(De)risky business: Why your startup should outsource in an economic downturn
Data from startups across Europe shows clear signs of an economic downturn in the European tech space, leading businesses to reevaluate their burn rates and expenditure.
To keep flexibility and agility while growing their team and optimise costs, some startups are turning to outsourcing.
“A large majority of functions in a company can be outsourced, from customer support, to sales, platform management, software development or compliance services — from the most simple task to the most complex one,” Andréa-Lou Laffitte, group programme director at outsourcing partner The Nest by Webhelp, tells Sifted. “The important thing is to make the right internal vs. external decisions. When you have a repeating process that you’ve mastered internally, that’s one of the best things that you can outsource.”
But what does your startup need to know about outsourcing? And how can it help in turbulent economic times?
The outsourcing model
Outsourcing is not only about recruitment; it can involve training, managing, upskilling and retaining your extended team. All of these are important yet time-consuming tasks — even more challenging when startups need to extend their teams internationally.
“By outsourcing, you can deliver a quality experience to customers without needing to divert internal resources”
A key perk of outsourcing is handing over repetitive, tried-and-tested projects to an external company to free up time and resources internally.
Robert Gamble is chief operations officer at GO Sharing, a Netherlands-based micromobility startup that offers shared electric vehicles. He believes that working with a business process outsourcing (BPO) partner can help derisk in times of economic uncertainty and focus resources on critical core competencies.
“When starting or scaling a company, it’s easy to get distracted away from focusing on, investing in and developing your core competencies and service offerings that make you unique or disruptive,” says Gamble. “By outsourcing, you can deliver a quality experience to customers without needing to divert internal resources.”
De-risking business plans
Working with an outsourcing provider can also help startups absorb market shocks.
“While we are able to set up and ramp-up an international team for a start-up within a few days/weeks, we are also able to “take the hit” in times of crisis for the start-up, if they need to reduce their staff and costs”
“While we are able to set up and ramp up an international team for a startup within a few days/weeks, we are also able to ‘take the hit’ in times of crisis for the startup — if they need to reduce their staff and costs,” says Laffitte. “This way the startup doesn’t have to carry out internal layoffs and we can easily reassign our experts to other projects.”
Outsourcing specific activities to a specialised partner may be a solution for some startups to consider, in order to focus on their core business and their best in-house talents.
For example, Gamble notes that for early-stage startups, the recruitment and HR functions are often under heavy pressure as companies enter hypergrowth stages. So working with an outsourcing partner can allow recruitment teams to allocate more time to hiring management roles, facilitate the recruitment of larger international teams or acquire new skills and industry best practices.
One issue GO Sharing had was a need to provide high-quality customer support in multiple languages. And within western Europe, it was difficult to find full-time customer support team members who were also interested in working evenings and weekends, which are the company’s peak demand periods.
The Nest by Webhelp’s team in Turkey was able to find talented multilingual staff to support GO Sharing’s customers. This ability to source talent from multiple countries is a key attribute of outsourcing, helping startups scale faster without hiring permanent staff and burning through cash.
“If you were a startup we work with and you were planning to enter six new countries in two months, you could just send us an email and we could easily build up the ideal team to manage those new markets,” says Laffitte. “This is simple because we already know your brand and processes, so we can adapt your processes to local specificities through our knowledge of local markets.”
Culture and knowledge
In addition to knowledge sharing, it’s important for startups to ensure there is a good culture match when selecting an outsourcer. It’s crucial that a provider acts as an extension of your team rather than as a separate entity.
“It’s really important to take the time to know the outsourcing company, understand the culture and go and meet your teams in the specific sites”
“It’s important to work with the best BPO partners to ensure you can achieve this without losing touch with your customer base,” says Gamble. “Really early-stage startups can also learn a lot from working with a BPO experienced in collaborating with companies at a similar stage in growth.”
Laffitte agrees, adding: “It’s really important to take the time to know the outsourcing company, understand the culture and go and meet your teams in the specific sites or countries where you will operate.”
Trusting a third party with key tasks and projects may seem daunting, but taking time to select the right outsourcer will ultimately free up valuable time for startups to focus on their core goals. So what is the best approach to deciding on a provider?
“It’s not only manpower or costs — it’s also about gaining access to new skills”
“Go in with a clear understanding of your own business processes that BPO agents will interact with to ensure a smooth transition,” says Gamble. “I would also advise away from ‘bargain hunting’ when selecting a BPO partner because in the end, you are selecting a BPO partner to provide a quality service.”
Despite the current economic uncertainty, Laffitte says The Nest by Webhelp’s operation has grown by 400% in just one year.
“It’s not only manpower or costs — it’s also about gaining access to new skills,” says Laffitte. “As a startup, you can think you perfectly master some processes but as we work with several industry leaders, we have access to best practices and some of the best tech partners on the market. By outsourcing, you get access to these best practices and technologies.”
(De)risky business: Why your startup should outsource in an economic downturn: By SIFTED - October 12, 2022