Why Outsourcing Is Not Ideal for Startups

Last time I wrote about an outsourcing company’s hidden business model. If you want to see it, please check my post here. 👉

According to International Business Machines, “IBM Global Services: A Brief History. Outsourcing was first recognized as a business strategy in 1989 and became an integral part of business economics throughout the 1990s”. The early globally-scaled IT outsourcing came from India. One of the key benefits was the time zone difference. If we asked them to do something today, the team could fix the issue by tomorrow morning while you are asleep. Another example would be if you have several companies, you might realize that by creating one IT company to support all IT matters in your other companies, you could save costs. Here’s a hidden secret: one day, your coworker who works with you suddenly transfers to an IT company under the same ownership and supports the same tasks with different salaries. 💼💡 As the outsourcing business models are growing fast and look promising, lots of countries join these trends and provide similar services. Originally most of the clients were big enough to have internal members and manage the outsourcing staff, and even if the outsourcing company provides a new staff, someone from the clients can share the knowledge with them. Now, as new industries emerge and many new business models come out by new startups, and as there are too many outsourcing companies in the market, eventually, they need to find new domains rather than focusing on the well-known business models that they can do well which leads to the outsourcing companies needing to outsource their business to other smaller companies and freelancers, similar to the typical construction industry. Eventually, the outcomes from these companies will worsen and worsen. 😔

Photo by Markus Winkler on Unsplash We expected that outsourcing companies would act like an expert but in the current market situations they can’t not provide real expertise any more, this may cause fatal damage in your startup journey. In early-stage startups, we almost always claim that we are unique and something different, innovative, disruptive like this. “Yeah, we are different from other competitors and have a unique strength and business model.”. If that is true, you are the only one who can fully understand what you are doing. Additionally, growth-oriented strategies in the startup ecosystem boost these worse directions, founders in the startups ignore everything(?) but focus only to build their first MVP even though they don’t have any engineers inside. If you have no CTO or engineers in your early stage company, and you truly build a new and disruptive business model and decide to hire an outsourcing company. Here is what would have happened. Operational Hurdles Await: Your boat will go mountain.🏔️ I highly doubt that founders will talk with outsourcing engineers on a daily basis and share what you would do. In most cases, you will talk with someone who leads the team once a week or once a month only. And you will only scold them if the progress is being delayed. Demo vs. Reality: 🎉 Your product is truly MVP for your demo. Your product will not run this as an operational stage smoothly. It is only working for the demo stage, which means only designed for your demo and not the end users. Most engineers in the outsourcing companies are good at standardized tasks, not your company product. Delayed Development Looms: 🕰️ Your product development will be delayed. In most cases, they never worked together before because the companies just hire them from freelancer markets or other companies; they don’t know what this company is about; they will just wait for a clear description from you. Oh yeah, we are too busy to do outside things such as fundraising. They will wait as they will get money anyway. 💸💤 UI/UX Challenges:Your UI/UX looks easy to use. In fact, it looks quite similar somehow from somewhere. Yes, I know you also don’t have a good UI/UX designer. So they will do the best way (AKA dirty yet easy) to finish the task within a given timeframe and will leave the project as soon as possible. 🎨🔧