The power of outsourcing

Obviously we’re big fans of business outsourcing for everyone -- it’s a service we provide to companies looking to scale their software development function-- but sometimes people (prospective clients) are confused by the sheer need for outsourcing.

If you look at this article from Entrepreneur called “Build a better business through outsourcing,” this one quote near the top explains the whole issue:

 "Most entrepreneurs have great talents but many times they think they can do it all," Sparks says. "That can really stall the growth of the business.”

We’ve seen this, and a variation of other issues, many times. Don’t want this post to be self-promotional -- you can look around the site and contact us if you choose -- so rather, we’re going to discuss a few of the key aspects you should be considering about business outsourcing.

Can you really do it all?

This should be question No. 1. Even people in one specific role at a scaling company can burn out. If you’re the person over everything, you can definitely burn out. We tend to deify the world-builders in business -- guys like Elon Musk or Jeff Bezos -- but we often don’t see the full team behind those guys. No one does it themselves. Everyone has a team, and usually those teams are a mix of internal and external.

In the beginning, it makes a lot of sense for more people to be external -- because until you have a predictable revenue engine, there’s no reason to pay someone full-time salary for a high-level position. For example, we’ve seen companies who probably could use a CFO, but don’t have the predictable revenue stream to pay someone at the level they’d require for that title. So they use business outsourcing and find a retired CFO or someone who doesn’t want a full-time job anymore, and that person comes in 2-3 days/week. In the early stages of scaling a business or expanding into a new market, this is smart. 

Are you over-complicating things?

We love to over-complicate aspects of business, often creating “process for the sake of process.” We don’t work as much with marketing, but here’s an example we once heard from a recruiter. A company was growing pretty fast, and they wanted a better handle on social media and a “sharing strategy.” So they go out and full-time hire -- hire! -- one person to run Facebook, one to run Twitter, one to run LinkedIn, etc.

Now they have three-four full-time employees who basically just post to one platform 2-3 times per day each. It’s a huge waste of money and over-complication of a basic function that one person could easily do. But companies often make these mistakes in a short-term, reactionary vacuum. They see a competitor doing well on Facebook and someone says “We need a dedicated resource for that now!” No, you don’t. The whole reason marketing agencies exist is for this reason: business outsourcing can take the inevitable human desire to over-complicate and make it more simple. Simplification has been called the new strategy of business.

What tasks can you outsource ?

Business outsourcing works best when you know what needs to be outsourced. Sometimes internal politics of the founders and initial employees get in the way, because someone wants to “own” a business function that’s better off being outsourced.

Most people begin by outsourcing things like data entry, and that makes sense -- those are somewhat-automatable tasks. After you’ve established the first business outsourcing departments, think up the chain. Marketing. Sales. Dev. Executive functions. If it’s going to help you in a new market quicker, anything should be fair game.

How do you pick an outsourcing partner?

Simply: research and referral. One advantage of business outsourcing is that your partner isn’t a full-time hire. You want to build a relationship with them, of course, but when you flop on a full-time hire, it’s much more costly

A business outsourcing partner could be gone in a year or so, or they could become a dedicated resource.

Still, the decision is important. Research, research, research. Most outsourcing options have a website and LinkedIn presence that will tell you how great they are. So, now you need to move over to referral. Ask friends, trusted colleagues, former co-workers, etc. Get at the right people. In a world of so much noise (digital and otherwise), referral is becoming more important -- because it cuts through that noise, and it’s real advice from someone who knows someone. 

Analyze the costs of outsourcing

You 100% need to do this, but … from experience, almost always a business outsourcing/contractor option is going to be cheaper in the long-run, and more effective in the short-run in terms of scaling up or driving revenue forward in a new market.

The importance of communication

This is important and often overlooked. If you’re going to work with a business outsourcing partner, communication is going to be crucial. Communication is often not very good in the working world, but for outsourcing to work the most effectively, it HAS to be.

Your new software development partners may not be in the office every day. They might not know the words, concepts, values, and benefits you like to discuss and use with customers. You need to be communicating that to them at every turn. It’s the only way to get your outsourcing partner on the same page with your internal team, and that’s the surest path to business outsourcing actually working.

These are just a few considerations when looking into business outsourcing. We could write books about these concepts (but that would probably bore people).

Anything else you’d add on business outsourcing? Ever been burned by it and want to explain what to protect against?

If you haven’t - Download our Checklist: