For a startup to get through the teething stage and gain recognization, it must have its own unique system. It must consider as all-important such activities as hiring, training and the outsourcing of development, plus such elements as brand, structure and values.
Along the way, outsourcing is a common practice many startups use to complete these tasks. In fact, I know startup entrepreneurs who outsource virtually every task.
There’s good reason for that: Outsourcing can lead to high levels of productivity at relatively reduced costs. A study by Intetics revealed that outsourcing can save companies 60 percent on overhead costs.
What you outsource depends on the nature of your business and your goals, of course. But you’ve got to approach outsourcing the right way or risk losing money and even putting your business at risk.
For example, you may want to outsource the development of your mobile app, because you don’t have the technical expertise required. Better yet, you may want professionals to handle things at a lower cost so you can focus on a a higher revenue-generating task, such as marketing.
The truth is, you can outsource every aspect of your business if you choose, but considering how vital one aspect — development — is to every startup, you should look particularly closely at the following seven things to know about outsourcing it.
1. Choose the right third party to work with.
Creating a brand that you’ll be proud of requires deliberate efforts. One of the daring steps involved here is deciding who handles your development (e.g., app development). Should you hire an agency or freelancers? Most of the startup entrepreneurs I’ve interacted and worked with prefer working with agencies.
However, if you’re tight on budget (most startups are), seriously consider going to a place like Meetup.com to find a technical co-founder.
Remember that whether you’re going to hire an agency or individual freelancers, there are both pros and cons to each. Conduct your research first.
2. Consider technology standards.
Technology has redefined web and app development, or any type of development for that matter. For this reason, when outsourcing, consider the technology standards you’re using.
As an example, mobile usage has almost drowned desktop usage, with a 58 percent growth rate year over year. If you’re developing a website for your startup, you can’t possibly hire professionals who don’t understand responsive design.
More so, if you plan to generate traffic, leads and customers from search engines, Google expects you to make your web and mobile applications mobile-friendly.
Chaim Sajnovsky, founder at B7Dev.com, suggests that, “Being able to feature up-to-date technologies in your development is critical. Otherwise, your project will be outdated.”
3. Include personalized communication.
Don’t outsource development if there’s no guarantee of a personalized communication. Why? Because sooner or later you’ll encounter technical issues after the project has been completed.
To ensure a seamless communication, be aware of the time-zone difference to help you make smart decisions about when to outsource your services, and whom to put in charge.
If you’re based in California, for example, and you’re in the process of hiring an agency/freelancer in Johannesburg, South Africa, do well to understand when to send emails, put a call across or submit a support ticket.
4. Don’t neglect intellectual property considerations.
What rights do you have on your mobile app properties? I’m not an attorney, but from my personal experience, I’ve found that some legal jurisdictions have little or no regard for intellectual property like software.
It may interest you to know of estimates that say approximately 61 percent of software used in most Asian countries and 58 percent in India are pirated. How many of these crimes have resulted in lawsuits? How many of those lawsuits have been litigated?
That said, when outsourcing developments (web, app, software, etc.), it’s your responsibility to secure your intellectual property against misuse and theft. So, create those limitations by drafting contracts and nondisclosure agreements which the freelancer/agency will be required to sign and adhere to.
As always seek professional legal advice if you have any questions.
5. Consider the unique quality of your software or other product.
There are some delicate developments you should never outsource to a third-party. Why? Because if you’re talking about a key competency — a key product or service that makes the company unique — you don’t want other people to hijack your edge.
This is your company’s “secret sauce,” so trade it with extra care. If you truly want to get the project done, consider hiring an in-house developer to handle it.
You may want to outsource operational products such as reservation systems or process automation, but when it comes to creative products like architectural rendering, chip-design programs or consumer games, don’t reveal the secret. Work on these in-house.
6. Get regular updates on your company’s progress.
You’re in control of your business. So don’t be like all those other CEOs and founders out there who relinquish to a third party 100 percent control of their company’s development. That’s not ideal.
