Sooner or later, any startup comes to the stage when it’s time to scale up. And it’s exactly scaling that will define its success. As a company scales up, it experiences growth in various spheres, including revenue, customer base, and brand awareness. The goal during the scaling phase is to expand the business sustainably. This involves maximizing growth opportunities while managing the increased operational complexities that they bring.
Scaling up has its challenges, not only in terms of operational efficiency and market competition, but also talent acquisition and hiring strategies. Understanding the opportunities of outstaffing vs. outsourcing may bring considerable benefits to a company’s growth and development. Stay with us to explore how the tools of outstaffing can help a startup reach cost-effective development.
Spread Challenges of Scaling Startups
Once you’ve started your startup scaling up, you’ll face a number of challenges, which will test your resilience in the end. Here are the most common ones that may create obstacles :
- Specific skills needs. During the startup scaling, the need for specialized skills becomes more critical. Scaling complexities require expertise that will be able to deal with them. You’ll still need to navigate between acquiring the best talents and managing the competitiveness of the market.
- Pressure of the market. As your business grows, you expand to new markets, segments, and reach more customers. You’ll need to understand all their demands and regulatory landscapes to fit in. Besides, you’ll need to work on establishing brand awareness and trust to compete with the local brands.
- Resources constraints. All startups have limited resources at the beginning. To scale startup activities, you’ll need to think strategically and allocate them smartly. The main areas impacted are usually finances, human resources, and technological infrastructure.
- Cost-effectiveness. The limited resources can redistribute effectively, focusing on lean principles and minimizing waste. While scaling startups, the critical areas should receive the foremost attention. Cost-effective strategies also consider the automation of manual tasks, outsourcing non-core activities, and focusing on high-ROI marketing strategies.
Main Functions of Outsourcing and Outstaffing
As startups leverage their sources and transfer their functions to third parties, outsourcing and outstaffing are the two business practices that are addressed the most. The following are the main functions, each of which helps businesses develop.
Specifics of Outsourcing
To scale startup activities, more and more companies turn to an outsourcing model, which means contracting a third party to accomplish specific tasks and functions. The outsourcing company helps with managing various projects, processes, and teams. Outsourcing focuses rather on the final results, without having control on the individuals who perform the tasks. The most common functions outsourcing helps with include HR, administrative, legal tasks, IT, marketing, sales, and financial activities.
Outstaffing Model
An outstaffing company may help you to hire staff and expand your team, but these new specialists will be under your direct control. In this model, the hired specialists will be employed by the outstaffing company for any specific task you intend to transfer. At the same time, they’ll constitute a part of your team until the end of the project or the contract. The outstaffed specialists are a good extension of your team, which is beneficial for scaling startups. The outstaffing company, in its turn, ensures control over the work done and integrates it into the existing workflows. This model can help you with such functions as software development, project management, technical support, design, and other development occupations.
Advantages of Outsourcing and Outstaffing in Scaling
Both outsourcing and outstaffing help startups accelerate growth and optimize resource allocation. As a startup, cost savings is a must for you at this stage, and you can save much with choosing an outsourcing partner. You’ll already see savings as soon as you transfer your non-core functions to them.
Outsourcing also opens up access to a vast, global talent pool. You thus find highly skilled professionals across various domains. This is particularly beneficial if you seek to scale startup activities to other regions. They may have competitive job markets or shortages of specific skills. When you delegate non-core activities to external providers, your team can concentrate on strategic growth areas. You rather focus on product development, market expansion, and customer acquisition.
With outstaffing, you’re flexible to scale teams horizontally or vertically. It considers your current needs and project demands. Besides, with it, you continue to directly control your projects and manage remote employees as if they were in your core team. With outstaffing you tackle new opportunities or challenges quicker. As a result, your business can respond effectively to market dynamics without the delay of traditional hiring processes. This is especially important, since data show that 80% of startups fail because they are unable to adapt to the mainstream market demands.
Making the Choice
Both models have their advantages, but which direction to choose? This will depend on your requirements, your startup situation, the projects you delegate, and your final goals. Before you make your choice, assess these main factors:
- Complexity of the task. Is the task you want to delegate complex and falls outside your competencies? In this case, outsourcing may be more beneficial. Instead, consider outstaffing if you want the task to remain under your control and integrated in your team.
- Duration of the project. If your project is a one-time or short-time, outsourcing will be more suitable. Outstaffing focuses more on long-term cooperation when projects require some degree of flexibility.
- Level of control. If you want to delegate tasks that don’t require close supervision, turn to outsourcing. If you want to closely track the progress and have real-time feedback and adjustments, outstaffing will be your choice.
- Scalability. If you’re looking to scale rapidly, outstaffing offers the flexibility to adjust the team size based on current needs. If you aim to maintain a lean operation and focus on your core business, outsourcing may seem more aligned to your strategic goals.
- Budget. Outsourcing will be more cost-effective if you’re looking to minimize expenses. However, for ongoing projects or when scaling up quickly, outstaffing might offer better cost control and predictability over time.
Scaling and Expanding
The strategic utilization of outsourcing and outstaffing represents a valuable opportunity if you aim to navigate the complexities of scaling. These approaches offer distinct pathways to augment capabilities, manage costs, and focus on core competencies. At the same time, you will continue navigating the growth trajectory in the startup system.
The choice between outsourcing and outstaffing hinges on several inevitable pillars. They include the character of the task you want to delegate, the required level of control, and budgetary constraints. By leveraging these tools, you’ll be able to optimize your resource allocation, enhance operational flexibility, and focus on innovation and market expansion.