How Outsourcing Can Help You Build a Better Startup : The revenue of the global outsourcing services industry continues to increase year on year from US$45.6 billion in 2000 to 99.1 billion in 2012. – Statista.com
When two college friends founded Macphun in 2008 and went on to release their very popular first Cartoonatic app – they could never have anticipated the success (and workflow improvements) they would face. Founder Paul Muzok Macphun, is responsible for creating a software development company that specializes in providing user-friendly SaaS software to photographers of all skill levels, worldwide.
After rave reviews on their debut app, they have continued to produce photo editing apps that consistently top the App Store charts.
While their app received great acclaim and they grew to over 22 million customers worldwide, they are still trying to streamline some of their critical business processes as much as they can. Kevin, VP of Macphun told us he is considering outsourcing so they can support their customers professionally and free up internal employees who previously worked with customer support to help Macphun grow and be more productive.
“We do respond to customer inquiries via email and phone, but again we need a workforce within the company that we can use in other ways.” -Kevin La Rue, Macphun.
Now this is just one small niche of outsourcing, but each sub-category all serves the same purpose, which brings us to the heart of this guide.
HOW CAN OUTSOURCING HELP YOU GROW? (and what you need to know)
So if you’ve come this far and still don’t know what outsourcing really is… here’s a quick, direct definition from Merrill Matthews from Forbes.
Outsourcing is when a company contracts with an outside person or company to provide some product or service, such as bookkeeping, payroll processing, or cleaning services, or a more complex function such as marketing or IT services. And families do the same when they turn to professionals for major plumbing, air conditioning or car repairs.
While outsourcing is usually seen as a maintenance strategy for some big companies like GE, Microsoft, Intel, Oracle – it has recently been popularized as a growth strategy for many low-level startups that need to prioritize more important areas. Startups like Skype, Slack, Uber, AirBNB, etc., are known for their use of outsourcing processes from coding and development to marketing and customer support.
Nancy Mann Jackson of Entrepreneur supports this by saying, “Entrepreneurs have long viewed outsourcing as a reserved strategy for large businesses, but technology has made it a more accessible tool for small businesses and for some small companies, outsourcing has made a strong impact. business.” their growth, productivity and profitability.”
As stated above, high-quality outsourcing is becoming increasingly popular among small businesses, due to increased accessibility to technology that makes outsourcing smoother and more efficient. BUT, aside from that, outsourcing is exploding because, there are a large number of quality professionals who have chosen to leave the corporate world in favor of working in less stressful environments like their small startup home or office.
These professionals include: virtual assistants, marketing directors, copywriters, graphic designers, website/software developers, etc., all of whom have the ability to work from anywhere in the world.
Now you may have some questions that you need to answer before even considering outsourcing such as…
What to outsource?
When to outsource?
Where to outsource?
Worried about outsourcing?
Cost vs. benefits of outsourcing?
Now that you’ve asked all these questions, it’s time to make this guide as complete as possible just by going through the list.
Which Business Process Should I Switch? It sounds like you’ve outsourced some of your business duties like payroll administration or background and criminal checks for jobs. And with the points mentioned above, it’s easier than ever to outsource almost any task you deem necessary. BUT this doesn’t mean that you should outsource just because it’s easy for you. Many processes are better done on your own, depending on your priorities…
For example, if your priority is to generate large amounts of revenue with specialized sales techniques that only your in-house team has perfected. it may not be the best idea to leave the task to an offshore contractor. On the other end of the spectrum if your priority is customer support, then it might be okay to outsource something like graphic design.
The following is a short list of tasks that an outsourcing contractor should best complete:
Tasks that require highly skilled expertise. Say you are the CEO of a SaaS startup and don’t have a set of executives set up, e.g. CFO, COO, CIO, etc. Outsourcing some of these positions (at least temporarily) can help get your startup started. So in the end you’ll have a highly skilled task outsourced for a lot less than it costs to have a full time employee do it.
Repetitive tasks. This can be anywhere from an outbound sales call to spreading the word about your product or conducting a customer satisfaction survey to a very common troubleshooting problem. Let’s face it, assigning this repetitive task to your highly qualified internal team to worry about can be a waste of your company’s time and resources.
Also included in this list: Filtering Emails / Managing Spam, Responding to Customer Service Emails / Tickets / Chat Support, Newsletter Delivery and Management, Data Entry in Word, or Google Docs, PDF Conversion, Splitting and Merging, Preparation of Training Materials, Social Media Management , and many others. Basically almost any monotonous task you can think of can be outsourced by freelancers/virtual assistants/call centers.
Tasks that require unique talents or knowledge.
