After the recession waned and economy began to pick up in the U.S.A. and Canada, there has been a spurt in entrepreneurial activity. While this is a good sign and reflects the buoyancy in the market, many of these newer businesses often find themselves in existential crises.
Though venture funding and angel investing have seen an upward surge, money that is invested in start-ups is diluted towards non-essential functions, such as investing in unnecessary IT infrastructure and hiring full time employees.
Several studies have pointed towards the fact that some of the most successful businesses today are those that are lean, small in organizational size and that which depend on third-party services. This article takes a look at 4 important benefits of outsourcing for startups and new business owners.
Outsourcing IT requirements is a necessity for every start-up and new business owner. It would be financially and technically imprudent to take up IT responsibilities in-house. When a company outsources IT requirements, it gains access to software programs, enterprise solutions, IT infrastructure and storage solutions that come at a fraction of what it would otherwise cost, if the company chose to go it alone. Moreover, vendors are specialized in these areas, thus reducing and eliminating the necessity for non-technical individuals and start-ups to learn something alien to them.
Most importantly, new businesses gain access to technology that is otherwise unavailable or inaccessible to them, on account of financial and technical constraints. With cloud computing emerging as the future of IT industry, it is no more a choice but a norm to outsource IT and technology requirements. This is because cloud-based services offer a plethora of on-demand services, eliminating the need for investing in or spending on unnecessary IT tasks.
Take the example of a restaurant which needs to automate its billing system. The owner of the restaurant will be familiar with kitchen, management and marketing techniques. However, to expect that the owner of the start-up also knows his IT skills well is to expect a little too much from him. Unfortunately, many start-up owners try to do everything on their own, often resulting in unpleasant consequences.
Outsourcing helps entrepreneurs to access specialized services which they either did not know existed or had very little idea about. For example, the restaurant owner probably doesn’t understand that enterprise mobility could be used to not only place orders, but also to track inventory, billing and sales. A few examples of such specialized services that can be outsourced are legal services, taxation, training, software consulting, infrastructure and others.
While it may seem like outsourcing is a lot of money to invest initially, it costs a lot more to do everything from the scratch, all by oneself. Outsourcing IT, branding, marketing, infrastructure and other services only helps small companies to reduce costs and focus on their core competencies. Precious time and financial resources can be used to grow a business, instead of diluting those very resources on things that can be delegated to a third-party vendor.
While cost-reduction may not seem apparent immediately, in the long term, outsourcing not only helps to reduce costs but also assists in boosting sales and profits, ultimately helping a business to break even. It is thus rightfully said that the smaller and a newer a company is, the more fruitful and important it is to outsource as many functions as is realistically possible.
One of the most important benefits of outsourcing is that it streamlines the way an organization works. It eliminates the need to hire full time employees and keeps the organization small and effective. By hiring third-party vendors, startups and new business owners can eliminate the burden of full time employees and concentrate on building a team that is small but highly qualified.
It is worthy to note that a number of times, it is just the founder and the co-founder which run multi-million dollar companies. They do this by outsourcing all functions and duties to third party vendors. A lean structure is very important for a new business to succeed and allocate its financial and time resources to more important tasks.
Outsourcing is often seen by entrepreneurs as something that is the reserve of medium and large sized companies; only, that is not the case. Smaller companies and those companies which have just filed papers for incorporation are the ones that benefit the most when they outsource. A start-up neither can afford to waste existing funds on non-essential human resources nor can it purchase IT infrastructure. To cut a long story short, it is never too early to outsource. For a small company that has just filed for its incorporation, the benefits of outsourcing are innumerable.
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