The new way out for startups – outsourcing

May 30th, 2010

Small businesses have got a small budget but large needs. For small business owners one of the biggest challenges is wearing all the hats and the smaller the business, the more aspects of it you need to look after yourself. Startups originally go into business because they have a passion and skills for a certain product or service.

However, the skills may not include the operational, marketing or financial end of the business. Every small businesses have got some essential but non-core activities which take much time and could be better spent servicing existing customers or developing new ones.

In the past startup businesses were limited to two choices:

  1. Wear every hat; fill every role, to the best of our ability, hoping that there will be time to seek new clients or cope with the existing already ones. But as they say grasp all, lose all.
  2. Or hire the employees to fill those roles so that to focus on growing our business. In this case you should bother about searching for the personnel, selecting, hiring, establishing the team and what the most important – to wade through the red tape.

However, the third choice, which is growing popularity is outsourcing. This is when you engage the services of an external provider who is an expert in a particular field.

The Top 6 Benefits Every Start-up Should Know About Outsourcing… But Probably Doesn’t

May 30th, 2010
  1. Focus on your core business. Do not spend time doing projects which take you away from growing your core business, jobs you dislike or even are not good at. By outsourcing you get to focus on your business, while they complete the project, you have been dreading for months. Time is money!
  2. Reduce staff costs. When you outsource you do not have to deal with tax laws, desks and office space, superannuation, sick and vacation pay. You also have the benefit of hiring someone for a short term project that otherwise may be too expensive for a fulltime basis.
  3. Increase flexibility. Have the flexibility to decide how long you need your remote developer(s) for, what hours and days the work. You can attract the whole team for specializing projects which are selected especially to meet your requirements.
  4. Control capital costs. Cost-cutting may not be the only reason to outsource, but for startup companies with their limited budget it is certainly a major factor.
  5. Start new projects quickly. Handling the same project in-house might involve taking weeks or months to hire the right people, train them and provide the support they need. And if the project requires the capital investment the start up process can be even more difficult.
  6. Increase efficiency. By utilizing the existing infrastructure of an external provider you get the economies of scale which can increase your efficiencies and give your business an important competitive advantage. You also get the knowledge and skill set of a professional.

Scrum Advantages

May 30th, 2010

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Dedicated teams model is gaining popularity

May 10th, 2010

According to “Central and Eastern Europe IT Outsourcing Review 2008″ – a research conducted by Ukrainian High-Tech Initiative,during 2003-2007 the customers were tending to switch from project-based outsourcing model to hiring dedicated programming teams, – so that the customers contract and manage IT staff directly. Although fixed-price project model seems to provide less risks, it also restrains significantly the development process and can result in overestimated budgets. According to the research results, since 2003 until 2007 the number of project contracts has fallen by 30-35%.

As one of the answers to Onstartup questions about selection the right agile IT Outsourcing provider Scott Drake, the Owner of the Data Pros (Web development company in Louisville, USA) has made quite an interesting statement – “I built my team in Argentina … I interviewed all of the developers and still made one bad hire. It took two months for them to go into the market to find the right talent that would work well on my team to replace that bad hire. The management was willing to hire another employee for my team because I built a relationship with them and treat them and its employees very well. And they know my intention is to build a mutually beneficial relationship with them and keep my team for at least a couple of years, not just two months. It took me months to find the right vendor/build the right team. Unfortunately, I could not find an easier/faster solution.”

I wonder whether our readers have had similar experience. How difficult was it for you to select the staff for your remote team? Is one development interview enough for the decision? What questions were the most important for you – was it their experience, or ability to solve the problems, or the communication skills?

I have asked Mr Scott Drake some other questions about his experience managing his dedicated team. I will put his answers together along with more relevant data into the next blog post.

The Benefits Of Small Companies Over Big Companies

May 10th, 2010
We live in the world where big seems better. Small feels … well, unsafe, in general, not mention the fact of collaboration with. But sometimes we overlook the fact that huge businesses have serious weaknesses in areas where small businesses shine and then begin to realize that small business is a great business, and I’ll tell you why. Having business with small companies really have the number of advantages over big companies. Here they are:

Experience. Big companies are always well-known and widely advertised. One can often hear that some company has 100 year experience, that sounds very promising and impressive, doesn’t it? But have you ever thought that only personnel experience really matters, but not the company’s. That is the point. You can find qualified and professional employees both in small and big companies, and it never depends on the age of the company.

Better customer care. I’m sure you’ve noticed that the larger a company grows, the harder it becomes to provide good customer service. Just try to find the right person to help you on the phone in a huge corporation – it’ll drive you crazy. But when you ask for the owner of a small business, chances are you’ll be speaking to her or him within a few minutes. Hence, more often than not, burning business decisions can be made without the delays.

Flexibility and immediacy. Things happen quicker in small companies. Small businesses are positioned to quickly adjust to change, they know that their ability to make rapid decisions and implement course corrections is their key to success. Decision making is streamlined and employees often exercise a wide range of skills and experience, rather than to be specialists in only one area. If one employee is on leave or needs to be temporarily reassigned to a different project, another employee is already trained to take his or her place.

Commitment. That is not to say that the management teams in large companies are uncommitted. The personal stake in small business is greater. Business owners’ self-image is tied closely to their businesses. They will not let these businesses fail. They take it personally.

Lower costs, equal or better quality. When cooperating with big companies, you pay 20 per cent only for the popular brand of the company, but not for the job done itself, it’s like buying white plain T- shirt from Gucci for unreasonable price which is of the same material, quality and tailoring as from a shop. Just think what you pay for. Does it worth it?

Responsibility. Writing this article I interviewed some my colleagues who worked in businesses of a different size and all of them pointed out, that when working in big companies, people often shift responsibility on their colleagues, and think that somebody will do his job. Otherwise in small companies employees know that nobody except them will perform their own obligations and tasks, hence they are more responsible, ambitious and motivated.

Freedom to innovate. Due to the structure of the small businesses (flexible schedule, no dress code, positive atmosphere) employees have the freedom of action, that really can bring to customer’s project innovations, new decisions, ideas and creativeness. You can see that innovative small businesses are considerably cost-effective to cooperate with than to innovate on your own.

Thus, dear readers, being big isn’t a great deal. But delivering top customer service, a passion for excellence, a willingness to dream and create, and the freedom to make timely decisions – these are worthy of acclaim.
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