Inasmuch as outsourcing development is important, you need to get regular updates to keep abreast of the behind-the-scene processes.
Don’t be interested in just the end result, such as the functional software, either. Rather, get involved in the ongoing development. Provide ideas, answer questions, give suggestions. You’ll learn a lot more from the processes than from the end result.
If you’re ignorant of software malfunction, or even some minute fact about app development, you may make irrelevant decisions.
7. Get what you pay for.
At any phase of your startup, be careful not to think that getting cheaper services is the best way to go. I know that you want to save money, and that’s important: 46 percent of startups that fail do so because they run out of money. Specifically, not seeing projected ROI is the reason why fully 80 percent fail.
However, you need to keep in mind that you always get what you pay for. That’s a fact of life. And I’m not necessarily suggesting that you should make expensive hires.
The bottom line is, choose freelancers/companies that have the experience, modern tools and right skills required to handle your project. At the worst, pay the industry standard fee when outsourcing developments of your software applications.
In a world where you’re required to be creative, productive and tenacious in order to cut through the noise, consider outsourcing as your master key. If you’ve tried it in the past but didn’t get the results that you wanted, don’t give up.
Use the above seven-item checklist. Of course, you don’t have to implement everything at once, but be disciplined enough to resort to these tips every so often. That way, you’ll be assured that your startup is in good hands when you outsource development.
As a decision-maker at a small-to-medium sized business (SMB), perhaps you’ve started to consider taking your company’s marketing in-house. You’re not alone.
An array of large brands are moving their own marketing programs in-house, with major names like United Airlines and Procter & Gamble leading the pack. In fact, 64 percent of advertisers now follow the in-house agency model according to Forrester research;, that’s up from 42 percent just a decade ago.
The trend toward discontinuing agency partnerships is happening for many reasons. Our economy is doing well, and recent slashes to corporate taxes have freed up resources that businesses can use to move their outsourced activities internally. Some decision-makers, moreover, are feeling pressured to offer a crystal-clear expression of their brand across social channels and other outlets. They see in-house marketing as the best way to take back control over consumer perceptions of their brands.
But for an SMB like yours, there’s no need to divorce yourself from your agency networks overnight, if at all.
What you should do, however, is consider an agency’s specialties when you consider that agency as a future partner. How you outsource your services can have a major impact on your marketing department, and on your entire company, for that matter, so before making a move, educate yourself fully on all of your options and their related risks.
When you hire an agency, go with a specialist.
Outsourcing your company’s marketing program doesn’t mean you’re left with no options. Rather, many decision-makers opting whether to go with an agency may even feel overwhelmed by the choices: Work with a full-service agency? Or a specialty agency?
There are two sides to every coin, of course. Full-service agencies support a more streamlined customer experience. However, big-name agencies may glide by on legacy alone and produce generic, less compelling marketing campaigns. What’s more, full-service agencies often don’t go as deeply into specific service categories, such as PPC or SEO. So, what you gain in efficiencies you may sacrifice in performance.
Conversely, you earn greater value and new capabilities when you leave high-priority, or high-knowledge tasks to the experts. Specialization means agencies say “no” to certain opportunities, but more importantly these agencies can better execute on the campaigns they say “yes” to. That’s a major reason why specialization outperforms full-service more often than not.
Here are some other key benefits of working with a specialist agency:
A boost for your campaign performance
First and foremost, specialist agencies get programs up and running faster than their full-service competitors. The learning curve to drive value from your investment is less steep and positions your team to leverage a rich set of features from day one. For example, a provider like RallyMind can offer unique technologies to help SMBs quickly develop landing pages and master lead-generation.
Both of these tasks are key to early campaign performance, but they can feel like big asks for SMBs to tackle alone and without expertise.
