Outsourcing has become the preferred solution to various business challenges over the past three decades. It’s the choice solution for large, prominent corporations, and even startups mainly because of its scalability, flexibility, and cost-effectiveness.
Much debate has been tossed around about outsourcing and its efficiency. However, data statistics from credible sources show that it’s, in fact, a valuable service. For startup businesses, especially in the tech industry, a related debate is also going on. The argument is about whether or not outsourcing can make or break your startup business. In this article, I’m going to share with you some deciding factors on outsourcing, use cases for tech startups, and some aspects of the business you can choose to outsource.
Outsourcing Opportunities for Tech Startups
For tech startups, there are many areas of the business you can outsource. Whether choosing a core or non-core aspect to outsource, outsourcing can provide a solution that will meet your bottom-line goals.
Product Development
When starting out, it’s common for some people to have an idea, but lack the skills, knowledge, and resources to build that idea. This is where outsourcing comes in. The outsourcing market can provide you with the expertise and skills needed to build your idea. The customer’s needs should always be top of mind when it comes to developing a product. The right outsourcing partner should take the time to develop a deep understanding of your customer’s needs and your product feasibility.
Physical Infrastructure
Investing in a physical infrastructure can be quite costly for a startup. However, you can outsource your hardware setup to an infrastructure provider. This way, you can save space, time, and money. You’ll also have no worries about the maintenance of the infrastructure since the outsourcing provider owns it.
Data Services
Aside from outsourcing your hardware requirements, you can also outsource your software needs. There are plenty of outsourcing companies in the market that offer attractive data service packages from cloud hosting to data annotation and data entry.
Web Design and Development
We all know that building a great website can be difficult. It takes time and a lot of effort to build something that will impress customers and have a strong backend structure at the same time. An outsourced expert developer can take your vision to the next level.
Making the Outsourcing Decision
The decision to outsource is crucial. You must be objective, and you should look at all threats and possibilities that might come along the way. Here are some tips to help you with your winning decision:
Clear and Defined Plan
The first step you need to do is to define an outsourcing plan before looking for an outsourcing partner. Meet with your team to identify the scope of business that will be outsourced, whether you’re looking to outsource segments of a project or a whole business process. Then, you need to determine the timeframe if it’s a short term or a long term plan. Lastly, prepare your budget. This is crucial when you start negotiating with an outsourcing prospect.
Check for a Track Record and Customer Feedback
Once you have a list of prospects, you can choose among these shortlisted candidates. Before doing business with your chosen outsourcing provider, you must conduct thorough research to find out how they do business, their values, and objectives. Check for a proven track record through client feedback. You can usually find client feedback online, but you can reach out to previous and present clients for more detailed insights about your prospect.
Reiterate on Data Privacy and Intellectual Property Policies
Illegal acts, such as piracy and selling trade secrets are rampant in the tech industry. As a startup, it’s important to protect your valuable assets. So, you must check numerous times that your outsourcing prospect complies with international data privacy and intellectual property policies.
Tech Startups and Outsourcing Use Cases
Outsourcing has played a vital role in the success of famous startups that we know today. Here are some examples of tech startups that have used outsourcing to improve one or all aspects of their business:
Slack
At first, Slack was used as an internal collaboration tool by the gaming developers at Tiny Speck. Before Slack’s public launch, the company outsourced their logo creation, marketing, web design, and app design to a design agency. Today, the company’s value is worth US$15 billion and has now 5 million daily users.
Basecamp
Prior to becoming a tech leader, Basecamp was just a minor service offered by 37 Signals, a web consulting firm. The company decided to outsource the majority of the business aspects of Basecamp in the beginning. When the project management tool started gaining traction, 37 Signals decided to drop their core consulting service and focus on the more profitable Basecamp tool. In 2014, the 37 Signals company was rebranded to Basecamp Co. Basecamp is now valued at US$100 billion with 16 million users worldwide.
Skype
Before being sold to Microsoft in 2011, Skype used to outsource its software development to Estonia. The founders of Skype chose to outsource the development of their idea since they lack the professional skills needed for the brand to grow at that time. Today, Skype contends with other online video communication tools, and the company was valued at US$41 million just last year.
Github
One more company sold to Microsoft is Github. Github is a hosting company for software development. But before it got sold to Microsoft in 2018 for US$7.5 billion, its founders had outsourced much of the software coding to an expert coder. That expert coder eventually became their Chief Information Officer (CIO).
WhatsApp is another tech company that got sold to a tech giant. In 2014, Facebook acquired WhatsApp for US$19 billion. WhatsApp’s founders are former Yahoo! employees, and the majority of its core development was outsourced to Russia in the app’s early days.
AppSumo
AppSumo is a tech deals website that offers various deals on digital tools like software apps, eBooks, etc. The company’s founder, Noah Kagan, was a former Facebook employee who got fired. His move to outsource a part of its website to a developer for US$50 has become one of the company’s early achievements. Today, AppSumo is valued at US$2 million and has the largest list of mailing subscribers close to 700,000.
Alibaba
Alibaba is widely known to many as “China’s eBay”. When Alibaba was just starting to venture out, founder Jack Ma and his friends decided to outsource the web development of the e-Commerce site to the US. The success of Alibaba didn’t come as a surprise as the company captured the Chinese consumer market. The Chinese e-Commerce giant still outsources aspects of its business today.
Wrapping Up
As a tech startup, there are plenty of opportunities to outsource. An effective outsourcing decision can lead you to achieve your company’s revenue goals and expand your business. Given everything, you must evaluate for yourself how outsourcing can contribute to the success of your business. Choose wisely, and you can reap the benefits of outsourcing that countless businesses worldwide have experienced.
