What Can You Outsource?
I speak to a lot of founders that are considering outsourcing key functions to keep costs and headcount low. Can it work? “Sometimes” is usually my answer. I’ve seen outsourcing effective at startups that I ran and also for founders I work with, but you need to make sure you have the right partner and understand how you will integrate that function back into your staffing at a later date.
One of the most common areas that startups outsource is technology. For non-technical founders, this is often the fastest way to market. It can seem lower risk since you are hiring a team and not a single person for about the same price. For outsource tech teams, I cannot stress enough the importance of getting references, at least two. Find two very happy people that have worked with the firm before you sign on, hopefully two people that you know directly and not just people that the tech firm told you to speak to. I have heard a bunch of disaster stories of outsourced tech gone wrong, don’t be the next one in this list.
We used an outsourced tech team at a FinTech lending startup I ran. They had previously done work for a friend’s company and were strongly recommended. They were local here in Atlanta where our company was based, so I was able to drive over and talk with them in person. They built our website, our back-end database, and more. As our business grew up, we hired a head of technology and the handover was smooth. It was a great experience.
A few of the founders I know have outsourced their digital marketing work to a third-party group. They are really happy with the assistance they are getting on ad placement, audience targeting, spending recommendations, and more. I actually have a firm in this space that I recommend often, and I’m sure there are lots of other good ones out there. Bringing this functionality back in house is going to be easy for the startups as they evolve. I have also seen situations where startups are outsourcing financial modeling, and this seems to be another function that is a good outsource candidate. It is fairly isolated, not core to the business functioning, and easy enough to integrate back into the core ops in the future.
My bottom line on this topic is that outsourcing can be a good way to add extra punch to your startup. Be careful to do proper diligence on your partners and have some thoughts at the outset on how you will bring the functionality in house later, and you should be fine. Thanks for reading today’s post, I hope this helps you with outsourcing decisions for your business.
