Why outsourcing is a good idea for SMEs and Startups

Medium-to-large sized businesses have been outsourcing for years, even decades now. Over the years, they have been able to draw profits form the successes of outsourced IT support, customer relation support, web development and the likes of this.
The upsurge of technology has led to many businesses facing technical challenges and many to transform— the change has been invariably for both SMEs and large corporations. Technology has enabled the service industry to go flatter. Businesses have grown to compete with their local and global competitors.

With the rising demands and competitions, SMEs, especially start-ups are more likely to suffer the wrong end of an expensive deal, mainly due to the limited resources they have access to. Their focus continues to be directed towards the development of effective strategies and process systems. This is essentially, where Outsourcing comes in as a guided relief. They are not merely the access tools of multinational corporations, but also the operational hands to develop business for SMEs.

Outsourced operations do not necessarily need the physical presence of all staff in a particular location. There are tasks, business divisions and departments like marketing, recruitment, training, customer services, data management and design that can be outsourced to external teams and the work can be carried out with the same amount of dedication and focus as an in house team.
Some SMEs are also progressively looking at having an outsourced chief technical and financial officer (CTO/CFO) — a more economical solution than having a salaried CTO or CFO keeping an eye on architecture & cash flows. An external CxO can focus on multifaceted procedures and give key inputs to support business decisions.

The benefit however lies in leveraging the best of a global workforce and tapping into the local business market to make a sustainable investment in opportunities and increasing profits margins.
An organization affluence and credibility depends on its business performing capability and financial strength. By outsourcing time-consuming and expensive processes and functions, the top management of an enterprise can create more bandwidth to focus on things that really matter and make the organization more cost-efficient, better organized and result-oriented. All these play a very crucial role in improving business performance and financial strength — key factors that are considered when outsourcing business operations.

Additionally, outsourcing allows capacity for expansion of a business division where there is scope and requirement for development. The outsourcing process adds an external infrastructure into the organization without the actual investment.
The key points therefore for why Startups consider outsourcing as a good idea is—

  • Reallocation of resources to business development and innovation that enables growth without the large associated overheads
  • Saving overheads and maintenance costs of infrastructure
  • Minimizing risks significantly, whilst growing and extending service offerings
  • Retaining control of budgets and staffs
  • Gaining a competitive advantage by embracing non-core but necessary functions as a service
  • Creating a long-term sustained value to the business

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