London would benefit from a pan-European back office outsourcing platform
I’ve been thinking for a while about taking a closer look at startups outsourcing their back office. There is a trend amongst US startup to outsource non-core activities to 3rd party experts. Whether it’s outsourcing your team lunch planning and execution to ZeroCater or outsourcing your entire backoffice from HR to Finance to Accounting to backops, US tech companies strive towards being lean and executing fast.
I am convinced that in the future: a) bigger companies in the US will take advantage of this and b) startups in the rest of the world will begin to outsource as well. UK startups would certainly benefit from embracing more of a “you don’t have to do everything yourself” culture. However, I do see less of an immediate need here as UK startups usually grow less crazy than the US counterparts. But there are signs that this is already taking place here in the UK. One just has to look at ihorizon’s services offering “outsourced finance services delivered seamlessly at a fixed price“ or at Blur’s accounting exchange.
I think that there might be a need for a pan-European back office solution for startups here. Any startup that wants to tap into the European market will be faced with a myriad of different employment, tax, accounting and immigration laws. This is certainly a big pain point. Do you want to expand to Germany and have a small satellite office in Berlin? Need to hire an Italy based salesperson but have no clue about the Italian job market and legal framework? You should be able to turn to one service provider that can help you with hiring, onboarding, payroll and accounting anywhere in the EU. I think a service offering like this, based in London would solidify London’s leading position in the European tech scene. It would not only allow UK and other European startups to faster expand in the EU, it would also allow non-European startups to use London as a hub to expand into Europe. As Michael Acton Smith from Mind Candy said recently: “Life is short, have big audacious, crazy dreams.” The European Union with a population 500 million compared to 300 million in the US certainly provides enough room to dream big and build a billion Dollar/Pound/Euro company. A pan-European service provider would make it much easier for startups to take advantage of this potentially huge market and build a big global business.
Outsourcing doesn't mean that everything will be done offshore or will be faceless. Especially when you are based in a big city like London, there is no reason why you can’t have a part-time HR person or bookkeeper come to your office one day a week. Combining a streamlined technology platform with the right amount of face time and personal touch (e.g. for hiring a new employee) would provide tremendous cost saving opportunities while still maintaining a good level of service.
I would love to startup something like this here in the UK but, being honest, I wouldn't even know where to start on this massive undertaking. I’ve done some CustDev in this rough direction and spoken with several tech startups about pain points related to back office. If anyone’s got any suggestions or would like to join me on this idea, definitely let me know.