An emphasis on data tracking
Another benefit common to specialist agencies is performance-tracking, as niche agencies must prove their value. Not only is this data-driven approach the antidote to generic campaigns popularized by bigger, full-service agencies, but specialized agencies also work with additional specialists to help SMBs “out-measure” the competition.
For example, savvy specialist agencies may bring on martech partners — like the call-tracking software company CallRail — to better understand and boost the cross-channel performance of their marketing spend.
Call-tracking closes the marketing attribution loop and empowers SMBs to track and measure the relationships among billions of offline and online customer engagements. This added intelligence directly contributes to ROI conversations, helps avoid accidental underreporting and aggregates the data required to help your company make informed business decisions.
A future-proofed organization
Job-hopping is the norm for younger professionals today: 57 percent of millennials, according to a Robert Half survey, no longer feel a stigma around career switches. Employee turnover is practically expected at SMBs, but it can cause major problems when you bring too many responsibilities in-house.
So, what do you do when the head of your marketing department (and sole marketing employee) puts in his or her two-week notice? It’s a daunting reality to find a replacement, gather your departing employee’s insights and ensure the continuity of your marketing program in that person’s absence.
Outsourcing to a specialist agency mitigates these issues. An agency guarantees performance regardless of turnover, and it costs less than hiring on your own full-time (pseudo) expert. What’s more, providers like Trainual are designed specifically to alleviate the pressures of setting employees up for success.
Training distribution platforms do much of the heavy lifting around new education and training rollouts. Keeping training external also means that you don’t lose valuable resources and expertise when employees leave, or your company scales. These advantages “future-proof” your organization against the natural ebb and flow of running an SMB.
Moving forward, agencies will even be able to help SMBs automate common, routine tasks and provide stability as workforces change. For example, ThinkChat’s AI-powered solution automates lead-capture and allows SMBs to operate 24/7 at a low cost.
Every SMB must decide for itself what its best marketing future looks like.
As you consider different options for your company, remember that going in-house is not the only avenue to earn more control over your marketing program or drive greater ROI from your budget. Nor is it always the best option. To ensure your SMB’s marketing is as strong and innovative as it can be, remain open to the benefits a specialist agency can deliver.
Because the internet has connected people worldwide, the outsourcing industry has grown by leaps and bounds over the past two decades. Another reason for this growth: Outsourcing gives entrepreneurs access to a greater pool of talent and low-cost labor. Their ability to delegate responsibilities helps them free up more time.
But outsourcing is not always the best option: Many business owners, in fact, are starting to figure out that not all work should be outsourced. In some categories, like customer service, outsourcing can even make a bad impression with customers.
In other categories, outsourcing can mean subpar work, such as with communication or writing duties. Then there are the times when entrepreneurs wish they had outsourced sooner, as that would have meant less time wasted while they (unwisely) tried to do everything in their business.
Though finding competent people in virtually any line of work is possible, what works with one business may not work for another. So, what are the pros and cons of outsourcing, and how do you decide?
Benefits of outsourcing
Writing in LinkedIn, Charlett Adams described how, after becoming owner of a commercial cleaning company in 2011, she found herself inundated by client demands and meetings. So, she tracked her time and thought carefully about what roles to outsource: She hired a bookkeeper, a CFO-level person, an IT person and someone to handle her marketing, as well. By outsourcing, she freed up the time she needed to focus on her company’s growth.
You may want to emulate Adams’s example. If you take the time to think strategically about what you aren’t good at, what you don’t have time for and what you need help with, outsourcing might benefit your business. If you leap without looking, though, outsourcing could end up costing you more than you bargained for.
The main benefits of outsourcing boil down to three things:
- Access to a larger talent pool
- Cost savings
- More time
Roles to outsource
With the caveat that different businesses have different needs in terms of the tasks that need to be completed and the roles that need to be filled, here are several examples of roles that can be outsourced:
- Marketing. This includes inbound marketing, email, social media, content and even SEO or search marketing.
