How outsourcing boosts start-up growth

There’s a certain romance to the term ‘start-up’. Images of young entrepreneurs spring to mind, fresh-faced dynamos who have decided to roll the dice on an idea that no one else has had. They’re investing their own funds, working their own hours and maybe, just maybe, they are going to be laughing all the way to the bank when their vision for success becomes a reality.

M_BlogT_How outsourcing boosts startup growth

However, while it might sound cool to own a start-up, the truth is everyone who does so dreams of the day their venture finally reaches the next phase of its evolution and becomes a scale-up. The likes of entrepreneurial support network Endeavor have clear guidelines for what constitutes a scale-up (e.g. a company growing at 20% per annum over the past three years) but a simpler definition is a start-up is a business that has entered a distinct phase of growth. As a company, it has identified a scalable business model, enjoyed some success and is ready to take it to the next level.

Respected business magazine Forbes says the average length of the start-up phase is about three years but it all comes down to how quickly a business grows. Some start-ups still retain that title five years after their launch, while others grow so quickly that they achieve scale-up status within a year. The key factor is when that distinctive growth period occurs and the secret to any future success is having the right level of support when it does.

The very nature of start-ups means far too many entrepreneurs end up trying to do far too much on their own. Turning an idea or passion into a business venture, often with limited funds, can be a slog and it is common for start-up founders to become accustomed to doing what they have always done and refuse to think outside the square when searching for or dealing with growth. Having always enjoyed oversight of every business function, many are also reluctant to give up control of their product or teams when scaling up means their resources are increasingly stretched.

If that sounds familiar for your start-up, it is worth remembering the famous words of business philosopher Peter Drucker, a man who knew a thing or two about modern management: “Do what you do best and outsource the rest.”

What is outsourcing?

Outsourcing is the process of hiring an offshore team or team member to complete tasks that would otherwise have been done in-house. Rather than trying to do everything, many start-ups realize they are better off dedicating their funds and resources to their core business and outsourcing functions such as customer service, sales or human resources to third-party experts. It is a particularly smart strategy for start-ups entering a growth phase as it allows them to better allocate three of their most important resources at a crucial stage of their evolution – time, money and talent.

Why should start-ups outsource?

The theory that outsourcing is a tool solely for sizable, well-established organizations has been proven to be a myth. Research has shown that organizations of all types and sizes are benefiting from such partnerships, with one survey revealing 37% of small businesses outsourced at least one important business process and more than half were planning to during the next year. For ambitious start-ups looking to grow and scale, outsourcing can be a one-way ticket to success for many reasons.

  • Lower costs: money talks and never more so than when pursuing a growth strategy in the start-up world. Expanding a start-up requires financial capital and the ability of outsourcing to drastically reduce operating costs simply cannot be overstated. Offshore providers in outsourcing hotspots such as the Philippines can deliver 70% reductions on labor and operating costs, with such savings able to be invested in areas that directly impact growth. Senior business leaders regularly cite cost savings as a key reason for outsourcing and start-up founders would be naive to ignore such benefits.
  • Established infrastructure: accessing human talent is just one piece of the outsourcing pie. By partnering with a quality offshore provider, start-ups avoid the hassle and expense of physically providing teams with the equipment, tools and systems needed to perform their roles. This is particularly welcome during growth stages when every dollar counts and there may be uncertainty about how long the support infrastructure will be needed.
  • Lower staff churn: one of the great misconceptions of outsourcing is its impact on staff consistency. In the Philippines alone, the modern offshore environment is being driven by an ambitious and enthusiastic pool of talent who relish the chance to work for Western companies, especially the likes of similarly ambitious start-ups. While some entrepreneurs tire of receiving resignation letters from in-house staff tired of the fast-paced start-up world, savvier organizations are enjoying the consistency that comes from hiring offshore recruits who are in for the long haul.
  • Growth partners: start-up founders are renowned for doing it their way but the growth phase is a period when it is not only advisable but essential to bring in a different set of eyes. Established outsourcing providers and their teams boast a level of expertise and knowledge in their specific business areas that can help entrepreneurs identify hurdles and opportunities that they may otherwise have missed. Similarly, experienced offshore operators are a great resource for start-ups needing guidance on just how much work their in-house teams are capable of managing in a high-growth environment.
  • 24/7 support: customer support should be a priority of a fledgling business but what happens when more customers need support? Start-ups that seek rapid growth without considering the impact on their contact centers or customer service platforms run the risk of alienating both new and existing clients and potentially cruelling their expansion ambitions. With 24/7 support a necessity in the modern world, outsourcing providers can deliver shorter hold times, instant online chat and around-the-clock management of social media and DM queries by allowing start-ups to tap into different time zones and more cost-effective staffing structures.

What do start-ups outsource?

The outsourcing industry has reached a stage of its own evolution where a better question may be ‘what don’t start-ups outsource’. Be it providing support for a business’s unique offering or assuming sole responsibility for non-core tasks, there are many and varied tasks that can be managed by an offshore provider. Here are a few that can help start-ups achieve the growth they are seeking.

  • HR and payroll: the more a start-up grows, the more it needs to invest in the resources required to manage its growing workforce. The likes of hiring, onboarding, training and payroll can put a severe dent in a company’s budget, with entrepreneurs often surprised by the HR machine needed when their once-small ventures become bigger operations. Fortunately, outsourcing HR for start-ups allows them to tap into solutions and teams that are cost-effective and highly efficient.
  • Accounting: if there is one thing a start-up needs to be across during a growth phase, it is finance and accounting. More money means more potential headaches and that is especially so for start-ups that have traditionally dedicated few resources to the area. Outsourcing accounting and financial services to offshore providers is a cost-effective tool for accessing highly qualified personnel, with the Philippines alone home to thousands of graduates who operate in a fiscal and financial system almost identical to Western nations.
  • Sales: at the end of the day, start-up growth requires one key ingredient – increased sales – and while that task commonly falls to in-house staff, never underestimate the power of a strong offshore team supporting them. From preparing reports and organizing correspondence to managing databases and CRMs, sales support specialists play a key role by handling time-consuming and repetitive tasks and allowing business development managers and sales experts to do what they do best – sell. The best offshore providers are also supported by CRMs such as Hubspot and Salesforce that ensure in-house teams can easily access any information they need to deliver more sales and, ultimately, more growth.
  • Digital marketing: an adhoc approach to marketing can only take a start-up so far. While word of mouth and an occasional social media post may initially attract a few customers, start-ups seeking growth need to think more strategically. Digital marketing is a modern-day science that requires a laser-like focus to ensure the SEO rankings and extensive reach needed to stand out from one’s competitors. It also requires time, expertise and resources, which is why many start-ups choose to partner with outsourcing providers that specialize in digital marketing at highly cost-effective rates.

Take your start-up to the next level

A lot of articles get written about how many start-ups fail in their first couple of years. Business is not for the faint-hearted and many budding entrepreneurs’ dreams do not come true. That said, there are plenty of visionaries who have done the hard yards and now find themselves on the cusp of saying goodbye to being a start-up and hello to life as a scale-up. Entering a growth phase is an exciting time for any start-up and outsourcing certain tasks and processes is a proven strategy for making that transition as seamless as possible.

Given almost 60% of Americans are likely to switch companies because of poor customer service, it is little wonder successful start-ups are investing in the development of sustainable consumer care functions. Discover why that decision is inspiring many of them to partner with outsourcing providers and how you can establish your own offshore customer service team from scratch.

    MicroSourcing Offshoring eCourse

    Want to ensure startup success?

    Get tailored resources and insight delivered straight into your inbox.