People have different opinions about startups taking the outsourcing path. For some, outsourcing is not a good tactic for startups, while for others, it is the most cost-effective way to hack their startup’s growth. Whether you subscribe to the former or latter point of view, there is no denying that outsourcing is a step that some startups have taken and benefited from today.
Sadly, some entrepreneurs still have misconceptions about outsourcing, which often lead them to not wanting to explore it further. But the saying, “what you don’t know won’t hurt you” cannot be applied in business. Unpleasant results await those who have limited knowledge of the growth tools available to them. If you are a startup owner who wants to get a clearer understanding about outsourcing, here’s help. These are a few things some startups still don’t know about outsourcing:
1. There is a right way and wrong way of outsourcing. Startups must realize that as with any business strategy, outsourcing will only work if it is conducted and managed properly. For starters, the right way to outsource begins with an understanding of your company’s core competencies, which must be handled internally, and those tasks which are not. These tasks are the functions that must be outsourced to the professionals. Marty Zwilling, a veteran start-up mentor, notes that there are entrepreneurs who, in the interest of cost-cutting, outsources everything. This is a big mistake that can put your startup’s future at risk.
2. Outsourcing means work. In some ways, outsourcing can be more challenging than hiring a full-time staff. Instead of taking a few steps from your desk to check how your new hire is doing, you would have to resort to other means of supervision when you outsource, especially to offshore locations. For outsourcing to work, you must make sure your team of contractors are doing their job according to your agreement. This does not mean micromanaging, but rather, reviewing periodic progress reports from your outsourced team, or having an internal staff to monitor them. If you outsource to locations with a different time zone, language and culture than yours, you must also adjust and adapt to theirs.
3. Outsourcing means relationship management. If you want your outsourced team to perform according to your quality standards, or higher than that, you need to make sure they are happy working with you. Zwilling advises against using outsourcing as an inexpensive solution for startup staff issues, noting that the cost-effectiveness of your virtual team is dependent on their motivation to work alongside you. It also won’t help your startup if you treat them as temporary staff.
4. Outsourcing is not there to handle and solve the “difficult” aspects of your startup’s operations. According to Zwilling, entrepreneurs must have either a management level understanding of all the aspects of their business or a partner who does. Clifford F. Lynch, author of Logistics Outsourcing: A Management Guide, observed that many companies outsource their problems, the stuff they do not understand, and expect the third-party vendors to provide the solution. Lynch notes that an outsourcing relationship such as this is doomed to fail. Outsourcing is there to assist your team, not whip up a magic solution to your problems which you yourself don’t understand.
Startups interested in outsourcing must do their research properly before committing to this tactic, in order to fully experience its benefits. Outsourcing can work if you do it the right way and understand what it entails.