Worldwide, the outsourcing industry is worth around 971 billion US dollars. This nearly trillion-dollar industry is on the rise. Outsourcing is a way of life. Nearly all startups outsource some or a majority of their core functions, and for good reason.
Outsourcing is the best way to get things done—without wasting time or money trying to optimize workflows or create new managerial processes.
The younger your startup, the more you should outsource. If there’s anything you don’t know how to manage, you should outsource it.
Only startups with positive cashflow or a lot of VC-offered runway should attempt to create inhouse teams and departments.
In this guide to startup outsourcing, we showcase the most essential functions to outsource and we list best practices that will help you minimize risk and maximize your results.
Key benefits of startup outsourcing
These main benefits of outsourcing make the practice a must-do for startups.
Keep costs low and predictable
When you outsource to external providers, you can drive a lot of cost savings. Instead of hiring a bunch of full-time employees, you can utilize fractional outsourcing to purchase access to someone with executive-level talent or outsource to a company that will charge you a fixed monthly fee for their work.
Either way, you’ll be able to lower your costs compared to insourcing, or at least make the most of your budget by spreading it out across multiple functions.
Make sure that tasks and projects are completed
When hiring and managing internal employees, you’re paying for their time—not results. Outsourcing companies, on the other hand, provide specific deliverables and projects. They use optimized processes to progress quickly towards end goals. This ensures that work actually gets done.
Focus on your core strengths
When launching a startup, you need to ruthlessly focus on your target customer, the problem you’re trying to solve, and why you’re the right person to do it. Everything else is a distraction that has the potential to sink your business.
For many entrepreneurs, it makes sense to outsource nearly every aspect of their business in the beginning so they can focus on getting in touch with customers and forging essential relationships. What’s most important is that you utilize the skillsets you have and don’t attempt to take on new skills in the early stages.
If you’re launching a SaaS business, be sure to take our 1-Page SaaS Blueprint Challenge. It walks you through the process of creating a business plan and identifying your unique advantages.
Don’t waste time managing functions you’re not familiar with
This benefit is similar to the above point, but it’s worth mentioning separately. When you outsource to experienced companies, you stop wasting time managing all of the different talent and skillsets it takes to get the task done.
For example, with SaaS software development, you need a variety of talent: software developers, UX designers, DevOps engineers, and QA testers. If you don’t have product management experience, you’ll need to either hire a great PM or attempt to manage technical employees on your own.
You’ll waste a ton of time trying to manage everyone and the chances are that the end result won’t be as high-quality as if you’d outsourced to an experienced company.
Minimize risks and preserve your runway
Because your outsourcing contracts are usually for deliverables and specific work, you’ll naturally lower your risks. Plus, outsourcing providers often have industry-specific knowledge and are equipped to manage compliance, security, and other risks more effectively than an in-house team.
With fewer risks and lower operational costs, you can preserve your startup runway and reach a breakeven point much sooner.
Ultimately, outsourcing takes more factors out of the equation than insourcing, so if your startup fails, it’ll be because the idea, timing, or market wasn’t right—not your management style.
13 functions to outsource as a startup
If you’re considering outsourcing as a startup, start with these key functions. Here are the most common types of work to outsource.
1. Web application development
If you’re launching a SaaS product, you can outsource the development of your web application. Software development agencies that specialize in web apps can save you a lot of time and money by providing technical product management, UX design, Laravel development, DevOps engineering, and more.
Common tasks:
Prototyping
Front-end development
Back-end development
Product management
User experience (UX) design
User interface (UI) design
DevOps engineering
Database management
API integration
Quality assurance and testing
Ongoing maintenance and updates
Tips for choosing the right company: Select a company that offers product strategy, prototyping, and a dual-track agile approach so you can develop a product that meets real user needs.
2. Mobile application development
You can also outsource mobile app development, whether you’re building an app for your customers or your internal employees. Building and launching apps is highly specialized work that you should only tackle if you have previous development or PM experience.
Common tasks:
Native app development (iOS, Android)
Cross-platform app development
UX/UI design
Backend integration
Testing and debugging
App store submission
Performance optimization
Security features implementation
Tips for choosing the right company: Ensure the company has experience with the specific platforms you need, a history of successful app launches, and expertise in user-friendly design and app performance optimization.
3. Human resources
Many startups outsource human resources so they can maintain regulatory compliance without spending dozens of hours researching and setting up HR processes. HR firms can help with payroll, onboarding, benefits, and more.
Common tasks:
Recruitment and hiring
Onboarding and training
Benefits administration
Payroll processing
Employee records management
Performance management
Compliance with labor laws
Employee relations
Tips for choosing the right company: Pick a company that offers comprehensive HR solutions, including recruitment and onboarding processes, and not just payroll management, to ensure holistic support for your HR needs.
4. Accounting and bookkeeping
Accounting and bookkeeping are the most commonly outsourced tasks. Even very small businesses or solo proprietors outsource these functions because they’re simply not worth DIYing. Until you’re ready to hire a CFO or finance manager, you can get help with bookkeeping, financial reporting, and tax compliance.
