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Tuesday, June 26, 2007

Over a year ago I posted about "Sales Outsourcing as a Bootstrapping Strategy".

I mentioned that "most of our start-up and small business clients are bootstrapping their businesses and our services are a low-cost and low-risk option for them."

This certainly hasn't changed too much. For international companies entering the UK market, many are investor backed, but they are still looking to contract us to test the market and develop a beach-head rather than launch full scale operations in the UK.

In fact, even if a company has raised a significant round of funding for international expansion, it is still a sound strategy to utilise third parties (outsourced sales/channel partners, etc) rather build your own local office and team.

In the book "Other People's Money", Michael Lechter talks about the sources of Other People's Money (OPM), which is generally equity investment, bank loans, as well as factoring, leasing, etc and also the concept of OPR (Other People's Resources).

Included in sources of OPR are co-venture, strategic alliances, partnering, licensing (including franchises) and outsourcing.

Michael's simple definition of outsourcing is "purchasing a functional service from another business" and he explains that it is effectively a way to leverage Other People's Resources in a similar way to Other People's Money.

In the same way that you pay a premium (or interest) for immediate access to money in the form of a loan, outsourcing provides you immediate access to resources without the time and expense of developing the capability or performing the task in-house.

Today, many people think of "outsourcing" as moving jobs to a lower cost region (which is off-shoring, really).

In reality, outsourcing could cost you more, even if some of that cost is deferred in terms of commission, with sales outsourcing, for example.

In the case of entering the UK, rather than paying the (large) up-front costs of recruitment, offices, etc and the time it takes get everything in place you could contract an interim sales manager to put feet on the street within days.

Instead of "buying it"... you "rent it"

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Posted by: David Regler @ 6:43 am |   | Links to this post  

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