High-growth brands are actively increasing their use of outsourcing non-core, operational functions. Doing so, so early on in the business, can help in the development of the infrastructure.
It’s a great help when needing to achieve rapid scaling without relying on the overhead of having to build teams internally.
The use of external staff through outsourcing is a great way to convert fixed costs into variable and performance-based expenses.
In this guide, you’ll learn more about why high-growth brands outsource so early on in their business development and how you can benefit from the same efforts for your own.
Key reasons why high-growth brands choose to outsource early
What are some of the reasons when it comes to high-growth brands choosing to outsource so early on?
From the immediate scalability it offers to providing a strategic focus on core competencies, here’s why it’s effective to outsource for your brand sooner.
Immediate scalability and flexibility
With outsourcing, it provides an on-demand model, letting brands scale their operations either up or down instantly and in response to demand surges without risk of overstaffing. Demand surges like Black Friday or Christmas tend to be times when businesses need extra hands for the upcoming rush.
Rather than having to go through the long and drawn-out process of hiring new staff members in-house, the benefit of outsourcing is that you don’t need to worry about time because you’ve got immediate access to the specialized talent you need.
Companies therefore have the opportunity now to deploy specialized external teams within days, which helps greatly to accelerate time-to-market for new products or services.
2. Access to specialized expertise and technology
Nowadays, businesses have a wealth of technology at their fingertips, from complex software to lightweight and easy-to-deploy tools.
Outsourcing partners like a 3PL help gain access to cutting-edge technology that benefits the business in many ways, in this case, for speedy order fulfillment. The use of AI-driven analytics and sophisticated warehouse management systems makes these traditionally pricey setups more affordable when outsourced.
Startups won’t often be able to afford to hire the top-tier talent across all of their departments, but with outsourcing, you get immediate access to professionals in all sorts of areas, from AI to compliance and customer service support.
3. Cost-efficiency and financial control
High-growth brands will often outsource their requirements for the sake of cost-efficiency and financial control.
Companies will save on hiring, onboarding, employee benefits, training, and infrastructure costs like office space and hardware. Being able to lower overhead costs in general is music to the ears of any company that is looking to save money, especially in the early days of development.
Outsourcing is a lot more predictable because it converts what are typically high fixed costs internally into variable expenses. This helps to improve the cash flow for a business, as well as reducing the break-even point.
4. Strategic focus on core competencies
As a strategic approach, outsourcing is a great way for internal staff to focus on core competencies that need their attention the most.
By offloading any administrative burdens, internal teams are able to concentrate on high-value activities, whether that’s brand building, marketing, or product innovation, for example. Outsourcing is a great way to take some of that monotonous and non-essential workload off your internal teams’ hands so that they can drive forward with more important stuff.
Early outsourcing, it prevents leaders from getting bogged down with those day-to-day, non-core processes and challenges that can often distract them from company growth in general.
5. Risk mitigation and compliance
A great benefit from outsourcing would be the risk mitigation and compliance perks it offers. In industries like healthcare, finance, or e-commerce, outsourcing to partners will often ensure compliance with even the most complex and evolving regulations. That can reduce the risk of penalties for your business as a result.
When you’re outsourcing partners, you’re able to gain access to 24/7 support, as well as, in some cases, robust disaster recovery plans, which help to reduce downtime.
Top tips for implementing outsourcing for your business this year
If you’re thinking about implementing outsourcing for the benefit of your business this year, then here are some of how you can implement it successfully.
Strategic planning and readiness
Think about your core and non-core activities. Those that are non-core are essentially applicable for outsourcing and should be prioritized as such. Assigning an internal manager is useful for bridging the gap between your company and the partner to ensure that consistency and quality control are achieved.
Partner selection and governance
It’s always a good idea to prioritize quality over cost. Think about shifting from low hourly rates to the total cost of ownership. The most successful partnerships are judged by outcome-based metrics rather than simply the number of hours the outsourced individual or team works.
Make sure to demand real-time visibility so that you’re getting live analytics that allow you to track your KPIs with ease.
Technology and security integration
When it comes to technology, leverage the use of AI and automation. It’s the technology nowadays that so many companies are using, and so it’s a good idea to partner with those who are using such technology within their systems and software already.
Ensure your partners are meeting global standards with compliance and that they’re secure when it comes to cybersecurity efforts.
The best practices, when implemented, will of course help your business to grow. Use collaborative tools in order to standardize your workflows and ensure the outsourced team or team members in question are integrated seamlessly into the existing internal domain.
Be flexible with contracts and make sure it allows for rapid scaling up or down as market demands inevitably shift. Finally, be aware of cultural integration as it matters when you’re working heavily with outsourced teams. You should see them as an extension of your company, rather than something completely separate.
The more you integrate your outsourcing with those within the company, the more unified and powerful it becomes.