Common tasks:
Financial record keeping
Payroll processing
Tax preparation and filing
Accounts payable and receivable
Budgeting and forecasting
Financial reporting
Audit support
Cash flow management
Tips for choosing the right company: Look for a company with experience in your industry, reliable software solutions, and strong customer support to ensure accurate and compliant financial management.
5. Search engine advertising
Search engine ads are a great way to grow your startup because you can combine location criteria with keyphrase criteria to reach relevant searchers in your market region. You can rank your business at the top of Google ads results without having to wait months or years for organic search rankings. This is a smart task to outsource because best practices and budget strategies are always changing.
Common tasks:
Keyword research
Ad copywriting
Campaign setup
Bid management
A/B testing
Performance tracking
Conversion optimization
Reporting and analysis
Tips for choosing the right company: Choose a company with a track record of successful campaigns, a data-driven approach, and expertise in managing your specific type of search engine advertising (e.g., Google Ads).
6. Search engine optimization
Many startups also choose to outsource organic search optimization, such as blog post and landing page creation to agencies that can provide end-to-end services. If you want to outsource the entire process, make sure that the vendor offers the technical and creative talent needed to research, strategize, produce, and launch the required posts and pages.
Common tasks:
Keyword research
On-page optimization
Content creation
Link building
Technical SEO audits
Mobile optimization
Local SEO
Analytics tracking
Tips for choosing the right company: Select a company that stays updated with the latest SEO trends, offers transparent reporting, and has proven success in improving search engine rankings and organic traffic.
7. Social media advertising
Social media ads are highly specialized, and you’re better off choosing a specific vendor for each platform. Because the algorithms and content styles are so different, many high-quality agencies only provide services for one ad platform, such as Facebook ads (which also houses Instagram), TikTok ads, YouTube ads, LinkedIn ads, or Pinterest ads.
Common tasks:
Audience targeting
Ad creation and design
Campaign setup
Budget management
Performance monitoring
A/B testing
Retargeting strategies
Reporting and analysis
Tips for choosing the right company: Ensure the company has expertise in your target social media platforms, creative ad design capabilities, and a strategy for ongoing campaign optimization.
8. Customer service
It is very difficult to provide 24/7 customer service, which is why so many startups outsource it. This can be a good idea in the early stages of startup development, but you should insource customer service as soon as you can. By providing stellar support that’s on-brand and goes above and beyond what competitors offer, you can retain more customers.
Common tasks:
Call center operations
Email support
Live chat support
Social media support
Customer feedback management
Issue resolution
Order processing
Customer satisfaction surveys
Tips for choosing the right company: Look for a company with a strong reputation for customer service, multilingual support capabilities, and robust training programs for their agents to ensure high-quality service.
9. IT support
IT is one of the fastest-growing outsourcing segments, as more companies seek expert, outside help for highly technical and high-risk work. Startups of all sorts need IT support. If you have an office, you’ll need network setup and security, and if you work remotely, you might want to implement cybersecurity measures to protect your intellectual property.
Common tasks:
Network setup and management
Hardware and software support
Cybersecurity
Data backup and recovery
Helpdesk services
System monitoring
Software updates and patches
IT consulting
Tips for choosing the right company: Choose a company with a comprehensive range of IT services, strong cybersecurity measures, and 24/7 support to ensure your IT infrastructure runs smoothly.
10. Legal services
Unless you have a lawyer on staff, you’re going to need to outsource legal services. At the very least, you should get help from a law firm when organizing and incorporating your business. You should also seek help when developing contracts and terms of service for clients and customers .
Common tasks:
Contract drafting and review
Compliance consulting
Intellectual property protection
Employment law advice
Mergers and acquisitions support
Litigation support
Regulatory compliance
General legal advice
Tips for choosing the right company: Select a legal service provider with expertise in your industry, a clear understanding of your business needs, and a strong track record in handling similar legal matters.
11. Public relations
Even very established companies tend to outsource public relations, because it’s one of those functions that’s best handled by external experts. Why? Relationships. PR firms have existing relationships with media contacts and can help you get top-tier news coverage for your products and services much more reliably than an inhouse team.
Common tasks:
Media relations
Press release writing and distribution
Crisis communication
Event planning
Brand management
Influencer outreach
Media monitoring
Reputation management
Tips for choosing the right company: Ensure the PR company has experience in your industry, strong media connections, and a strategic approach to building and maintaining your brand's reputation.
12. Sales lead generation
Unless you have previous sales experience, you should outsource sales lead generation in the early stages of your startup. The most essential tasks to outsource are cold calling and cold emailing. Without experience, it can be very difficult to manage effective scripts, deliverability, contact list building, etc. However, as your startup grows, you’ll likely want to develop an inhouse sales team.
Common tasks:
Market research
Target audience identification
Lead sourcing
Cold emailing
Cold calling
Social selling
Lead nurturing
Performance tracking
Tips for choosing the right company: Choose a company with a proven lead generation strategy, a deep understanding of your target market, and advanced tools for tracking and managing leads.
