Posted by Neha De
August 14, 2020 | 4-minute read (625 words)
Software-as-a-service (SaaS) is quickly becoming one of the most popular methods of software delivery for customers across the world. About 73 percent of organizations say that by the end of this year, more than 80 percent of their apps will be SaaS, with 38 percent of companies already running almost entirely on SaaS, according to a report by BetterCloud. And looking at the growth, hiring the right people is extremely important.
As a solution, many SaaS companies have increasingly started outsourcing in order to gain a foothold in the market and eventually grow. So instead of letting core SaaS employees waste their time and energy on tedious or repetitive tasks, business owners can get the best of both worlds by outsourcing their back-office activities to industry experts.
As SaaS gains traction, outsourcing can prove to be an essential component in the long-term success of SaaS startups. Here are three ways such companies can benefit from outsourcing.
Fast, Enhanced Growth
According to research from McKinsey, an annual growth rate of 20 percent for a healthcare company would be an exciting achievement, but if a software company grows at only 20 percent annually, it has a 92 percent chance of going out of business within a few years.
Growth at any organization depends on such external factors as product adoption and engagement, as well as market penetration, in addition to internal factors such as product development and cost analysis.
On the other hand, there are a number of factors at play when it comes to a company's failure to evolve quickly. Some such factors are startup costs, unsuccessful marketing campaigns and employee motivation and satisfaction. On top of that, finding qualified staff members can be a challenge in itself.
At SaaS companies, a full-time employee may not always be needed for a project, so once that project is complete, those staff members might soon find themselves working on peripheral tasks that take them away from their core responsibilities. As a result, apart from wasted costs and resources, employee motivation might take a dive, and eventually overall progress falls as well.
Outsourcing takes care of this problem by bringing in people to handle the various peripheral tasks that must be completed, while also allowing employees to focus on their core job functions, which typically include growing the business.
Rapid Development and Deployment
One core function of SaaS businesses is to apply software patches and updates to their software effectively and efficiently. Such companies must be able to quickly adapt their software as needed. However, this requires a skilled development team, fast change management and successful deployment phases. Outsourcing can be a great option in this case, as instead of scaling up an internal team, which can be quite expensive, SaaS companies can have an on-demand team working for them.
When a business grows, it needs to hire more people, create new teams, develop new policies and procedures, build its IT infrastructure and other things, which can take a lot of time and money. But for software companies, SaaS is only as efficient as its existing infrastructure. For example, if a SaaS company only has enough infrastructure for 500 customers, revenues will plateau and growth will eventually stagnate. But by increasing its infrastructure by even 30 percent each year, the opportunity for growth can match that increase.
For many businesses, especially SaaS, scalability is a tough metric to measure. However, outsourcing can help remote teams quickly build new IT infrastructure as needed. The scalability that outsourcing firms offer can provide your SaaS company with much-needed flexibility, which is not always possible to do internally.
The bottom line is that outsourcing provides an option for growth to SaaS businesses, because without growth, success disappears and competitors can take over.