- Website. Outsourcing the design and development of your website allows you stay on the cutting-edge of best practices and saves you countless hours pushing pixels.
- Customer support. Poor customer service is simply unacceptable, and could be the downfall of your business. But some businesses, such as SuperFastBusiness, have found a hybrid solution: SuperFast succeeded in getting its customer-service team to handle inquiries via a ticketing system, and teaching team members what their response should be in various situations.
Outsourcers can be found on freelancing sites like Upwork or Freelancer. If you have a WordPress site and require ongoing help, WP Curve is a great resource to tap into. There are many other services available depending on what you’re looking for.
Risks with outsourcing
In September 2010, Virgin Airlines had to ground all flights for nearly 24 hours, leaving 50,000 passengers stranded. The problem? Virgin had outsourced its internet booking, reservation, check-in and boarding system to IT provider Navitaire. The latter company was tasked with identifying and resolving mission-critical system failures within a short period of time; but on this occasion, things didn’t go so smoothly.
Not everything you outsource will necessarily have such an immediate and drastic impact on your business. If the problem you need to solve is occurring on the other side of the world, all you can do is trust your vendor to deal with the issue in a timely and competent manner.
Benefits of in-house
Brian Scudamore, founder and CEO of O2E Brands, said his company used to outsource overflow call volume to a Vancouver-based call center. Alas, O2E Brands saw conversions begin to decline and its company culture begin to slip. This is when it decided to make customer service 100 percent in-house again, and it hasn’t looked back.
While keeping certain functions in house may not save you any money, it gives you more control over the quality of work that’s produced and the ability to better define and preserve your company culture.
Any aspect of your business that you believe is a differentiating factor or unique selling proposition should be kept in house.
Roles to keep in-house
Thanks to technology, there are many ways to put your business on autopilot without outsourcing. With these tools, there is always an upfront cost and time investment, but automation — or semi-automation — can free up a great deal of time and save you from having to hire experts in every department. Business owners can automate:
- Social media, with Buffer or MeetEdgar
- Email marketing, using a tool like Drip
- Customer service, using software like Temper to to measure analytics
- Content, since you can schedule posts in advance of their being seen by your audience
- Payments for subscriptions and even affiliates, using gateways such as Stripe
- Accounting, using tools like QuickBooks, which will import transactions from banks or payment gateways.
- Customer support, using a tool like Zendesk, can be efficiently managed.
You can find employees in a variety of ways, but many business owners have found success with social media sites like LinkedIn, job boards like Monster, recruitment services like Zirtual, and so on.
Again, the exact roles to keep in house will vary from one company to another. Oftentimes, however, it is best to keep in house, functions like human resources, security and succession planning, and to maintain your company culture in house as well.
Risks to keeping everything in house
Conor Wilson, co-founder of Sproose, wrote on Fora that he used to struggle with not being an expert in his field, thinking he had to know everything there was to know about a specific niche before establishing a business in it. Then, realizing that he could leverage outsourcing to build his business, Wilson thought about what problems he could help solve, and settled on laundry pickup and delivery.
Like Wilson, many entrepreneurs are paralyzed by the overwhelming number of options available. They concern themselves with every step, thinking they need to know everything. This is, perhaps, the biggest trap of all — not getting started. Outsourcing offers a low-cost way for entrepreneurs to go into business for themselves, and tap into the knowledge and expertise of skilled and qualified people, without the added risk and cost of hiring full-time employees.
Not all roles are right for outsourcing, and not all roles need to be full-time in-house hires either. As management expert Peter Drucker has often pointed out, keeping experts around for the few times you need them is too costly and entirely unnecessary. On the other hand, outsourcing all aspects of your business without thinking about your customer could end up killing the momentum you’ve built up.
Truly, the worst thing you can do is not get started. You can always course-correct as you learn more; but if you’re taking no action with work that needs to be delegated, you’re just slowing progress in your business.
