4 Things Your Startup Should Choose Outsourcing
Every year, millions of startups attract funding and launch worldwide. However, receiving money to bring your idea to life is not a guarantee for your startup to become successful. In fact, 90% of startups fail. While it may sound depressing, there are already lots of studies and guidance on how to make your startup survive and bring ROI to the investors.
Outsourcing services is one of such lifehacks and keys to excel your competitors. Outsourcing is bursting. Usually being talked of as a new practice, in reality, it exists since the rise of the Internet, and now the IT outsourcing is a giant sphere. From 2000 to 2018, the global outsourcing market size has grown twice as big and was estimated at $85.6 billion in 2018.
This said, 37% of companies that outsource are planning to increase the utilization of this practice even more. Also, IT outsourcing comprises 72% of services, outstripping legal, tax, and HR outsourcing, regardless of the industry.
Why Do Companies Outsource?
Outsourcing companies provide suitable teams of professionals with corresponding hands-on experience in the required business area, who can deliver a quality product faster than an in-house team would have delivered. Together with less paid months spent on the development itself, outsourcing services save funds on office support, team management, taxes, and other hidden payments.
Based on the Global Outsourcing Survey held by Deloitte, here are the top reasons why do businesses outsource in %:
an instrument for cutting costs
allows owners to focus on their business
brings a solution to capacity problems
raises service quality
crucial for the company’s needs
provides access to intellectual capital
helps to manage business processes and environments
encourages immense transformative change
Because of these and many more reasons, companies choose to outsource at the different stages of their development, be it their first steps on the market, expanding to new territories, launching a branch of products, etc. And though large enterprises often continue delegating processes to external service providers, startups are the ones to benefit from outsourcing services the most.
Benefits of Outsourcing for Small Businesses and Startups
Startups are companies that have somewhat special conditions of their development. Why outsource IT services? In comparison to enterprises, startups should be fast and agile to outlive competitors. Sometimes, they need to create an MVP in such a short term within which it’s simply impossible to hold the job interviews with developers.
Also, the amount of work startups put into the progress of their products is enormous because they literally have to prove their place on the market. Extensive promotion and the need to spend more time and costs on it is also a distinctive feature of the startups. Add decent restrictions in terms of workforce, its experience, and budget, and you get a broader picture of why outsourcing is good in this case.
All in all, there are numerous benefits of IT outsourcing for various small businesses and startups. Let’s take a look at the key pros.
Starting a new IT project requires a team in the first place. Large businesses often have their own talent pool from which a team can be built fast; startups need to hire new specialists and form a new team from scratch. In a competitive atmosphere, finding individual specialists may be a hard yet bearable task, but forming an entire team may take months.
The time is a key factor for startups, so they can’t afford to spend this amount of time on stalling, so that is why do companies outsource — this way they can get a fully functional team in a matter of days, if not hours.Apart from the faster set-up process, the correct involvement of the team leader with the project’s goals and the ability of more experienced specialists to deliver the same quality of the product over shorter time spans, spare even more time during the production period and offer faster time to market rates.
29% of small businesses fail because they run out of cash, 18% of the unsuccessful startups had pricing/cost issues. Money is truly both a life source and a curse for them. Outsourcing saves funds by optimizing the spends on office maintenance, taxes, and other hidden payments, which is one of the major reasons why do companies outsource IT and other services.
And there’s even more to the cost-efficiency here.It often happens that the attention of certain specialists like designers or DevOps engineers is not required during the whole development process. For an in-house team, this will mean inefficient under-load on these specialists, but in outsource companies, they can participate in several projects at once. Since the wage is largely hourly-based, the customer will only pay for the time spent directly on their project, which will decrease the overall cost of the development.
The higher overall quality of the final product is one of the major reasons why do companies outsource IT processes. In this case, the more experienced QA control and well-established technical feedback process in a team that works together for longer ensure better quality for the final product.
The outsourcing companies themselves work with their teams to provide these benefits of outsourcing to their customers, as the feedback is crucial for the future clients of the company. Finally, startups often do not have a second chance to spend even more time and costs on building the product. Thereby, the higher quality the initial development has, the better for a startup.
For the most senior-level specialists, employer branding pays a big deal in selecting a company to work for. In large enterprises, HR specialists increase the level of comfort at work for these employees by improving the working conditions and offering out-of-office activities to cheer up the entire team. In most cases, startups can’t offer anything comparable in the early stages of development, when they need experienced engineers the most, and this task falls on the outsourcing company.
A big outsourcing company will have all needed employer branding tools in its hands, a great retention rate for experienced specialists, and a sufficient reputation to hire more seniors when needed. Easy access to a deeper talent pool is among reasons why do businesses outsource if developers with expertise are essential to their product.
Outsourcing Services for Your Startup
These top benefits of outsourcing are just the top of the iceberg. While big businesses go for outsourcing to mainly concentrate the internal activity on the core processes, startups hire outsource teams because they may not have access to funds, people or other resources, required for an in-house team. Based on your startup needs, you may choose from the two main models of outsourcing services: project-based development (fully outsource to the external company) and staff augmentation (hire outsourced specialists for certain tasks).
Regardless of the way you choose, it is important to thoroughly select an outsourcing company for your startup, namely, check out its reputation, ask its previous clients for feedback, find out whether this company has already successfully delivered products in your field. If you just received funding for your startup idea and are planning to launch the development process, contact us today. Together, we will outline the stages for creating your product, the number and expertise of specialists needed, as well as cost and time estimation based on your resources.
Contact us and let’s discuss your project!