Bizstartup.ie - Start Up Kit

Since the early Nineties there has been a trend for small to medium-sized enterprises (SMEs) and large corporates to outsource certain functions to reduce costs and improve efficiencies. 

Functions such as finance, logistics and manufacturing are now regularly outsourced to companies whose primary focus is to offer “out of house” departments to their clients. 

Start-ups that consider an outsourced approach can sometimes avail of more benefits than purely reducing costs and improving efficiencies. 

One of the main challenges a young enterprise can sometimes face is in-house management. Sadly, great products and services all too often never reach their potential within the target market due to the lack of experience of their promoters. Nowadays start-ups that look into outsourcing can avail of industry insight, experience and a useful outsider’s perspective while also reducing overheads and cash burn.

Formulating your strategy

So, when formulating your strategy for growth within your own plan/business, look at your internal process and its present/future components. Ask yourself:

• What do we need to do in-house? 
• Would elements of the business be better executed or outsourced to experts in the field?
• Could our business better maximise its working capital by outsourcing to partners who are rewarded by results and not flat fees?

Tips on choosing an outsourcing partner

• When choosing an outsourcing provider, the best practice approach is to source a partner which already has a customer base in line with your own business. This way you can benefit from the experience and learning outcomes of other companies. 
• It’s also important to understand the available resources of the potential provider ensuring there will be sufficient bandwidth for your business and its requirement scale. 
• Finally try and structure your commercial engagement with the partner on a results basis – this will allow for better management of your company's capital and will also ensure the best-possible return. 

Further information and advice on outsourcing can be found here.