A simple guide to outsourcing - for startups.

Startups on their growth journey may arrive at a point where a decision must be made on which operations to outsource and which to maintain in-house. It is common among larger corporations for instance to have legal and accounting services outsourced to third parties. For larger corporations these decisions are mainly motivated by maximizing profit and minimizing risk.Instinctively, startups may lean towards managing all of their business in-house as a means to minimize overhead costs. But there are instances, even for startups, where outsourcing may be more financially and strategically prudent. In determining what to outsource, here are a few points for startups to consider.

• Outsource specialist services needed for finite periods. Common areas where startups may require specialist support are for legal, growth or marketing strategies. Since these are required for finite time periods, it is irrational to permanently hire a specialist for this purpose.
• Outsource business components with huge upfront costs. Startups may outsource product or operational components that have massive upfront costs. Minimizing investments in fixed assets boosts cash flow and minimizes risk. A common example might be to outsource product packing needs rather than invest in expensive printing and packing hardware.
• Outsourced business components should not have the potential to cause major disruptions. Startups may consider outsourcing only services that do not have direct bearing on the core business. For example, if running a technology startup, the core technological component should not be outsourced, since it may not be easily substituted and without it, your startup may collapse.

In addition to meeting the above considerations, if the overall costs of outsourcing are cheaper, startups may opt for that. The above points are only meant as a starting point for startups facing these crucial decisions. Actual choices must be contextually relevant and should form part of a startup's business strategy. Wide Strategy has worked with over 50 startups as strategy consultants and project managers, supporting them on brand positioning, stakeholder engagement, sustainable growth strategies and culture change challenges they face. Visit our website to learn more.*Outsourcing in this context loosely refers to contracting a third party, (-who is not a permanent member/employee) for a business component. By Maud Martei