You may have a great idea for an app and some capital to fund its development, but no coding/development/design knowledge. This is where you may need to consider outsourcing your application development. You can leave your ideas to experienced developers on the other side of the world and let them take care of the rest (with your supervision of course).
Another example is if you don’t have the resources to hire full-time IT support personnel to manage your IT system, you can easily hire IT experts from freelancer sites like Elance-Odesk or Guru.
In short… you can easily and effectively outsource almost any non-priority business process in your company, which doesn’t require the full attention of your internal team, or whatever task you are performing. again uncomfortable doing it yourself.
When Should I Take the First Step? For the folks at Macphun, they ultimately made the decision to outsource when managing the backlog of support tickets became too much for their relatively small staff to handle. But it’s different for everyone.
The time to decide on outsourcing may come very early for someone whose product development depends on it. OR maybe come at a later time for a company that just needs a little support.
To Chris Devor of Macroplant Inc. the decision to outsource came about 1 year to start his company:
After about 1 year in business, I needed help with our support email. It’s a matter of timing and a matter of being able to respond quickly and effectively to my users. First I had another developer doing support emails. But considering the cost of developer salaries, it doesn’t make sense for them to answer support emails all day long. So next I hired a freelancer or two to help with support emails.
Where Should I Outsource? In the world of technology and IT outsourcing services, the most famous countries for outsourcing are India, the Philippines, Central America, and Eastern Europe with a workforce of nearly 1.5 billion (Statistic Brain). Due to the poor economy in third world countries, many companies choose this region simply because of the cost savings.
With this, you should not enter the recruitment process with a specific country in mind, but with an individual’s unique talents/skills in mind. Remember you are ultimately focused on quality and not just price. You can review thousands of freelancers on sites like Elance.com or Guru.com to choose which one best fits your needs.
Why does your Silicon Valley CEO typically hire software developers for 100k+ a year, when he can hire equally qualified offshore workers for less than $15 an hour?
This question may raise some ethical issues which I’ll discuss below, but it’s important to remember that your CEO’s typical job is to do what’s in the best interest of the company. And more often than not, saving money and time by outsourcing… is usually in a CEO’s best interest.
Concerns With Outsourcing
There are a few different concerns you need to consider before thinking about outsourcing. Concerns like safety, quality, management, poor working environment, transparency, etc.
Here’s what to consider when choosing the right contractor…
Do they take data privacy and confidentiality measures to ensure the security of your customers’ personal information?
Will they be available to communicate whenever you have a question or problem?
Are they protecting your best interests by taking legal action?
How they handle their team management. Can you regularly review the performance of your outsourced employees?
Are they doing work that your internal team really can’t do effectively?
Can you see/visit their office and evaluate the working conditions?
Do they have reputable clients that they already provide services to?
If they don’t follow one or any of these simple business steps… that’s a big red flag.
Other big concerns with outsourcing are language barriers and cultural differences. However, by following a rigorous training and recruitment process this can be easily overcome.
Lastly, clearly communicate your expectations and even write a contract before hiring an outsourced member to ensure there is no confusion anywhere.
“When there are problems [with work], I am often blamed, because my instructions may not be clear enough,” says Jeremy Belcher, owner of FoxyMelody.com
Risk Vs. Outsourcing Gifts
Outsourcing is widely recognized as one of the best solutions to cut costs and a lot of research has been done to verify this fact. Booz Allen Hamilton, a leading technology and management consultant, issued a report in 2014 describing “mixed reports on traditional outsourcing”. However, he says: “Savings typically occur because outsourced suppliers can access a cheaper, more flexible workforce and the latest and most efficient technologies. Organizations claim they achieve, on average, 15% cost reductions through outsourcing.”
But effective outsourcing saves the company money – still has the potential to damage the company’s reputation. There is a huge stigma against outsourcing. The word “outsourcing” reminds different things to different people.
If you live in a community that has an outsourcing company and they hire your friends and neighbors, outsourcing is great. But if your friends and neighbors lose their jobs because they are sent around the world, outsourcing will bring bad publicity. If you outsource part of your operations, morale can drop across the workforce.
However… if done right and professionally, outsourcing can be one of your company’s greatest assets and benefits from the large amount of work being removed from your plate, often masking the negatives.
Now that we’ve put all worries aside, it’s time to face the harsh reality… outsourcing remains one of the best methods to maintain or grow your company.
If you have a definite plan in place, today’s technology and resources allow any business owner to employ completely outsourced staff that is just as effective as an in-house team.
When you outsource, you give yourself and your company the freedom to focus on core business areas while saving a lot of money.