Outsourcing for startups: what you should know

Both independent and government statistics show that the gig economy is taking off rapidly for many reasons. This is good news for entrepreneurs who seek to save money to bootstrap their startups.

Founders of startups are faced with many challenges as they forge ahead. Focusing on core business operations and keeping abreast with the competition take time, effort and money. The stress of expansion takes determination that can mostly only be put in by the owner. However, time and money are both usually in short supply at the beginning and need to be allocated wisely so that the work can get done correctly and effectively.

Outsourcing to external organizations or freelancers saves the startup owner from having to hire an in-house employee. The main benefit for the owner is that he can share out the workload at a lower cost and free time for core business operations.  So let’s take a closer look now at what you should know about outsourcing for startups:

How does outsourcing work?

Instead of employing in-house personnel to perform certain tasks, the startup owner outsources the workload at a lower cost. The outsourcing company gets paid for the work completed and nothing extra. On the other hand, an in-house employee must be paid full time with benefits.

Since most businesses that fail do so because they run out of money, watching the budget is paramount. Companies outsource because of the huge savings that it offers an it increases productivity levels. 

How does outsourcing increase productivity levels?

Taking time out of a busy schedule to advertise a position, interview the potential candidates, train the new employee, allow them the time to adjust to the company and its culture can all take time.  This leads to a drop in productivity levels, especially for the startup owner who usually has to oversee the whole procedure.

Outsourcing companies are easy to find online and from the moment that they have been hired they have trained personnel in every area to start working on the task needed immediately.

How can a company outsource?

When deciding on outsourcing, startups should consider their options. The two most popular are to either recruit a remote team from an outsourcing company that has highly trained personnel that are ready to undertake a number of tasks, or hire someone from a freelancer’s platform.

Outsourcing platforms can be based in another country. They offer highly-trained personnel that are free to work according to the working hours of the country of the startup.  

What are the most important tasks that startups should outsource?

Depending on the startup and its goals, the tasks that need to be outsourced may vary. Careful analysis of which areas of the startup are strong or weak, which employees are putting in the most work, and which departments need to be strengthened can indicate which areas could do with outsourcing help. It is not recommended that a startup outsources all its work because this can limit the control that the owner has.

The most outsourced tasks are usually administrative duties, IT services and payroll, but companies also outsource their marketing and other departments.

Administrative duties

This is the most popular department that startups outsource because of the ease with which these tasks can be tackled from afar by well-trained personnel. These are the day-to-day tasks that are essential to ensuring an office runs smoothly. They include taking of notes, email answering, and scheduling things like meetings and employee work hours.

IT services

IT teams can help keep a company up-to-date with all the latest developments for innovative approaches on the technological side. Software development is a particularly popular area for outsourcing.

Payroll

Incorrect payroll can come with hefty fines for businesses and startups don’t need an unavoidable expense to their new business. Outsourcing payroll ensures accuracy and protection.

What are the benefits of outsourcing?

The survival of startups depends on cost savings and outsourcing some activities within the business is one of the most effective ways to do this.

Cost savings

The overhead costs that a startup can save by outsourcing are approximately 60%. However: as a startup, just because you see cheap services offered on outsourcing websites, don’t forget: in startup mode, you have to allocate a healthy budget, especially on things like Marketing and Web services – because these things are what will fuel your growth.

Boosts productivity

In-house employees that are inadequately trained or have gaps in their knowledge can set the business back. The money spent on outsourcing allows the owner to focus on crucial issues helping to boost productivity.  

Communication

Outsourced assistants keep up with all the communication through the working day making sure that communications to clientele, employees, and potential investors and business partners are not ignored or left until too late in the day.

Competitive edge

Every startup wants to develop a competitive edge and outsourcing some areas helps them achieve this faster.

Bottom line

Startup owners can succeed if they utilize cost-effective outsourcing to prevent errors and build a functional business that can reach consumers in even the most competitive markets.