Table of Contents
- First Things First, What Not to Outsource?
- But, What About Outsourcing Development?
- Understanding Which Business Functions Are Best Outsourced
- Most Commonly Outsourced Functions
When you run a business, there’s a number of things that you’d have to take care of.
Managing the processes. Monitoring them. Initiating new processes. Bringing new ideas to the table and whatnot! In times like these, an extra hand can always be useful.
Outsourcing can be that extra hand for you.
With almost every second company in the US outsourcing one function or the other, the global outsourcing market rose to almost $100 billion in 2015.
And then, 78% of these businesses that outsourced their business function(s) were satisfied as well.
This simply means that outsourcing works. The question of concern is what exactly can a company outsource to kick-off big?
To start off, here’s a comprehensive guide revealing everything from the secrets of picking the best outsourceable business functions to finding out what not to outsource.
First Things First, What Not to Outsource?
With consultants and incubation centres becoming popular, many business functions that were traditionally kept in house, such as, business strategy and accounting, are now being effectively outsourced to drive success.
But, then there’s this thing about drawing the line. Clearly, no business can outsource all of its functions. And before you know what to outsource, it’s better to know what not to.
While outsourcing sales can be highly beneficial in some industries, the case of SaaS products is different.
Unlike generic products, most SaaS products require a well-trained salesman that thoroughly knows the ins and outs of the product. This, however, does not mean that you will have to start cold-calling prospects.
Instead, you can begin by outsourcing the prospecting and lead generation for your product, and close the final sale in house. This way, you can enjoy the benefits of outsourcing the most mundane (and often, most difficult) part of your sales process.
Moreover, you will still be ensuring no leads are wasted because the sales rep couldn’t answer in-depth questions about your product.
Just like in the case of sales, while outsourcing support may work for bigger brands, it is not a great idea for growing SaaS businesses. The reasons are a few:
1. It is the era of personalized customer experiences
When you have complete control over your support staff, you can concentrate on building fortified and personalised relationships with your customers. Not to forget, an in house customer service rep will be backed by your product expertise, and may prove to be more efficient at resolving customer queries than an outsourced resource.
Also, when you interact with your users directly, you are not only helping them, but also collecting valuable feedback.
Martin Gjaldbæk, Founder of Hrvey says “chatting with users on Intercom is the best and most direct product feedback I could get.”
2. Most common customer queries can be resolved by simply adding thorough instructions within your software
This way, you can effectively minimise customer queries.
To take this a step further, instead of investing on an external support team, invest on instructional videos that enable customers to make the most of your product.
These videos will stay relevant, regardless of how your customer base grows, and hence, are a one-time investment with potential lifetime returns.
Bottom line, it’s good to keep customer interactions in-house. Your customers are the reason behind your success so far, and it is a smart move to keep them close.
But, What About Outsourcing Development?
The SaaS industry is growing at a rapid pace, and not all businesses are able to keep up.
At a time when developers are just as much in demand as the products they develop, it is not always possible for bootstrapped startups to hire the right talent.
However, that is just one of the reasons you should consider outsourcing development for. Here are more to consider.
1. Outsourcing will boost your in-house development team’s productivity
Even when startups end up hiring a small team of great developers, in many cases, they are compelled to perform a variety of tasks that fall outside of the responsibilities associated with their job (that’s startup culture for you!).
As a result, their productivity diminishes, along with the progress.
Outsourcing takes care of this issue by providing dedicated resources to the most pressing tasks. Moreover, when you outsource smartly, you get access to top development talent, without having to pay their hefty salaries.
The most famous example of the same is Slack.
They outsourced their development, and were able to roll out a prototype and test their MVP in relatively shorter time, while still avoiding significant financial risks. As a result of smart outsourcing, Slack became a successful product currently valued at over $7 billion.
2. It Enables You To Scale And Grow Better
As your business grows, there are about a million things that will require attention. While some are more important than others, it is easy to get lost on the way.
Consider this, according to McKinsey, if a software company grows at a rate of 20% annually, there is a 92% chance that it will cease to exist in a few years.
In order to be able to scale and grow, SaaS products need to be continually updated, new features need to be deployed consistently.
While there is no denying these tasks can be done in house, with all the other little things to take care of, these tasks take a backseat.
In contrast, there are certain cases when SaaS companies should NOT outsource their development.
The most common such case is when the CEO/Founder is a developer. It’s your idea, you have the skills to materialise it, why would you outsource something you do best, right?
Apart from that, CEOs that don’t come from a development background still have a couple of considerations to make:
3. Does the product need technical support after development is finished
If your product is relatively straightforward, and you think once the bugs are taken care of, it has the ability to function without constant maintenance, it is a smart move to outsource. However, if, on the other hand, your product does require a lot of looking after, it is best to keep things under your direct control.
If something goes wrong down the line, an in house team will be the most efficient at understanding the urgency and importance of getting the task done immediately.
4. Is the product truly unique?
Unless you trust your development outsourcing partner with your life, do not outsource your unique product idea to a stranger. Not only is there a significant chance that your idea will no longer be unique, but there is also a great chance that an outsourced team will not be able to fully realise your vision.
All-in-all, any decision that you make towards outsourcing any of your business functions should simply be thought-through and leak-proof.
That can only be achieved once you understand the science behind deciding which business functions are best outsourced.
