjustments challenging. However, with outsourcing, adjusting to shifting demands becomes hassle-free. For example, during peak seasons you have the opportunity to ramp up your team swiftly to meet the heightened demand.
Tapping into Expertise
Partnership with BPO connects you with skilled professionals ready to help with various tasks. It allows you to quickly get a team of expert CS agents, developers, designers, and marketers all in one go. This is especially valuable for new startups that might not have the in-depth knowledge or resources in-house.
Hiring external expertise can boost quality as well. Service providers, being experts with superior tools and resources, often outperform in-house teams. This not only enhances your product and service quality but can also cut costs.
Key Functions that Startups Should Outsource
Before you start outsourcing, identify your goals. This will guide which tasks to outsource and to whom. Want to save money? Probably, it’s better to hire out your marketing or social media. Want to grow? It might be best to keep those functions in-house. Outsourcing for startups in the following six key areas can help new businesses get rolling without expensive personnel or overhead investments.
1. AI Operations
According to a Gartner survey, 54% of respondents consider artificial intelligence (AI) skill shortage as the biggest challenge facing their business. This means your startup may have trouble finding in-house talent with the necessary AI skills and experience.
If your startup uses AI, you will need to have an extensive training set of data to ensure your machine learning models are effective. That means you'll need a significant amount of human data labeling, a process of identifying and providing context for raw data, such as images, video, text files, and other sources. Most emerging businesses can't support a significant data labeling effort at scale, so outsourcing this critical task is an ideal solution for startups.
2. Digital CX
The on-demand digital economy has created a new kind of customer who expects quick responses and dynamic interactions from companies around the clock and across every touchpoint. However, not every startup has the resources to manage all customer interactions in-house.
Outsourcing digital customer experience (CX) drives brand loyalty by empowering your business to offer 24/7 support via call center, answering service, IT, chat, technical, and email support.
3. Content Control
With online content growing exponentially, your startup needs an optimized but secure environment for your customers and business.
A BPO partner can help you with content control, including content moderation, online fraud prevention, abuse detection, and profile impersonation. As a result, you can enjoy improved safeguards and enhanced customer trust.
No matter how digitalized your startup becomes, there will always be humans in the loop – be it your technology, communication, or services.
An outsourcing partner can help support and perform any kind of task that needs a human touch. This allows you to create a broader spectrum of support and intervention depending on your exact use or experience requirements.
Today many new businesses understand how outsourcing for startups can help to get measurable results and acquire human insights across customer service, marketing, finance and accounting, software development, eCommerce, natural language processing, and more. By outsourcing your microtasks to a partner, you can also get the capability to scale no matter the size or volume of the project.
By the way, when outsourcing software development for startups, small businesses, or a large company, secure an NDA to safeguard your source code and confidential data. Also, incorporate contract clauses detailing the post-project handling of your intellectual property.
6. Back Office Support
You can also outsource back-office support services such as finance and accounting, data entry, human resources and payroll. Your outsourcing partner can efficiently handle accounts and compile yearly budgets, carry out audits, and offer critical financial insights that help your startup grow.
Outsourcing your data entry tasks gives you peace of mind knowing that your data is being entered accurately and quickly. Likewise, outsourcing your HR operations can help you optimize your hiring, training, and payroll processes. By doing so, you can focus on retaining and nurturing a number of key employees essential to your business's core functions
Choosing the Right Outsourcing Partner for Startups
When companies first begin outsourcing tasks, they often make typical mistakes, especially if they haven't had such experience before. This is a common scenario for startups and emerging small businesses, so it's crucial to be aware of these pitfalls beforehand. There are some of these widespread missteps.
Choosing the Lowest-Priced Partner
Going for the lowest-priced vendor can be tempting but risky. It's better to find a balance between cost and quality. Simply picking the cheapest option without researching the company can lead to problems. Look at their past work and customer feedback. While saving money is good, too low a price can end up costing you more down the line.
Ignoring Customer Feedback
Unfortunately, businesses sometimes deal with poor-quality services, overcharges, or even deceptive practices. There are even such cases where the vendor vanishes after receiving payment, leaving no way to contact them. To prevent the following unpleasant issues, always check past customer testimonials from both clients and employees of their BPO and take note of their experiences. The most reliable platforms for going through real feedback are Glassdoor, Clutch, Goodfirm, Comparably, etc. This shows what you might face.
Overlooking Poor Communication and Feedback Gathering
Consistent miscommunications, unanswered calls, and a reluctance to make changes are serious warning signs. If you notice these, consider switching vendors. All these communication and feedback details should be stated in the agreement, ensuring that at the end of each week or month, you'll have a meeting or call to discuss results, identify gaps, consider potential improvements, and review KPIs for the outsourced staff. If things aren't progressing as expected and your vendor avoids communication or seems unwilling to share details, it's better to say "goodbye" and select the right outsourcing partner with solid experience.
Choosing Between a Fixed Price Package and Time-and-Materials
There are two primary pricing models to consider — fixed price and time-and-materials. Based on our observations, the fixed price option often comes with many questions.
Under a fixed-price model, a single rate is assigned to a project, regardless of its duration or costs. This can lead the provider to cut corners to manage costs, potentially compromising the quality of work. On the other hand, the time-and-materials model charges clients based on the hours dedicated to the project and any related expenses. This method tends to be more adaptable and trustworthy for all involved.
Getting Your Startup Off the Ground
Startups have to ramp quickly without compromising on quality caring about customer satisfaction as well. By outsourcing their functions to a reliable partner like Helpware, emerging companies gain a full suite of front and back-office solutions that can be customized to their expansion goals.
At Helpware, we understand the unique challenges of outsourcing for startups. Helpware's startup acceleration services provide people, automation, and security in line with your unique requirements. We design, integrate, manage, and innovate to grow your business and develop market-leading customer experiences. Get in touch today to discuss your business process outsourcing needs.