Start-up is a terminology that is highly romanticized at present. When we hear start-ups, we paint a mental picture of entrepreneurs who gave life to an innovative idea that nobody else dared to take risks with. And while it sounds cool to work on a vision and bring it to fruition, the next stage of a start-up is eventually scaling up. It is during this transition that outsourcing can prove beneficial for entrepreneurs.

When do Start-ups Scale-Up?

Different entities identify the transition of start-ups into scale-ups in different ways. An article by Forbes points out comprehensive indicators of scale-ups like clearly established product-market fit, repeatable sales model, advanced funding stage, distinct leadership roles, more structures and processes, and more risk aversion. Another article by Forbes says that three years is the average length of the start-up phase but this period largely depends on how quickly a business grows.

When Does the Role of Outsourcing Come In?

A distinct characteristic of start-ups is the role of entrepreneurs. Whether they like having their hands on all aspects of their business or they lack human resources, entrepreneurs have a knack for doing (almost) everything on their own. So, when businesses are evolving and growing out of the start-up phase, entrepreneurs struggle with delegating leadership or giving up control of business functions to others. They are so very accustomed to taking responsibility that even if they do change the way of handling their business, the change becomes disorganized and unstable.

It is at this point that entrepreneurs should remember the prominent words of the legendary business consultant Peter Druker, “Do what you do best and outsource the rest.”

Reasons Why Start-ups Should Outsource

Running a business is not cheap, let alone start-up. And when it comes to scaling up that start-up, it can be even more demanding. Since outsourcing is an alternative to not only well-established businesses, it is reason enough for entrepreneurs to consider outsourcing as a resort for the next step in their business growth. 

According to Clutch, 37% of small businesses outsourced a business process in 2019, and 52% planned to outsource. Similarly, the 2020 Global Managed Services Report by NTT suggests that businesses expect to outsource more than 45% of their IT in 18 months. We can take a guess how this number must have increased during and after the Covid pandemic since businesses struggled to sustain themselves in the US economy and many of them embraced outsourcing along with remote work.

1. Lowering business costs:

Hiring more people or top-tier talent to scale up is expensive. For a software developer, a company has to compensate between $50,000 to $150,000 annual salary, plus benefits. For a start-up, that’s a lot of money. Other costs associated with hiring can be in providing training, providing work equipment, workspace, software licenses, and other overhead costs. 

Outsourcing can help reduce costs associated with these functions dramatically. Additionally, the saved cost can be utilized in other areas while scaling up. Outsourcing is like hitting two birds with one stone.

2. Expertise in specific skills and flexibility

Many outsourcing agencies specialize in providing employees with specific skills. For example product development, HR and payroll, admin or operations, customer support, and so on. These agencies are able to evaluate the unique needs of any business and startups can take advantage of it. 

Instead of having an in-house team for each of these business functions, if startups focus on more important areas like market acquisition, customer engagement, networking, partnerships, etc., their scale-up process is going to be much more effective. Outsourcing enables this kind of flexibility and allows entrepreneurs to utilize their resources optimally. 

3. Advantages of quality work

This point aligns with the previous one. As outsourcing agencies provide employees with specific skills for business needs, the quality of their work is phenomenal. The agencies are well-aware of the fact that the only way they can sustain their business is by providing quality work. Quality is their core business value. Hence, they either hire employees who can provide quality results or train them to be able to do so. 

4. Reduce employee turnover 

The modern economy is very fast-paced. Employees change jobs as soon as they encounter small inconveniences, or if they want change or different things from the workplace. As such, high employee turnover can plague any startup. If they have to hire employees for the same position multiple times, the time and resources that need to be invested for it will sum up to a hefty amount. With outsourcing, this headache can be avoided or reduced easily. 

The outsourcing market is driven by an enthusiastic and ambitious pool of talent who appreciate the opportunity to work with western companies. So, they would rather stick with the same western company and learn and grow through the agency. Startups can, therefore, reduce employee turnover as outsourcing ensures more consistency.   

The GoCode Way

At GoCode Solutions, we help startups and businesses connect with all types of talents for their business needs. We have a reliable network of talent pools to hire from where we can find the best candidates with the necessary qualifications. Our core values are to work smart, act with integrity, continuous improvement, and work to make a difference. Every partner company is of equal importance to us and we confidently assure the accomplishment of all the benefits discussed above.