Aiding to the same, the following section will help you.
Understanding Which Business Functions Are Best Outsourced
Here is a list of factors to consider while picking the business functions that you want to outsource.
1. One Metric That Matters (OMTM)
No, it isn’t another startup guide trending term. No, it doesn’t mean that there is just one thing you need to worry about after you wake up every day.
Instead, it defines the one metric that is more important than all others.
In the case of most SaaS companies, common OMTMs (in different businesses) are SLAs, uptime, recency of use, relevancy of features, among many others.
The point of identifying your OMTM is simple, you will never outsource any tasks that contribute to this metric.
2. Understand your own skillset as the founder, and how you can manage time to apply those skills
As Jason Feller, Lead Strategist at Salted Stone Inc. puts it, “it depends on your expertise. The things you don’t like or aren’t good at, are the things you should outsource usually”.
If you are a developer, outsource functions that don’t directly affect the development process. The point here is, the things you aren’t good at, or don’t like, are the things that will affect the efficiency of your business as a whole.
As opposed to which, when you outsource such functions, you can concentrate on what you’re good at, while ensuring the other functions are still getting the expert attention they deserve.
3. Identify low return/productivity divisions of your current team
Not all teams are created equal. Some work well, while others struggle to drive results and productivity.
Matt Watson, Founder at Stackify describes a refreshing outlook, “you don’t necessarily want to outsource anything. You want to augment your existing staff.”
Identify the strengths and weaknesses of your hired resources, and use them to guide the decision that will skyrocket your business output.
Most Commonly Outsourced Functions
Even when the guidelines have been laid out, making crucial business decisions is never easy.
In marketing, social proof is regarded as a great motivator of purchase decisions. The same principal can be used to choose which function of your business you want to outsource.
Let us look at some of the most commonly outsourced functions among successful SaaS companies, and make an informed decision:
1. Bookkeeping and Accounting
While accounting is certainly not something you want to overlook, it isn’t usually a business function that contributes to your bottom line. But, it eats up time.
All of this makes accounting the perfect candidate for testing the waters of outsourcing.
In many cases, such as in the case of business coach Dan Holloway, outsourcing accounts has actually brought in positive ROIs.
According to Dan, his accountants “paid for themselves 3 times over in the first quarter alone”.
Even if that is the absolute best case scenario, outsourcing your bookkeeping will at least ensure you never run into tax troubles, and can concentrate on the core competencies of your business.
2. Branding and Business Strategy
While founders and business coaches like Matt Watson and Dan Holloaway advise you should keep the core business strategy and innovation in house, there is no reason that it should not be outsourced.
Speaking of the challenges that you may have to face, finding the right team to turn your company into a brand can be a headache.
Even if your vision is crystal clear, the outsourcing company may still have some doubts.
This can be solved by working with a company that does it on a regular basis. For a company like that, realising your vision will be much easier and hassle-free.
3. Content & Graphics
While integral to effective marketing, creating content and graphics is time-consuming and if you’re not used to it, the task can be arduous. Add to that the frustration one may experience if the content/graphics don’t drive the kind of results you had imagined.
Albert Luis Mercado, CEO at Zipmade and GORUN.PH suggests,
“it’s always best that you hire managers and outsource the high volume workload (the actual design and copywriting). Your content manager will always have an exclusively aligned mission with you. They’ll brainstorm and come up with original ideas inspired by your directions.”
Another consideration here is that all the reasons that make creating designs and content in-house a challenge are also the reasons that will make finding the right content provider/designer(s) a challenge.
For this reason, it is best to stay off Fiverr, and work with an agency.
To drive the best results, it is advisable to work with a few designers/writers to find the one whose style resonates with your goals, and stick with them.
Outreach, whether it is for link building or for prospecting, is almost a necessity when it comes to achieving online success.
But, with your inboxes being bombarded with thousands of work emails, outreach can turn to be challenging and time consuming.
Sure, email marketing SaaS products are effective, but even they require a dedicated and proactive resource if you want to drive quantifiable results.
No wonder, outsourcing your outreach operations will add to your breath of relief.
Just like outreach, SEO is a complex undertaking that requires time and patience to show results.
When marketing is not a part of the solution you are providing as a business, it is best to let the pros take care of it.
As mentioned earlier, you can still maintain absolute control over the sales. It’s just the lead generation and prospecting tasks like SEO and email marketing (and cold calling) that are to be effectively outsourced for improved efficiency and output.
This one is a bit obvious. Legal matters demand specialised qualifications and knowledge and errors in legal matters can prove to be expensive (to say the least).
For this reason, it is best to leave your legal and compliance matters to someone that knows the law inside out (A.K.A., a lawyer).
7. HR & Hiring
These business functions may be your last choice of tasks to outsource. However, they can still prove to be an unexpected challenge for you.
In fact, challenges related to hiring are the reason many businesses start considering outsourcing.
While no HR firm can help you build a vibrant and positive company culture, they can certainly help you find talented employees that will contribute to a vibrant and positive company culture.
The rest will rely on you and how you train and nurture your team to boost productivity and employee satisfaction.
To sum it all up, while outsourcing can prove to be the one decision that transforms the growth-journey of your business, due diligence is required to ensure your decision doesn’t backfire.
Jonny White says the decision comes down to “what your skills are, how much cash you have, and what you enjoy doing.”