As businesses realise the huge benefits to be gained, more and more companies are turning to outsourcing in order to achieve business goals faster and at a lower cost. While, traditionally, it has been larger organisations that have been keener to outsource general functions, such as payroll, credit control or transaction processing. Smaller companies, including start-ups, are seeing that there are big advantages to be gained, specifically at this early stage in their development.
The trend in outsourcing inevitably began when senior business executives saw the savings that could be made by outsourcing operations to countries with lower wages and operating costs, but as they migrated their operations, it became clear that expenditure was falling across other cost centres too. Fewer personnel, for example, meant less need for office space and infrastructure, as well as a reduced need for managerial and administrative staff. Payroll and the costs of recruiting were largely eliminated in these functions.
Clearly, for businesses just starting out, these are massive expenses – ones that can be almost entirely removed through outsourcing. Perhaps more significantly, the initial costs of designing and building IT infrastructure for a new business (especially for one involved with software development) can be massive. Anything that can reduce these costs will give the business a far greater chance of success right from the outset.
Understandably, some firms are reluctant to outsource because of a perceived lack of control over productivity. Managers mistakingly believe that, because they aren’t physically overseeing the operation, then productivity and efficiency will fall. However, as case study after case study has shown, the opposite is true. Outsourcing to companies with a track record of experience in a particular niche, such as software development, inevitably means that things get done more efficiently, quicker and with fewer errors.
For start-ups, outsourcing to a company that already has tried and trusted methodologies in place can eliminate months of trial and error setting up new operational processes and systems. At a time when you need to get a product to market quickly, that can make all the difference between success and failure.
As a start-up, a lot of time is spent getting the operation off the ground. This means a lot of business resources and manpower need to be diverted to this end, instead of core business activities. Issues such as legal and regulatory compliance, security, payment systems and recruitment can all be big bottlenecks when starting out, but they demand meticulous attention in order to avoid problems further down the line.
Being ‘qualified’ doesn’t mean ‘experienced’. While someone might have a great idea for a product, that doesn’t mean they have all the experience to develop that product successfully. Outsourcing development functions gives you access to hard-to-source personnel and expertise that, otherwise, takes time to source and can be extremely costly to recruit.
Based on all of this, it could be argued that businesses need to outsource most when they’re small or starting out, as it’s then when the biggest gains can be leveraged. In a sense, outsourcing lays the groundwork for getting a software company off the ground. It’s at this stage when the most costly mistakes can be made. By outsourcing something as notoriously complex as software development, companies can get the experience they need to avoid errors and put all the early building blocks in place for a successful business model going forward.
Everything you need to know about outsourcing technology developmentAccess a special Introduction Package with everything you want to know about outsourcing your technology development. How should you evaluate a partner? What components of your solution that are suitable to be handed off to a partner? These answers and more below.