Modern startups face unique challenges that require exceptional focus and flexibility. The market shifts at a breakneck pace. Demand can surge one month and dwindle the next. And regulation changes make it difficult to remain compliant while also staying competitive.
That’s why startups are increasingly turning to outsourcing as a simple way to boost their productivity without significantly raising their expenses.
In this article, we’ll take a look at the best benefits of outsourcing your back-office operations, the savings available to startups that opt to outsource, and three tips for vetting your outsourcing partner. If you’re considering working with a back-office team, read on! Lightening your administrative burden might be easier than you think.
Why do startups outsource recruitment services, HR services, accounting and more?
Outsourcing tasks that are outside of your startup’s core strengths isn’t a new trend. In fact, companies have been outsourcing services like accounting, IT operations, recruitment services and more since the 1970s. In an effort to find faster and more cost-effective ways to streamline operations and reduce errors, these companies began to see outsourcing as a way to focus on their core competencies and leverage partners that are experts in their own offerings.
When you’re fighting to remain competitive, secure funding, prove market fit and expand your brand awareness, you don’t have time (or the budget!) to maintain a full in-house administrative team.
To survive as a startup in 2023, your time is best spent on value-added activities, like product development, investor relations and market research. That’s where outsourcing comes in.
In a survey by Deloitte, 38% of companies that chose to outsource some or all of their back office operations reported saving as much as 40% or more. And the other 62% of survey respondents reported saving between 10% and 25% simply by outsourcing.
When you’re growing a startup, every dollar matters. And outsourcing lets you keep more of them.
The first step towards outsourcing your back-office operations is to identify your key needs.
Before comparing outsourcing partners, consider what services your startup would benefit from most. Evaluate your needs to determine which back-office services would improve your startup today, and which services could be added as your company grows.
Startups often begin by outsourcing one of these three functions:
1. Recruitment.
Outsourced recruitment services can significantly streamline your startup’s hiring and onboarding process, enabling your leadership team to focus on finding the perfect culture-matched candidate — not writing job descriptions, sifting through hundreds of resumes and screening applicants.
2. HR and payroll.
Outsourced HR services for small businesses reduce the time your team spends on benefits administration, payroll paperwork, tax planning and compliance. You can even choose to outsource performance management and onboarding to further streamline your operations.
3. Finance.
Startups often find it helpful to outsource day-to-day bookkeeping, accounting and billing processes to a provider that can complete these tasks in a fraction of the time, with error-free, technology-backed processes. You may also choose to outsource your CFO services for high-level strategic thinking without the high in-house CFO salary.
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Once you’ve identified your initial outsourcing needs, it’s time to compare outsourcing partners — and find the right team for your budget, growth stage and long-term goals.
Next, evaluate the scalability and flexibility of your outsourcing partner
When choosing an outsourcing partner for your startup, it’s important to consider how your relationship with that partner may evolve over time. It’s not easy to switch outsourcing partners after collaborating with one team for a length of time. That’s why we recommend choosing an outsourcing partner whose services can scale seamlessly as your company grows.
If you anticipate adding more outsourced services in the future, research partners that offer multiple services in-house, like accounting, HR, CFO support, risk management and more. By leveraging a single partner, instead of a different company for every service, you can minimize communication time and save your team considerable onboarding time as you add new services.
Finally, evaluate the reputation of your potential outsourcing partner
When it comes to outsourcing, you need a partner you can fully trust. After all, they’ll be responsible for managing the critical back-office operations that keep your startup functional. Choosing the wrong partner, or a partner who doesn’t consistently deliver error-free and timely services, can cost your startup serious time, effort and funding in the long run.
Before committing to employee outsourcing services for startups, assess the reputation of the partners you’re considering. Look at their industry reviews. Read their case studies and testimonials. Evaluate their experience, years in business, service area, and industry knowledge. Consider: Does this company work with startups in your industry? Were they recommended by other companies you trust? Has anyone in your network worked with this partner? Do they have a reputation for quality?
Take time to carefully research, review and interview each company you’re considering before you commit to a partnership.
Outsourcing can benefit startups in any industry, at any stage of growth
Whether you’re a new SaaS provider in the fintech space, or ready to accelerate your growth after a successful Series C funding round, outsourcing can unlock the next stage of your company’s success.
By identifying your key needs, evaluating your potential outsourcing partners, and choosing a partner that can scale with your company, you can focus on your core strengths — and move toward peak efficiency.
Want more? Escalon has helped thousands of startups and small to midsized businesses streamline processes and maximize their potential with our back-office solutions for accounting, taxes, HR, payroll, insurance, and recruiting. Talk to an expert today.
