Outsource Everything. Here’s How.
An FYI I’m the Managing Partner of Interplay a New-York based foundry and investment firm that has founded ten companies that provide services to high-growth companies. One of those companies is Bristol Palmer, a provider of business process outsourcing services.
I’m going to say something controversial: I think you should outsource everything. Well at least damn near everything.
When I started out as a VC I was taught that “outsourcing” was a bad word. If a company outsourced any of their operational functions from development onward I was told to pass on the investment. “Good companies are built in house.”
Back in the day, there may have been good reason for this — the world was larger and more complicated. Video conferencing wasn’t moderately reliable, collaboration tools were nascent and most consultants weren’t online 24/7. Cost savings were often offset by all of the communication that was lost in translation.
Things have changed. Tools have made teamwork more seamless, bandwidth has made communication easier and technology has narrowed the margin of error.
One-by-one business functions have increasingly become kosher to outsource. It started with insurance, then it was accounting and then marketing and so on. We’re now in an era where damn near every non-core function can potentially be done better, cheaper and faster by a firm that specializes in that field. And it’s widely considered a reasonable strategy to outsource. I personally outsource almost everything. Unless it takes more time to explain it then do it, it’s outsourced.
One of the areas of outsourcing that has traditionally been underutilized is business process outsourcing. It’s the catch-all bucket for everything from customer service to data entry and content moderation. It’s the category that leverages onshore and offshore labor markets to streamline any recurring process in an organization. If it’s a logic-based system that isn’t automated it probably can be done more cost-effectively with an outsourced partner.
To help the world delve into the business process outsourcing world, Bristol Palmer created a market landscape. The map below segments the world of outsourcing into four categories:
- Traditional Outsourcing: These large firms have been building augmented workforces for seemingly generations; they are priced and structured to cater to large corporations.
- High Growth Outsourcing: These new-aged managed platforms cater to venture-backed startups and other ambitious high-growth companies. These providers recruit, manage and train talent for their clients at cost-effective rates.
- Outsourcing Marketplaces: These one-stop freelance marketplaces enable companies and freelancers to match based on desired skillsets and job requirements. Companies are left to identify quality talent in distant geographies and manage these teams on their own.
- AI Outsourcing Tools: AI enabled platforms that outsource specific tasks.