Management of Outsourcing In Startups

Outsourcing is a practice that companies use to externalize parts of their business to an outside partner or partners. By outsourcing, companies can gain cost advantages as well as increased sales opportunities, access to new expertise, lower annual costs, and more time to focus on core business strategy. It can also provide competitive advantages. It can be viewed as the practice of converting fixed costs to variable costs. By outsourcing certain manufacturing and production, a company can then focus on activities closer to its customers.
Benefits

The main benefits are-

An increase in competitive advantage through cost reductions.
The motivation to focus on core activities.
Access to knowledge and resources in the suppliers market.

Suppliers can produce cheaper goods and services through the economics of scales because they have much of their capital invested in machinery and other fixed assets. The company requires less investment in machinery and warehousing and can also employ fewer people.