Top 5 Reasons Why You Should Consider Outsourcing

As a startup business you know that one of the keys to survival is to drive growth and keep your cash flow burn rate as low as possible during the early stages of the business to avoid running out of money. I have worked as the head of customer acquisition at several successful early stage startups including Roku, TrustedID (acq. by Equifax), Texture (acq. by Apple) to have a good preview into what it takes to build a successful startup business.  

I have always found that outsourcing specific services to offshore companies in countries like India, Philippines, China and others, is much more cost-effective and convenient than doing it internally without losing quality. You don’t have to bear the high costs of hiring, training, workspace and even administrative expenses. Instead, you can shift focus to the core areas of your business that will enable you to grow the business.

Even large companies like Apple, American Express and Microsoft are continuing to outsource more areas of their work to control costs and stay ahead of the competition without compromising on quality. A recent survey states that 70% of consumer support in the world is outsourced and about 56% of offshoring partnership comes from the United States. I have seen success with outsourcing customer service, manufacturing, engineering as well as marketing services.

Here are the top five reasons for you to consider outsourcing as a great business strategy:

Focus on your core business

When you successfully deliver a product that the market demands, your business grows. But what if you are looking to expand? How would you plan to support your existing customer base, while you look for new ones? How do you plan to research new products and put them to test too? Like most companies have done, outsource your work. When you delegate a non core activity to offshore companies that provide quality results and have a faster turnaround time, you can concentrate on what it actually takes to make you successful. Well, these days there are companies which outsource their core business as well owing to highly skilled offshore labor at lower costs. Outsourcing core business helps companies expand and stay right ahead of the competition.

Optimize Cost

It is a given that labor costs in the US and Europe are high compared to most parts in the world. Apart from salary, as an employer you must bear the cost of benefits, taxes, work space and more. An experienced employee in the US can cost around  $50 - $100 per hour compared to an offshore employee with the same skill set to become experts in certain subjects costing 30-40% less. These savings can add up quickly to reduce your burn rate. For example, many companies go to Philippines for customer service needs, and it works because the industry there has been serving customer support needs for decades, which would otherwise turn out to be very significant if they had those based in the US.

Extend your team

One of the other benefits in offshoring to countries for example, India is to leverage the different time zones. Your offshore team acts like an extended unit that ensures your projects are taken care off even when your onshore team has left for the day. When you integrate your offshore team to work to your requirements, you will be surprised at the speed at which your projects progress. With an English speaking offshore team that is able to understand the depth and knowledge of issues, you always have a win-win situation. Your product reaches the markets quicker than before and your customers get non-stop customer service.

Mitigate Risks and Accelerate Growth

Outsourcing initiatives help organizations fine-tune their business models in the direction of profitability and being more resilient. It is very important that the outsourcing company is well aware of how to identify and prioritize business areas and help you manage the process by maximizing performance and mitigating risks. It is vital that you carefully examine the service provider’s records, facilities and skill set with other clients. With outsourcing you are at an advantage in terms of business continuity.

The other risk is the high turnover, especially with younger workers not planning to stick around. 43% of millennials envision leaving their jobs within two years, according to a global survey by Deloitte. Among Gen Z workers, 61% said they plan to quit within two years. I have found offshore teams to be more loyal with less turnover who generally can execute well if given the right training and support upfront as you have access to highly educated and motivated talent.   

New Processes

Since most of the outsourcing companies in India accumulate top-notch talented IT professionals, you get access into the pool of talented resources. Overtime these resources develop processes that work best and create learning exercises that work towards strengthening your own internal processes and techniques. There are some companies which state that offshore outsourcing is the most viable way to remain ahead of the aggressive competition. While employees are available round the clock and more receptive to learning new processes, you can focus on your key strength areas and in turn motivate them to perform more productively.

Despite challenges and drawback offshore outsourcing is an attractive solution for many startups and as well as large companies. Before consider outsourcing, it is important to determine the important tasks that need to be outsourced along with the pros and cons that offshoring brings with it. When offshore companies possess excellent communication levels and understand the complex processes involved, you get nothing but the best with your offshore deal. If you truly embrace outsourcing then it has the potential to give your business a competitive advantage to not just survive but thrive in the 21st century.