With all the attention surrounding outsourcing, some might be surprised that it’s lost a bit of steam recently. According to an Information Services Group study, traditional outsourcing fell 25 percent during the last quarter of 2016, in comparison to the last quarter of 2015.
This dip, the industry’s largest since 2009, raises important questions for small companies, most notably: Which tasks are worth keeping in house, and which ones should be doled out to the experts?
Most companies wait until a round of funding comes through before outsourcing. Accounting and HR can afford that, but needs like legal consultation should go external from day one, no matter how much capital you have on hand.
Going external helps efficiency.
Some entrepreneurs fear outsourcing could have adverse internal effects — specifically,outsourcing could impact a company’s productivity.
However, a Deloitte survey on global outsourcing positions outsourcing not only as an approach that doesn’t dampen productivity, but one that also sparks innovation, which can further boost productivity. Fifty-nine percent of survey respondents said outsourcing reduces costs, 47 percent believed it’s useful in finding unique ways to address capacity issues and 29 percent thought it boosts a company’s chances to scale globally.
With those three variables looming large in the productivity of any growing company, these numbers point to outsourcing as a trend startups should buy into. It’s just a matter of figuring out how to make it work best for your company.
Stay on track while outsourcing.
Deciding when and what to outsource can seem tricky, but your primary objective should always be to keep production moving. These three tips can help your team make the most of outsourcing without losing any speed:
1. Decide what’s a must-have. What can be outsourced successfully is occasionally a surprise. List what is — and isn’t — mission-critical for your company, then decide on outsourcing from there.
Slack founder Stewart Butterfield outsourced the workplace messaging app’s development — and the creation of its logo and website — to an agency. Butterfield and his team play-tested the design and tweaked it, based on feedback, before releasing it. Within two weeks of its release, Slack received 15,000 invitation requests; and DMR covered Slack’s current stats, which showed the company at 5 million daily active users and counting.
A great rule of thumb is for a startup team to have a clear understanding of what the company’s mission is so resources can be preserved for that work. Spending time on this process on the front end will get the ball rolling and free up time on the back end.
2. Adopt an old-school mindset. Nothing beats a real-life recommendation when it comes to connecting with outsourced providers who can meet your needs without becoming a drain on the company. Our firm frequently receives referrals from startups that found out about us through other companies we’ve worked with.
Whether it’s at a conference, a shared workspace or a happy hour, face-to-face networking with other founders is invaluable. “Who are you using for _______?” is an easy question to ask, and it may save you a lot of headaches in the long run.
3. Leverage existing service providers. Once you find a high-quality outsourced service provider, remember that the company can frequently offer resources in areas beyond its specialty. Asking these service providers whom they work with can initiate unexpected solutions — these service providers typically work across all industries because the operational foundations of many businesses are very similar.
GitHub CIO Scott Chacon met the company’s CEO and co-founder, Chris Wanstrath, at a chance meetup in San Francisco. Upon hearing about Chacon’s knowledge of Git, Wanstrath brought him in as a consultant for what would eventually become Gist, a GitHub sharing feature.
Outsourcing can create great opportunities for small companies without hampering their productivity. If they can determine when sending work out will work better than keeping it in-house, they can take advantage of the resources offered by the connections they already have and continue operating at a high frequency.