Outsourcing isn’t a new trend — but what and why companies are outsourcing is changing.
In its 2018 Global Outsourcing Survey, Deloitte went so far as to describe traditional outsourcing, such as moving manufacturing overseas, as “dead.” In its place, the report showed, “disruptive outsourcing” is on the rise.
What, exactly, is disruptive outsourcing? It’s a form of business process outsourcing focused particularly on leap-forward operational innovations. Most companies that engage in disruptive outsourcing do so not to cut costs, which Deloitte reports was once the top reason for outsourcing, but to create a competitive advantage through organizational agility.
Demand for disruptive BPO services isn’t slowing down, either. In a report released this past January, Market Research Future found that the global BPO market will grow 11 percent year-on-year until 2023 — between three and four times as fast as the wider global economy. The best business functions for innovative outsourcing share something in common: They’re tedious, but they’re also musts in the modern economy. Outsource the following functions to spend more time on your company’s core competency:
1. Payment processing
Everybody likes to get paid, but few people like doing the legwork of invoicing clients, hounding late payers and processing payments. But payment processing isn’t just a pain: Tungsten Network research shows the average business wastes 6,500 hours per year, or more than $170,000, on inefficient payment practices.
Particularly if you cut paper checks or do business internationally, partnering with a payment processor like BAMFi can empower you to use technology to streamline collections. “By reaching further into the process, we find more opportunities for automation,” BAMFi CEO Todd Ehrlich explains. “We can automate invoicing, for instance, using signals like automated proof of delivery.”
2. Contractor payrolling
Contracting certain roles can save money, to be sure, but it can also create headaches of its own. Peter Limone, president of payrolling provider Innovative Employee Solutions, points out in a blog post that hiring contingent workers can complicate a company’s payroll and compliance functions in multiple ways.
Say you’ve won a six-month federal contract. If you need to hire several temporary employees for the project, working with a payrolling provider ensures you won’t be burdened with higher state unemployment taxes when it’s time to let them go. Or, if you need to work with contractors in a state where you’re not licensed to do business, payrolling them with a national provider allows you to get to work immediately without worrying about compliance.
Related: Entrepreneurs Find Hiring a Payroll Service Brings Perks
When it comes to technical hires, in particular, recruitment tends to be expensive and time-consuming. Although she acknowledges that the metric depends heavily on company size, number of hires and the roles in question, Workable CFO Lacey Brandt suggests aiming for an average cost per hire of $3,000 to $5,000.
To cut recruitment costs, turn to an AI-powered talent acquisition platform such as Stellares. Using natural language processing and deep learning models, the platform reads job descriptions, matches candidates with companies, pitches the opportunity to talent in a personalized way and introduces individuals who holistically fit the role. In 60 percent of cases, the company claims, corporate recruiters using the Stellares platform request to meet 60 percent of the talent it introduces.
Related: 3 Ways to Enhance Your Recruiting and Onboarding Processes to Set Your Startup up for Success
To new entrepreneurs, purchasing might sound like the easiest business function out there: How hard can it be to buy something? Most B2B transactions, however, represent hours’ worth of communication, logistics and relationship-building. Without personalized interactions, for instance, about two-thirds of business buyers will look elsewhere.
Not only do group purchasing organizations like UNA take those time costs off entrepreneurs’ shoulders, but they also save their members money, to the tune of 80 percent on office supplies and 15 to 20 percent on categories like shipping and cleaning equipment. “Almost anything a business could need, GPOs can get for a better price,” CEO Anthony Clervi said. “Think printers, computers, company cars, desks, stationery, and even cleaning supplies.”
5. Product innovation
Companies are increasingly looking outside their walls for something once seen as an internal must: product innovation. Perhaps counterintuitively, external firms often out-innovate companies’ own product teams because disruptive innovation requires seeing problems with fresh eyes.
