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Understanding What You Can't Do: How to Know When and What to Outsource

Jan 24, 2017 / by Jon Repka

This blog was contributed to Paro by Patrick Hechinger at Built In Chicago. Built In is a network that allows people to get connected to local startup communities in Austin, Chicago, Colorado, and Los Angeles.

The term “gig economy” is a terrifying phrase for older generations. After decades of valuing tenure and work stability, it’s hard to comprehend how employees and companies can operate with a revolving door of labor. Yet, to any millennial, this concept seems entirely natural, if not more efficient.

For startup founders the question is no longer “should I outsource?” but, instead, “how much do I outsource?” Despite the movement towards contractual labor, there are still important parts of the business that should be kept in-house. Here are a few situations in which hiring outside help may not be in your best interest:

  • If the cost of hiring outside help has the potential to exceed the cost of a full time employee over the course a year.
  • If you’re developing business strategy, core pieces of your IP, or any other core business functions.
  • If you have strict deadlines or creative restrictions. (You can’t legally tell freelancers when or how to do something.)
  • If the roles you’re looking to outsource come with any amount of leadership within your organization.

The most common services to outsource are marketing, finance, HR, legal/compliance, and technical support. Many of these departments can be developed in-house over time but for the sake of early-stage growth, business owners shouldn’t shy away from outsourcing to experts.

“It’s important to leverage contractors’, freelancers’ and agencies’ expertise from the get-go, as opposed to trying to figure it out on your own,” said Michael Burdick Founder and CEO of Paro. “For example, I don’t know the first thing about website development — so is it more efficient for me to spin my wheels and ultimately figure out how to build a website? Probably not. I should optimize for my strengths and outsource or hire other folks to compensate for my weaknesses.”

If you own a young startup, you are financially in a tough spot and the price tag for outsourcing help may scare you away too soon.

It’s important to weigh the cost of your employee productivity. The amount of time they might spend trying to learn a new skill — while ignoring their core responsibilities — may not be worth it. In addition, their susceptibility to failure is dangerously high if they lack experience, meaning you could potentially pay to redo the work. Getting it right the first time is always the cheaper solution.

Tags: Finance, Startup