Outsource Or Insource : What To Choose by Startup

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“Don’t worry about failure; you only have to be right once.” – Drew Houston, Dropbox Co-Founder, and CEO.

It is the era of startups, people are no more entangled in the thoughts of a secure job, with the young minds going wild and taking a route of “road not taken”, thousands of startups are booming in the country today.

These young entrepreneurs have a lot of energy, enthusiasm, with their creative minds and innovative ideas, many of them have transformed the way business gets one in the country.

However, the harsh reality is, many of the startups fail… what is the reason behind it????

This so happens because these wild spirits “young booming entrepreneurs”, many of them don’t know how to coordinate the activities in the business and how to run it smoothly. This “I know it all attitude leads to their failure”.

As it has been rightly said “Jack of everything, master of none”. You cannot do everything on your own, you need people to help you and startups need help ….

So now comes the question of the hour, “Should the startups today in-source or outsource??????????”

If you’re running an early-stage startup, chances are there are some knowledge gaps in your core team. You may be strong on the technical side or a product whiz, but what about financial strategy, administration, HR? Are you prepared to manage the day-to-day of your startup, from recruiting new talent to bookkeeping to financial planning?

You need to fill those gaps.

If your in-house team gets preoccupied with these supporting functions, how would they focus on the core functions? Your core team should be focused on the functions that are vital for your product or services you are offering, they should not bother about these side tasks. So would a startup hire more people into the system?

It is not a wise decision as it has time and cost constraints that it must pay heed to.

So, what should you do? Outsource — to professional consultants or groups.

The best plan is to outsource whatever services you can so as to save on the highest business costs of all — staffing costs — while getting the support you need and the assurance that these functions are being taken care of by professionals.

Depending on the nature of the business, here are few of the services that you can outsource:

  • Accountants

Managing financial operations, keeping a track of your day to day operations and meeting regulatory compliance. Outsourcing your bookkeeping to the right firm will give you the support you need for cash management, AP/AR, financial close and taxes.

  • Marketing

These services can be outsourced to an agency that would take care of the marketing mix and the integrated marketing communication strategies.

  • Software development

Because of the era of digitization, the company has started using different soft wares for their functioning.

  • Human resource management

Any entrepreneur can attest to the fact that HR can be a total time suck. From recruiting to managing personnel issues, from compensation to benefits, from payroll to employee policies and procedures, human resources management can take over your entire schedule.

  • Legal services

Also, the legal services can be outsourced so that you remain hassle-free. They require a lot of time and effort and on the other hand, are vital for the firms for smooth functioning, therefore cannot be avoided.

Outsourcing them would lessen the burden on the employees so that they can focus on the core operations of the business.

Key benefits of outsourcing:

⇒ You have more time to concentrate on your core project/service.

⇒ You get the best minds to work on the operations being outsourced, as these people will have the expertise and requisite skills to perform the tasks.

⇒ Using freelancers can be more cost-effective than employing full-time staff; with the added benefit of you being able to quickly scale back should your finances run low.

⇒ The process can be simpler, and faster, than recruiting a full-time employee.

⇒ If the quality of one freelancer is unsatisfactory, you can easily switch to a different freelancer.

⇒ Chances of less wastage.

Every coin has a flip side to it, outsourcing has its own pros and cons:

Supporters believe that in-sourcing will lead to better management control and job creation at the local level. In-sourcing is also seen as a solution to the problems of control and hidden costs with outsourcing.

Most importantly, Insourcing means maintaining full control of the company’s operations.

⇒ The disadvantages attached to outsourcing include the lack of coordination between the different agencies and the in-house workers, this can lead to potentially hazardous setbacks.

⇒ Human resource is said to be the most precious and valuable asset to an organization. Because talent is such a precious commodity in the startup community, hiring skilled full-time employees can actually increase a company’s valuation.

⇒ In-house people are committed to the organization and work towards their goal dedicatedly; on the other hand, outsourcing agencies might not share the same sentiments.

⇒ Training employees in-house allow a startup to expand its skill set and improve its core competency.

While your company is in its early stages, it’s essential to get support, but only as you need it. To outsource doesn’t mean you just hand over a function and forget about it. You still would remain accountable for reviewing the progress of the outsourced work.

Hence no method is better, outsourcing or in-sourcing, you need to do a cost-benefit analysis and depending on the nature and the requirements of your business, go for a feasible solution.

“Make something people want” includes making a company that people want to work for.” – Sahil Lavingia, founder of Gumroad.

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