When it comes to running a business, taking risks is part of the game. Sometimes entrepreneurs win big, while other times they face setbacks. Either way, learning from successful and failed outsourcing projects can help guide your decision-making process.
The Power of Business Process Outsourcing (BPO)
Business process outsourcing (BPO) can be a double-edged sword. On one hand, it can help you save time and money while improving overall efficiency and business productivity. On the other hand, if not managed properly, BPO can lead to disastrous outcomes.
Lessons Learned from Successful Outsourcing
The global BPO market size is expected to grow from nearly $262 billion in 2022 to $525 billion by 2030 at a 9.4% compound annual growth rate (CAGR). This rapid growth speaks volumes about the industry's potential for businesses of all sizes.
Slack: Accessing Experts to Grow a Business
Slack, a popular digital communication platform, owes its success in part to strategic outsourcing. Early on, they partnered with MetaLab, a Canadian design team, to craft their beta version. This invaluable feedback paved the way for a user-friendly tool that quickly gained widespread adoption.
Through smart decisions like outsourcing logo design and engaging external teams for mobile application development, Slack secured $250 million in investment, culminating in a total valuation of $5 billion in July 2017. As of 2021, their valuation had soared to an impressive $27 billion.
Lessons Learned: Outsource some business processes to real experts to help your startup or small business grow and succeed.
WhatsApp: Offshore Outsourcing for Market Expansion
WhatsApp's success can be attributed to using offshore developers from Russia. Its co-founder recognized the engineering talent in this country, allowing the company to focus on core operations while BPO teams handled app development services.
This strategy helped WhatsApp reduce costs and build a successful product. Later in 2014, Facebook acquired the company for $19 billion. While it relocated third-party contractors to the United States, offshore outsourcing played a crucial role in its business growth and success.
Lessons Learned: Employ offshore outsourcing to cut costs and build your product, allowing you to grow your business and expand your market.
CuriosityStream: Integrating Onsite and Offshore Teams
CuriosityStream, a global media company, began an outsourcing journey inspired by the successful experiences of its industry competitors. They enlisted the services of a team developing a new feature for their streaming platform, reducing operational costs and contributing to viewer engagement.
Andre Silva, Chief Technology Officer, recognized the transformative impact of outsourcing on business scalability, advocating for the integration of offshore teams with in-house workforces to optimize operational efficiencies.
Lessons Learned: Delegate specialized tasks to remote teams that are experts in the field, striking a balance between in-house and offshore teams.
Lessons Learned from Failed Outsourcing
While BPO can be a valuable tool for companies looking to reduce costs and streamline operations, it also presents unique challenges and risks. Half of outsourced projects fail outright or do not meet expectations, with management issues and hidden costs being common culprits.
Lessons Learned: Carefully manage the risks associated with outsourcing to maximize success and minimize failure.
Klout: Staying on Top of Privacy and Security
Launched in 2008, Klout was a social media analytics company that measured an individual's influence. Its founder bootstrapped the business, but later faced challenges due to poor outsourcing decisions, including concerns about privacy and security.
Lessons Learned: Prioritize data security and employee satisfaction when outsourcing to avoid costly mistakes.
In conclusion, outsourcing can be a valuable strategy for app startups looking to scale operations and reduce costs. By learning from successful and failed outsourcing projects, you can make informed decisions that drive your business forward.