Start-Up: Outsourcing without Happy Ending

By Teik Piew Ng | Comments

Labor shortage has long been a constant bug bear for small business including start-ups. Outsourcing is one of the common initiatives business owners take to solve labor shortage problem.

In a start-up, it is important to recognize the difference between outsourcing problem and outsourcing due to lack of talent or manpower. When you choose to perform a task through outsource, we have to understand the task and how to achieve the desirable outcome of the task. Therefore, we can define the task, requirements and task milestones. If we are unable to define the task, there is a great probability that we are trying to outsource a problem that we do not know how to solve. In this case, one should engage a consultant or a “subject matter expert”.

Cheaper Alternative?

From bootstrapping to gearing up for early growth, managing cost is very important for start-up. However, taking outsourcing as the cheaper option is not always TRUE.The common thinking is if I outsource to a country with lower manpower cost, I get get the work done CHEAPER. Generally, it is true. However, there are other hidden costs in communication and mis-communication. I think there is definitely merit if we intend to outsource data-entry task to a labor market with lower cost.In short, outsourcing is definitely a viable solution for start-up to leverage on during the early growth stage. It is important to recognize the objective of outsourcing to avoid the obvious pitfall of outsourcing for the wrong reason.