Why tech startups fail without outsourcing?

Startups succeed, but only a few of them.
Technology startups with the greatest innovations, newest ideas fail because of enormous pressure of market competition. According to Startup Death Trends, tech startups fail with a 90% failure rate just after 20 months after their last funding round. The reasons for such huge percentage are different: focus on R&D, marketing, and sales processes, but not on building efficient customer care strategy, attracting and retaining users. Some entrepreneurs try to try again and again, but they are still facing same problems.

  1. Non-market relevance
    According to the report conducted by Fortune, 42% of startups said they failed because their product didn’t meet market needs and demands.
  2. Lack of experience and management
    More than 46% of tech startups fail because they are incompetent in questions of pricing, budgeting, sales revenue, customer support. Sometimes the “big idea” is not enough. Here we should talk about management skills. Project and personnel management, implementing business strategies and visions are also problem children.
  3. No core focus
    Tech startups fail because they strive to be on top, but they have no focus on the core services of their business. They do everything: R&D, marketing, sales, customer support. Or they just forget about some crucial services like customer support. What should they do to not to fail? Yes, outsource their services. The tech industry has never constituted more than 15% of the outsourcing market (banking, finance, and insurance accounted for 40%; telecom, 17%; and manufacturing, 12%), according to TechCrunch.

However, outsourcing is cherry picked by most companies today.


Here are 4 reasons why tech startup needs to outsource internal resources to not to fail.

1.Time
We have already said a lot about it.
But we would like to remind and explain why time matters to tech startups. Techno process never stops. Every day we face new features in future times. Building an internal team will cost you lots of hours and will take multiple resources. Stop non-focusing on your core strategies and values and use an outsourced team to fix time-consuming processes.

Time may become your main enemy. It can force you to quit your business, but you should never stop.
Here is a part of our interview with Sonni Christine Jakobsen CEO & Co-Founder at mInvoice AS where she tells about using time properly:

14 years ago, when I was a student at University in Oslo, I had another school project with 3 other students. We created a profile platform “ Blinderndate” for University in Oslo where students could make a profile of themselves and then get in contact with other students from other faculties. You could chat with other students and invite them to a coffee and a date. It was difficult to reach the other student from other faculties back in days. After only 14 days we had hundreds of student on the platform and it became really successful. The dumbest we did was to shut it down when we finished the school project and we did get complaints from students about that. After that year the Facebook came to Norway and replaced the need.

Unfortunately, we didn’t have the ambitions or the knowledge about entrepreneurship back in days….14 years later, we don’ t want to make the same mistakes.

2.Budget
Here we would like to talk about an in-house support. Most of tech startups are located in areas with a high cost of living and great market competition. Building an in-house team requires lots of technologies (phones, computers, CRM systems, real estate, etc.) and skilled employees. It seems to be really expensive. Outsourcing offers you various options for hiring customer support company from another country. It will cost you less and, taking into consideration Ukrainian customer support industry, you’ll get employees with perfect English language, best technical and professional skills.
Read more about Ukrainian outsourcing industry more.

3.Flexibility and scalability
Struggling with R&D and sales process you’ll forget about your customers. It is well-known fact, that 82% of customers every year pass a company owing to improper customer support experience and stick to other services. Global outsourced services can provide you with agents who are present 24/7/365 for your users and build the loyalty of your business. Don’t you need satisfied customers?

4.Expertise

You know, you are the best.
However, being in a startup requires special market expertise and day-to-day reports about your product and services. Most of startups fail because they are not experts in handling support issues. Outsourced customer support has expertise strategies, knowledge bases, and data entry tools.

To sum it all up, you need to know that running your own business is a great idea, but you should be aware of risks and mistakes of others on this road. To reduce the percentage of possible future failure consider outsourcing.

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