Entrepreneurship · Startups

Is outsourcing some business operations a good idea for a startup?

Ryan Thompson Commercial Real Estate Agent at Stidham Commercial

October 6th, 2016

Customer support is very important for any company. Is it a good idea to outsource such business operations?

Michael Burack

October 6th, 2016

Nope, bad idea: customer service people must feel unequivocally loyal to their employer not a third party..

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

October 7th, 2016

Outsourcing some business operations might be a good idea, but customer support is the absolute last thing that I'd outsource as a startup.  Start with IT, HR, and accounting/legal.

The reason you don't want to outsource customer support is that customer support does not scale well, and it's something that small companies do well, and big companies are totally lousy out.  The big advantage of dealing with a small company, is that you can get the CEO on the phone to fix a problem, whereas with a big company, you are contacting a call center that going through a checklist.

A lot has to do with the type of startups I typically deal with (i.e. high end services).  If you have a high volume, low margin business in which a customer call is an annoyance, you might want to outsource that. 

Ekaterina Sytcheva Integrated Marketing and Lead Generation Expert,Owner of Prospect Solutions.

October 8th, 2016

Outsourcing marketing is less risky and less expensive that hiring the internal marketing and sales team. I run a small marketing department outsourcing company in Canada. We are experienced, knowledgeable, hardworking and affordable. Check us out http://www.prospectsolutions.ca/

Scott Kacmarski CEO of Reps Direct

October 10th, 2016

Vlada is exactly right. I am a little biased but if you are going to outsource customer service I would use a company that offers what we do at Reps Direct. When you use our services the reps you hire only work for your company and you have full communication with them. Essentially you have a remote office with all the cost benefits of traditional outsourcing, but with the full control like you would with traditional employees. Most companies don't know an option like this exists. We are nearshore (Central America) and encourage our clients to visit their workers as well. This takes all the worries out of outsourcing especially if you are wary and have never done it before.

Alf Poor Chief Operating Officer at Global Data Sentinel

October 7th, 2016

In general, it can be favorable to outsource some operations. Accounting and, of course, legal are obvious outsourcing opportunities where you get economies over having those functions and expertise in-house. Customer service is more of a discussion point. I've found you can do so if you have a high volume and/or direct-to-market businesses but, in my experience, as a start-up selling software to corporate customers those early days of providing white glove service often make the difference between winning or losing while your service matures and stabilizes through its initial deployments. Early in my career I was told treat your customers, and this is particularly true with early customers, like an old friend coming in out of the cold, i.e. nothing is too much trouble when it comes to looking after them. It's served me well, but I have typically sold software that is installed into complex corporate environments with customization and/or integration dependencies - you can imagine how one needs to be in the people business as well as the software business when selling in this manner. The upside is, done right, you become a trusted partner and can keep those customers through an extended life cycle with enough goodwill to take a couple of self-inflicted wounds along the way (every start-up has those moments when upgrades or installs fail, new features introduce service instability, etc.). It may be different in other areas, such as consumer or services where businesses can buy or self-serve without interacting.

Vlada Piddubna Head of Business Operations at CyberCraft Inc.

October 10th, 2016

I totally agree that customer support people must be loyal to your organization, and not to an outsourcing provider. Maybe you should consider not outsourcing those operations, but outstaffing them, i.e. setting up your own nearshore/offshore support team? In this case your outstaffing partner will cover everything connected with establishing and hosting your team, and your remote employees will be de facto a part of your company. Thus you'll get all in one - benefits of outsourcing and full control of operations as if they were in-house. 

Kind regards,

John Barley Insurance Broker | Risk Management Expert | Organisational Health Coach

October 6th, 2016

yes and no. its great having customer support . But that is only in one direction and has to be earned by the company supplying the product or services.

to expect the same from out sourced services is an interesting question and there needs to be some major match offs of company and personal values to make sure the outsourced services has the same mentality and passion for what needs to be delivered . Get it wrong and we have a NASA catastrophe not a great as Challenger one would hope - but everything is subject to perspective     

Davida Shensky We help small to medium size companies put together a strategy for success and hold you accountable to follow through

October 7th, 2016

As an entrepreneur and startup you want to do everything yourself to cut your expenses but is best to outsource and concentrate on your speciality

Martin Omansky Independent Venture Capital & Private Equity Professional

October 6th, 2016

I wouldn't outsource customer service in the early days of a start-up, but some back-office things can be outsourced - even should be outsourced - in the start-up environment. Sent from my iPhone