13. Sales calls and demos
Startups and small business owners can outsource their sales calls and demos to save time for other activities. Just make sure that the vendor you choose lets you have direct contact with the sales representatives so you can train them effectively. While this is a good task to outsource, you should manage demos yourself for the first few months to test the messaging and structure that works.
Common tasks:
Sales strategy
Sales cycle tracking
Product demos
Follow-up calls
Objection handling
Closing sales
CRM management
Sales reporting
Tips for choosing the right company: Look for a company with experienced sales professionals, a solid understanding of your product or service, and a structured approach to managing sales calls and demos.
9 best practices for outsourcing as a startup
You can mitigate some of the problems with outsourcing by following these smart best practices.
1. Retain control over product-market fit
As a startup founder, there will be many functions that you outsource. But there’s one thing you should never lost control over, and that’s product-market fit. In fact, you should outsource work that makes it easier for you to focus on product-market fit.
What we mean by this is that your responsibility as an entrepreneur is bringing the right solution to market. So the companies you work with should make it easier for you to spend more time speaking with your target customers and forging relationships with them. For example, as a product development firm, we enable entrepreneurs to marry their industry expertise with our product management expertise. We manage the product development, so you can focus on customer research, marketing, and sales.
No matter what you outsource—whether it be your product, your marketing, your bookkeeping, or all three—you need to always have your eye on product-market fit and be in charge of pivoting.
2. Try nearshoring instead of offshoring
If you want to save money by outsourcing work overseas, you might want to try nearshoring instead of offshoring.
When nearshoring, you outsource work to countries that are nearby. For example, if your startup is in the US, you would outsource work to Latin America instead of Asia.
The chief benefits of nearshoring compared to offshoring include:
Cultural similarities
Improved communication
Cost efficiency
Faster response times
As a SaaS development agency, we source top talent from Latin America—primarily Brazil where our founder is from.
3. Choose companies with a fully-managed approach
The whole point of outsourcing is to take things off your plate so you’re not having to worry about every little detail. So make sure that you’re not delegating tasks to freelancers—unless you have previous experience managing that type of work. Instead, choose companies that offer a fully managed approach. This way, you’re reaping the full benefits of outsourcing.
4. Pick a provider that aligns with your company culture
When you’re so busy you hardly have time to pick a vendor, company culture is probably the last thing on your mind. But it’s important. Culture is what binds people together. It’s about shared values, expectations, and quality. Be sure to choose vendors that you vibe with. If their branding, messaging, and mission don’t speak to you and address your concerns, that’s a major red flag.
5. Make sure each company provides excellent offboarding and training
When vetting vendors, be sure to have a conversation about the offboarding process. One of the biggest problems with outsourcing is the risk of having important information get stuck with a vendor. You don’t want any IP or processes to be irretrievable.
On the contrary, your outsourcing vendor should actually make it easy for you to offboard. Ideally, they’ll even train your team on how to take over the work when you’re ready to create a team or department for that function. It’s essential to have this conversation upfront and ask what sort of support they provide before you sign a contract with them.
6. Default on outsourcing
Because managing internal teams is so challenging, you should default on outsourcing. Unless you know how to do something or are confident you can train and manage internal resources, it makes sense to choose an external vendor.
Of course, the most important thing is to not take on unnecessary expenses, so first be sure that the work is essential. If it is, default on outsourcing unless you can prove to yourself that you’re ready to take it on.
7. Get help with strategy for high-cost services
Some outsourcing companies provide strategy, and some don’t. It’s important to work with companies that offer strategy is the function is high-cost or high-impact. For instance, you probably don’t need strategy services from your bookkeeper, but you absolutely need strategy from your software development partner or sales company.
8. Avoid jack-of-all-trades companies
Choose specialist companies, not jack-of-all-trades firms. Specialists bring deep expertise and focus to their niche, making you more likely to achieve results. For example, a company that specializes in TikTok ads will have a nuanced understanding of the platform's algorithms, trends, and best practices, leading to more effective campaigns. In contrast, a general marketing firm that offers a broad range of services, from email marketing to social media management, may lack the in-depth knowledge required to excel in any one area.
9. Spend more time vetting your vendors
Some startup founders shy away from outsourcing because they’re afraid of relinquishing control. They’ve had bad vendor relationships in the past or they’ve heard horror stories about incompetent agencies. This fear can keep you from outsourcing certain functions. But we promise it’s easier for startups to outsource to the right company than attempt to manage everything in-house with employees or individual contractors.
So, the solution to outsourcing fears isn’t to not outsource. It’s to pick the right vendors.
Here are some signs you’re in good hands:
Month-to-month contracts / no long-term contracts
Transparent pricing models
Positive client testimonials and case studies
Clear communication channels and regular updates
Experienced and specialized team members
Strong project management practices
Flexibility to scale up or down as needed
Proven track record of successful projects
A dedicated account manager or point of contact
Unique or specialized approach
Faster launch or project speeds than most agencies
Outsourcing work for your startup is scary. But building and managing internal teams is much, much harder.
Are you building a SaaS startup? Get expert product strategy from our CEO and CTO alongside fully-managed product development. Learn more about our SaaS development agency.