How Outsourcing can be a Revolution for Startups?

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A startup may turn into a very profitable venture in a very short period of time but there are not many that do not go through a rash of teething problems. Managing funds flow and working capital requirements and working on a shoestring budget are some of the constraints start-ups face at the initial stages of business. The solution to all these ills is of course outsourcing core activities that do not require a high degree of decision making on the part of the owner. Accounts, pay roll management, legal services and a host of functions can be outsourced and the savings in time and money can be better utilized by start-ups for focusing on core activities and ensuring quick growth and development.

A look at Startup Rankings around the world for start-ups shows amazing figures. The USA leads with 28,862 start-ups in the last one year followed by India with 4,781 and the UK with 2,989.There can be no clear analysis of what business environment fosters start-ups. Developed, developing and poor countries all have start-ups. A comparatively economically weaker Indonesia has 1,726 start-ups while highly developed European nations like Germany, Spain and France lag behind with 1,290, 998 and 887 respectively. Hence, it is seen that the boom and exponential rise of start-ups is a very common phenomenon in every continent and all around the globe.
Startup Rankings
[SOURCE: Startupranking.com]



What to Outsource?

As a start-up owner you may be a multi faceted and talented personality with enough knowledge to look after most functions of your company. But why should you in the first place when there are expert outsourcing services to lighten your workload? The need of the hour is to analyze your business operations and identify which areas form the core of your business and are responsible for making the products and services offered by you unique and exclusive. These are the functions that you should not outsource. The rest of the work can be spun off to outsourcing agencies with a high degree of professional expertise at reasonable and affordable rates.
A misconception that you might have while grounding the start-up is that it can be a one-man show. But the truth is that there are others who can do some things better than you. Why not utilize their services? Start-ups have now acknowledged this reality leading to a flourishing outsourcing sector today.

Why Outsourcing is Beneficial?

Statistics prove that outsourcing is beneficial for start-ups. The global average of start-ups closing shop within one year of founding is an astonishing 90%. It might be difficult to zero in on reasons for this high failure rate as there are a host of different variables behind it. However, studies have shown that of the 10% that ultimately survive, most have outsourced some areas of their activities or the other. Hence today outsourcing is not only an asset to a start-up but a means of survival too.



Some of the pitfalls that start-ups can conveniently skirt through outsourcing are – .

Saving much needed funds
– One of the key reasons for start-up failures is running out of cash. 46% of start-ups fall in this category. Again 27% of start-ups choose outsourcing to cut costs thereby saving about 60% on overhead costs.

Losing focus on core activities
– Focusing on core issues is crucial for start-ups at the cost of everything else. Spending some extra dollars to outsource rather than attempting to do everything personally can increase productivity and competitiveness many times over, often as high as 100%. About 18% of start-ups fail every year because of in-house knowledge gaps and inadequate skill sets that could easily have been avoided by outsourcing.
Competition study – Every marketplace has a lot of start-ups with similar products. What really matters between success and failure is the speed at which a new start-up can get ahead of the competitors. Failing to keep a tab on competitors’ strategies can spell disaster. Outsourcing agencies on the other hand have made their presence felt in most industries and can read the market perfectly. Hence it is beneficial for start-ups to outsource marketing plans.
This school of thought is also backed by statistics. 53% of marketing executives would want to outsource their marketing and 78% feel that this strategy will give them an edge over their competitors. 90% of start-ups feel that outsourcing is crucial to their growth.

Areas that should be outsourced

The efficiency and productivity of your start-up depends greatly on the functions that you choose to outsource. Some of the key areas include Payroll management, marketing, bookkeeping, setting up appointments and digitized tasks like data entry and processing. It should be noted that all the functions mentioned here that can be outsourced result in substantial savings in time and money; funds that can be better utilized for expansion and diversification.



Year on year high growth of the Outsourcing industry

It was predicted by Deloitte Consulting almost a decade back that the outsourcing industry in future would grow exponentially and be in the scheme of things for any business. This forecast has turned out to be truly prophetic. Today, start-ups credit outsourcing to running within budgets, accessing top global talent and faster hiring periods. In future too outsourcing development will be the primary engine for optimized growth for start-ups and a strategic tool in their business plans.
INFOGRAPHIC: WHY COMPANIES OUTSOURCE TO INDIA?

1 COMMENT

  1. Great overview of how start-ups can take advantage of the many outsourcing options. We at Noosh work primarily with companies that outsource their marketing services… printed materials, direct mail programs, collateral, for example. This can save start-ups quite a bit of time, and more importantly, money. That’s because outsourcers often get some of the best pricing on these types of projects that are not available to smaller companies.

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