Employee outsourcing is seen by many as a viable option for a startup company, and there are certainly some benefits, like affordability. Still, there are significant risks that entrepreneurs should consider before going all-in with outsourcing. In this article, Ferrari Energy details five of those risks.
1. Outsourcing runs counter to a startup’s objective
Whether your new business is building software, IoT apps, or brick and mortar buildings, one key objective is to assemble a team that can work together effectively and efficiently. The success of your new company is going to be highly dependent on a smooth-running operation that frees you up to focus on growth and funding.
While outsourcing employees may seem like a helpful solution for keeping costs down, consider the “at what price?” question. If, in the end, your outsourced employees have gotten the work done, but you’ve been unable to grow the business, your efforts will have been for naught.
Look at building a team of loyal and committed employees as an essential key to your success. Paying higher wages is an investment that will pay off in the end, so don’t short circuit your startup before it even gets off the ground.
2. Misaligned goals
Your goals chart the course for your startup. You have undoubtedly invested considerable time and effort into creating a set of goals that you believe will drive your company’s success. But, you can’t do it by yourself.
By the very nature of the arrangement, your company’s relationship with outsourced employees is transactional. They will complete specified tasks and assignments, and you will compensate them. That’s the transaction, and it isn’t easy to expand the relationship any further than that.
When building a new business, you need employees who have personal goals tied to your company’s goals. Their success should be connected to your success. Transactional outsourced employees are not going to be vested in your success.
3. A hollow image
A crucial aspect of launching a startup is creating a culture that supports your company’s image and sets it apart from the sea of others in your market. This image should be something that customers and prospective employees alike can recognize and value. Maybe it’s the simplicity of your products (think Apple) or the breadth of your offering (think Amazon), but whatever it is, you may have created it, but your employees will sustain it.
Outsourced employees cannot internalize your company’s culture, and no matter how hard you try, the world-at-large will see a two-dimensional and hollow image of your company.
4. Complex negotiations
Sourcing and hiring new employees can be time-consuming. That’s one reason some companies entertain the idea of outsourcing HR.
Contracting with one or more outsourcing agencies can be even more time-consuming and complex than building your own team. Billed as a service that takes work off your plate is not always the case, so be sure to do your due diligence.
5. Building a reputation
Finally, in the end, no matter what kind of company you are building, the most important aspect of your leadership is the reputation you create. A poor reputation is nearly impossible to overcome. Customers are not forgiving, and your competitors never let them forget.
Much of what the public sees in your company is through your employees, so choose wisely.
About Ferrari Energy
Ferrari Energy is a family-owned private oil and gas company focused on mineral and leasehold acquisitions. Ferrari Energy took its name from its founder, Adam Ferrari. Adam is a native of Chicago and was formally educated in chemical and biomolecular engineering. He completed his degree at the University of Illinois at Urbana Champaign and finished at the top of his class, graduating magna cum laude. As a young professional, Adam worked in the operations and business sides of the energy industry. After gaining ten years of direct industry experience, he took his passion for the energy industry and launched Ferrari Energy.
