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Why startups should outsource some services

Posted 2018-09-06

The Brazilian business market is already very competitive, especially when it comes to startups, which are embryonic companies – created from ideas normally innovative and with limited budget. Because of these characteristics, to achieve greater chances of success, these companies must optimize activities, make the most of its resources and avoid unnecessary expenses. That is why startups should outsource some services.

Because of this, outsourcing comes as a way to reduce costs and optimize activities. But which services should be outsourced and which ones should not?

Reflect about the company’s activities

What is the main activity carried out by your company?

Knowing the core activity of your company is crucial, because in this way you will be able to identify which ones can be outsourced and which ones should not be.

The activities that bring identity to the company – that is the core of sets of services offered by the business- should not be outsourced. The entrepreneur must maintain strict control over these activities in order to better supervise the quality of the services provided, and to keep the focus of the activities towards the objectives for which they were created.

Services that do not concern the identity of the company can be outsourced, as they do not require immediate identification between the service provider and the business mission of the startup. In addition, there are other advantages related to the outsourcing of activities that are not central to the operation in the company, such as reducing costs and increasing productivity.

Reduce labor expenses

Hiring freelancers (temporary contracts, on demand) or companies specialized in the provision of routine services – such as cleaning, accounting and administration – can greatly reduce startup costs with labor expenses. This is because there is no direct link between the entrepreneur and the service provider. What matters in this case is the provision of a routine service, which does not depend exclusively on the professional curriculum of a given individual, nor on their internal experience within the company. Examples of this are accounting and routine legal advisory services.

Payroll costs, work material, maintenance of a business environment, among others, are reduced.

Focus on specific startup projects

Another benefit of hiring freelancers is the ability to focus on specific projects for which hiring on demand makes more sense. Through outsourcing, the entrepreneur divides the productive process of the company and delegates specific functions to individuals or companies specialized in performing that activity. Thus, it is not necessary to hire a professional to develop this project, since in future works those services may no longer be necessary in the company.

Hiring at market price

This is one of the main advantages of outsourcing. Unlike labor laws and union agreements, which require a minimum wage floor for certain activities, the hiring of freelancers and companies specialized in providing services to startups follows the rules of the market with regard to pricing.

Entrepreneurs and outsourcers are free to adjust prices, make discounts, extend delivery times, and other contractual freedoms that are typically stricter in more traditional employment relationships.

Learn more about our Outsourcing Services.

Author's post: Europartner Accounting [Fancy_Facebook_Comments]