Outsourcing In Startups: What Are The Advantages And The Best Models?

Outsourcing emerges as an answer to many of the challenges startups face due to their own business characteristics. In this article, we present you with several reasons why outsourcing can be a great solution to your tech startup needs.

Managing and developing a startup business implies several challenges. Some of the obstacles that can limit a recent company’s growth are limited resources, whether they’re human, financial, or technological. 

A lack of specialization is also seen as an initial challenge because many startups begin with smaller teams that try to reach every domain. Another challenge found is time pressure, considering that the business demands quick product or service launches from the tech team.

This is precisely where outsourcing appears as an answer to many of these challenges. Check out the different reasons why outsourcing can be an excellent solution to your startup’s technical needs.

Why Should My Startup Bet on Outsourcing?

More and more entrepreneurs look for companies like KWAN to help create outsourcing teams.

According to a study by Clutch, 52% of EUA startups planned to resort to outsourcing and over 37% of them had at least one important domain of their business delegated to outsourcing teams due to the many advantages this working model presents.

The Work Day Goes Back to Having (Almost) 8 Hours

Managing a startup is a strenuous challenge. The reduced teams need to stretch between product development, marketing, accounting, HR, and many other areas. Besides, they also need to constantly focus on solving issues associated with every domain.

Additionally, there’s a constant need to recruit as the goal of a startup is to establish continuous growth. All of this prevents you from focusing on what you intended when you created the startup: developing a business. The pressure sometimes gets to be so high that it can lead to situations that seriously impact mental health.

Opting for an outsourcing solution for startups allows you to look at your company’s management more efficiently, saving time with recruitment and small tasks and allowing you to focus on developing your business.

without exhausting your time in things like recruiting and small tasks. You’ll end up with more time to make your startup grow.

The Startup Has Access to New Knowledge and Technology

In a startup, a team comprises professionals who can do anything, from marketing to HR. They’re true “jacks of all trades” that try to answer every question and establish domain over every area.

The truth is that your employees aren’t superheroes and you can’t expect them to have superpowers to control everything. This is why choosing outsourcing might be an excellent strategy.

At KWAN, our clients have access to IT teams with experienced and specialized professionals in the areas you’re looking for, reducing the chances of failing and increasing the speed with which you can present results to your customers.

They can also access the knowledge of every company consultant through the technical training, webinars, and other knowledge-sharing events we regularly conduct.

Reduced Operation Costs

Startups’ budgets are limited and must be allocated to every company department, such as technology, product development, marketing, and recruitment.

Recruitment costs, for instance, include more than a salary and employee taxes. Additional recruitment costs include paying a recruitment team (or the person in charge of recruiting), an HR for career management and team motivation, payroll, and others.

Opting for an outsourced IT team might help you save money on costs related to employees, the recruitment team, and the management team. You’ll also waste less time with the recruitment process which you can then invest in core business tasks.

Reduced Team Turnover

One of the main problems associated with startups is the fact that teams constantly change and companies have to constantly undergo several recruitment processes for the same positions.

 This situation grows worse for IT professionals considering that there is a serious shortage of available talent. A startup’s intense pace makes employees have a short-term vision, leading them to extreme situations of stress, demotivation, and even burnout.

Outsourcing for startups is the answer to these situations: delegating work to external teams allows you to focus your resources on the startup’s core business and optimize your work hours. In the short term, you’ll be able to improve your employees’ performance and physical and mental health. 

Outsourcing companies like KWAN see employee retention as a priority, keeping them motivated and fulfilled in their projects. We have coaching specialists, our People Managers, accompanying our professionals’ evolution throughout their projects. If the project’s needs change, the outsourcing model allows for the resizing of the team, without having the burden of firing internal employees.

If you’re considering outsourcing by now, the next step is to figure out which work model you should adopt. Here’s where you need to answer questions such as “ How do I choose the right teams?” and “Where can I set them up?”.

What is “Inshore” and “Nearshore”?

Whether you’re familiar with some of the concepts that involve outsourcing in startups or if you’re at the start of your journey, the best step is to start with the main outsourcing work models. 

The “inshore” and “nearshore” terms are related to the distance between the remote team and the company. 

The “inshore”, also known as “onshore”, model determines a working model in which the team is situated in the same country as the hiring company. For instance, if an IT team from Lisbon hires an outsourcing team from Covilhã, this is an inshore team.

“Nearshore” refers to a working model in which the outsourced team is found in a country or region near the hiring company. In this situation, the hiring company might be situated in Madrid and working with an outsourcing team from Oporto.

Choosing between different outsourcing models will depend on the needs of each startup. All of them guarantee benefits such as cost reduction, better access to specialized human resources, and company flexibility. Startups must consider factors such as costs, geographical proximity, cultural differences, communication requirements, and more.

Onshore In Portugal: Why Limit Your Tech Team to a Single Location?

Apart from cities like Lisbon and Oporto, it’s possible to set up a tech team across the entire country. Check out our article on 5 tech-friendly Portuguese cities to start your nearshore IT team, with everything you might need.

Cities such as Braga, Aveiro, or Coimbra present an extremely positive cost-benefit ratio as well as professionals with excellent skills and well-structured coworking spaces.

Outsourcing In Startups: Which Are The Advantages And The Best Model? – Final Considerations

After reading this article you might be wondering how you could outsource a part of your business. An outsourcing partner specialized in finding the right people for each project is a starting point for the success of your team’s work and your business. At KWAN, we have years of experience in developing and implementing outsourcing solutions in tech, regardless of the company’s size or projects. If you’re a startup founder or a tech team manager in need of IT professionals and you think outsourcing might be the right choice for your business, reach out to us! Together we’ll help you choose the right option to reach your project goals.