Although it’s ideal to partner with an innovator in your own industry, those companies tend to go by another name: competitors. Instead, look for one with experience across multiple domains and types of technology. Digital innovation group Cie Digital Labs, for instance, has tackled everything from a national travel center’s loyalty program to a national pool supplier’s digital app.
Related: Why Product Innovation is the Key For Every Organization
No business is good at everything, but today’s economy leaves little room for learning on the job. Rather than wrestle with tasks outside your core competency, stick to what you’re best at and outsource the rest.
These days, outsourcing helps companies of all sizes shore up skills gaps in their teams, boost efficiency and sharpen their focus.
And companies that opt to outsource won’t be at a loss for qualified candidates. More than one in three workers in the U.S. freelance, according to Betterment’s 2018 “Gig Economy and the Future of Retirement” report, and that number is predicted to reach 40 percent by 2020. In addition, because freelancers can complete projects from anywhere on the planet, business leaders don’t need to shell out a lofty sum for travel and expenses.
Thanks to technology, outsourcing has become an affordable option — especially for smaller companies and entrepreneurs with little capital to burn. However, that doesn’t mean you’ll automatically benefit, so it pays to make sure that outsourcing is a good fit first. If you have trouble accomplishing a task on your own, then outsourcing may be the answer.
Related: 5 Things Small Businesses Should Outsource
So how do you better gauge whether or not your business will benefit from outsourcing a particular task? Before piecemealing out your organization or project, ask yourself these three questions.
1. Will it propel my business forward?
As Deloitte’s 2018 Global Outsourcing Survey highlights, controlling costs is still a major benefit of outsourcing, but the motivation behind the decision to outsource has changed. Now companies opt to outsource as a way to work with partners and integrate services that they couldn’t provide on their own.
For entrepreneurs, especially, outsourcing can be the key to propelling their startups forward faster and more effectively than they could do alone or with a small in-house team. You can even outsource product development. For instance, when Alex Turnbull wanted to launch Groove, he realized he lacked the technical expertise to build the SaaS product. He outsourced the online customer support platform’s entire early development so he could get his idea off the ground.
2. Will it boost my team’s capabilities?
Outsourcing can amp up your team’s skill set. For instance, say your marketing team can check off nine out of ten industry expertise boxes but lacks understanding of one area, such as graphic design or video production. By outsourcing this capability, you can complete the ecosystem. Whether it’s IT, accounting, marketing or any other function that needs help, building it up through strategic outsourcing helps everyone else excel.
The IT function offers an excellent example. With the exception of IT companies proper, most businesses don’t specialize in the types of technologies they depend on. To establish and manage any program, Christine Alemany, chief growth advisor for Trailblaze Growth Advisors, says that “you have to have much more than a cursory understanding of the technologies involved in the entire ecosystem.” Outsourcing with a partner that has this understanding will help your business thrive.
Related: 5 Tasks Entrepreneurs Are Better Off Outsourcing
3. Will it make my team more efficient?
Outsourcing is not about just handling areas in which you don’t excel. Sometimes you should even outsource some of your core competencies, too. By outsourcing some tasks that fall under the expertise of your team, you can free up time for in-house departments to flex their efficiency and productivity muscles. Outsourcing can streamline a process or help your team complete a time-consuming project while not abandoning all of their daily tasks.
For instance, with outsourcing’s help, Penske Truck Leasing, which leases equipment and provides logistics services, redesigned and centralized its back-office operations to better leverage a global delivery model. The company’s administrative and finance teams outsourced tasks to Genpact transition experts, leaning on them for some of the research and process mapping required to determine how operations should be redistributed.
Related: How Your Company Can Use Both Outsourced and In-House Marketing
The truth is that most companies, big and small, can relate to these three goals. Now, however, smaller organizations can have the same opportunities for success as their larger competitors thanks to strategic outsourcing. Before jumping in, though, take a comprehensive look at exactly what it is you should outsource for optimal results.