Outsourcing is a great way to expand your startup company and reach out to more markets. But its success lies heavily in how you implement it for your work. And that rests not only on the things you do but also on the ones you don’t. So, here is a list of the things you should avoid when outsourcing your operations.
Outsourcing Things To Avoid No. 1: Overestimating Your Cost Savings
Okay, let’s get this straight. Outsourcing does save you a lot on cost. But putting too much focus on that aspect can end up biting you back. Here, you might find it not generating as many savings as you might expect.
The problem often lies in you not understanding the actual cost of outsourcing itself. Bear in mind that the things you do during the outsourcing effort will contribute to that cost. For instance, ensuring provider compliance will require you to spend resources for it. These behind-the-scenes costs will affect the eventual savings that you will get. Be sure that you account for them when doing your cost analysis.
So, how much should you look forward to saving when outsourcing? At most, you would want to peg it at around 70% of your total work cost. Anything higher than this should be considered a lucky stroke on your part.
Going To The Lowest Prices Available
Because of that greater emphasis on getting as much cost savings as possible, you can also be prone to making another common mistake. You end up going for the lowest-priced option available in the market.
To be clear, going for the lowest price available isn’t wrong per se. However, you should be aware of what comes with that low price. Or rather, what doesn’t come with it.
Here, you might find that the provider does not have enough resources to support the scale of outsourcing you need. Or their talents might not be as effective as you expected. Whichever the case, you may end up spending more in other places to compensate.
Outsourcing Things To Avoid no. 2: Letting Providers Tell You What Your Startup Company Needs
Okay, the best outsourcing providers are arguably experts in the field. Thus, they know more than you do in various areas of outsourced work. After all, you sign them up exactly for that expertise.
However, that doesn’t mean that you will let them dictate what you will need. That might sound a bit odd since you likely have a list of services to get. But they can recommend more to you with the justification that these additional services can help you accomplish the tasks at hand. And if you are new to outsourcing, you can readily jump into these offers.
If the provider has a good track record, there might not be anything nefarious in these recommendations. However, agreeing on them immediately can still affect the success of your outsourcing efforts. Here, you might find yourself having to deal with services that don’t directly contribute to your outsourcing needs.
Setting Your Startup Company Priorities Right
The best way to avoid this issue is to be clear about what you want to prioritize. Go back to the outsourcing plan you have made and review those priorities. This helps you see whether the recommendations made by the outsourcing provider are reasonable enough and fit within those.
But even if they do, you still need to weigh other factors. For instance, you need to assess the feasibility of these recommendations against your company’s current situation. This will help you better decide whether to accept this.
Remember that, while outsourcing providers may know the work more, you know your business better. Combining your knowledge with theirs will help you take advantage better of these recommendations without being overwhelmed.
Outsourcing Things To Avoid no. 3: Not Including The Outsourcing Provider In The Process
Another common reason why your startup company outsources is to augment your workforce. However, you might sometimes be tempted to think of them simply as that, additional workers That mindset can lead you to not really get the most out of them.
Remember that outsourced workers are also professionals. Hence, they are very much capable of doing the initiative. Thus, they can contribute more than just providing extra hands. Your outsourced team can also bring in fresh ideas for the work.
How Your Startup Company Should Do This
The trick here is to bring them into the process right from the start. You need to have an established communication line they can use to send feedback and suggestions to you. Ensure that you are ready to respond to these and create a continued collaboration.
You should also encourage that independent initiative as much as possible. For example, you can provide them some leeway when doing tasks. That gives them room to experiment and devise new work strategies. Also, actively encourage them by asking what they think of these or that process. This encouragement contributes to the above collaboration.
Outsourcing Things To Avoid no. 4: Not Having An Exit Strategy
This is something that does not often come into the mind of many startup companies. After all, the goal is to outsource as long as needed. However, not having an exit strategy can create various issues when you reach the end of the outsourcing contract.
One of these issues is not moving properly into the post-contract environment. Here, you might have a hard time dealing with the loss of the service the outsourcing company provided. Or you might find out that the transfer of assets was not done correctly. All of these can disrupt your operations as you resolve them.
How Your Startup Company Can Be In A Better Position
Thus, you should have an exit plan even before you enter outsourcing. Think of it as a natural progression of your outsourcing effort. The length of the contract will govern how your exit plan will work.
If it is a short-term contract with a definite end, for instance, you want your exit strategy to be also definitive. The idea is that since you already know where the contract is headed, you should also know to wrap it up accordingly. On the other hand, if it’s a long-term contract, you want your exit plan to be more flexible. This is to accommodate any possible changes that might occur during the contract.
Boost The Outsourcing Success Of Your Startup Company By Doing It Right
This list of things that you should avoid is by no means definite. There are still many things that you should consider when you outsource your operations. As a rule of thumb, you should always put the best interest of your startup company when deciding whether to avoid these things. That way, you can be sure that it is indeed the right direction to take. Contact us today and we will help guide you there.