I have seen startup companies outsourcing business functions such as customer service, marketing and sales, retention and many more.. i want to hear it from entrepreneurs been engaged with this set up, and wanted to know how it helps in minimizing cost without sacrificing the quality of product or services
There are some ideas that can help you reduce the operational costs for your business and enable you to generate more revenue and reduce overhead.
1 - Reduce cost with outsourcing: Instead of relying on technology, it might be prudent to shift responsibility of certain business practices to another business or consultant. One area that seems to benefit the most from outsourcing is advertising and marketing.
2 - Lower operational cost by shopping around: If you work with vendors on a regular basis, you might want to set up a bidding system for projects and work. If you ask three different vendors to provide costs to you, then you can technically use the returned bids to get better pricing.
3 - Telecommute to cut down on costs: Leasing office space, paying for utilities and managing a physical office can be a drain on your financial resources. If it makes sense, allow your employees—and yourself—to telecommute.
4 - Pay invoice early or on time: Many vendors will offer a discount if you pay your invoice early. Even a savings of two or three percent can really add up. At the very least, make sure to pay your invoices on time in order to avoid any late fees or other penalties.
5 - Identify inefficiencies to decrease costs: You should always be looking for ways to make your business more efficient. By tightening up your processes and procedures, you can reduce waste (both materials and time) and therefore, decrease costs.
6 - Cancel unused services: This may seem like a no-brainer, but it’s easy for unused services to continue to be deducted from bank accounts or charged to credit cards if you’ve left them on auto-pay. Take a look at all of your expenses over the past six months. If you haven’t used a service in 90 days, cancel it.
7 - Go green to reduce operating cost: If you do have an office space, consider making it as green as possible to reduce energy usage. Replace regular light bulbs with compact fluorescent lighting, look to reduce heating and cooling costs by improving your insulation and windows, and cut back on the amount of physical waste. Encourage employees to communicate via email or other electronic means if they don’t already do, and ask your vendors to do the same. This can drastically decrease the cost of your monthly office supply order.Cutting operating costs for your small business isn’t impossible, but depending on how comfortable you are working within a lean budget, it can take some getting used to. Don’t be afraid to spend money on the services and people you really need, but take an extra moment or two to consider the long-term cost of ongoing services or expensive technology.
Those are many and very diverse functions , and outsourcing each may be have a different up and downside. In my past life I was running sales for a medium sized software company. We deliberated and deeply researched outsourcing parts of marketing (demand gen) and quickly realized that we'll be building transaction based relationships as opposed to outcome based partnerships. Nothing against the vendors we evaluated, and everything to do with how the business models are structured to minimize risk. The model was low value and we decided to expand the existing marketing team. This looks very different for customer service - again a very broad question , but outsourcing level 1 ( to a call center op) makes sense if you anticipate high case volumes that have canned answers. In any event I would create a tiered support model to start with and then work from there. Lastly on sales - my experience has been that, while both retainer as well as commission based models are low cost , traction is slow and sporadic , because typical free-lancers are working more than a couple of gigs. So the real question I would ask- what's my revenue target and how quickly do i want to get there , in other words can i afford to be on some else's timeline. Hope this helps!