Managing Startups: Best Blog Posts

Chapter 40. Five Outsourcing Mistakes That Will Kill Your Startup

Jayson DeMers

Several months ago I was on the phone with the CEO of an SEO agency in Utah who was looking for white-label SEO link-building services for her clients. She wanted to know how my agency was sourcing the work; when I told her that the manual labor was largely performed overseas in the Philippines, she scoffed. “How can you offshore jobs when the American economy is so awful right now? There’s no way I would ever consider doing that.”

Needless to say, that conversation ended quickly. But the reality is that outsourcing has not only allowed the business to operate efficiently, but has also actually enabled the business to create dozens of American jobs. Without outsourcing, those American jobs wouldn’t exist.

Creating American jobs makes us feel warm and fuzzy, but if you’re launching a startup, there’s one thing you’re definitely interested in: money. And you know that to make money, your business is going to need to separate itself from the competition—you’re going to need a competitive advantage.

Outsourcing is one way to optimize efficiency and achieve that competitive advantage, but there’s a minefield of potential mistakes that can severely hamper your efforts or even kill your startup.

Mistake #1: Outsourcing Something That Shouldn’t Be Outsourced

The lure of sending work overseas to cheap labor is enticing, but you need to tread carefully when outsourcing. Mission-critical tasks, ...