Midsize companies face different set of challenges when they are at the cusp of scaling up. As companies gear up to grow – when they want to increase revenues – the challenge is not just to contain cost but to manage them such that it doesn’t come in the way of growth and profitability.
Many of the successful midsize firms have discovered the benefits of outsourcing to balance the two, growth and profitability. Reality is firms can’t grow without additional hands on the deck and hiring is not necessarily the best strategy because of the fixed costs and long gestation around it. If firms think strategically and smartly plan their outsourcing then they can leverage the strength of outsourcing – which is scalability at variable cost.
Then there are obvious advantages outside of reducing costs. Firms can test efficiency of future technologies by adopting them in a small way. Here an outsourced function makes better sense than developing it in-house. The other advantage is that by outsourcing firms can build a “foundation” for future growth so when it is time to hit the pedal, the firm is ready.