Not long ago, most HR departments handled all activities from recruitment to training and handling concerns about employee benefits, salary and more. Most companies handled it in-house. But things have changed over the years. For instance, with the IT revolution, companies have started to outsource non-core activities like HR and payroll, to remain focused on their core areas of IT infrastructure and product innovations.
It is critical for companies to concentrate on their core competency and identify non-core activities which can be handled by a third party. The conventional thinking was that an organisation should outsource its non-core activities to provide sustainable competitive advantage, even though they are essential for the business to operate.
With the startup and e-commerce industry, the situation is no different. But they follow a slightly varied approach of a collaborative model. E-commerce companies and startups are collaborating with other startups in sharing the expertise, resources and best practices. For instance, an e-commerce company whose core is building products and providing a marketplace, do not want to concentrate on delivering goods to the end consumer. Hence, they partner with logistics firms to complete the transaction. Or, a cab hailing service partnering with a startup for verifying its drivers’ credibility and background information is another example.
Speaking to FE, Alok Goel, managing director of SAIF Partners, whose firm has invested in several startups and e-commerce companies said, “For startups, there is an unprecedented pressure to grow. So if they start solving all the problems by themselves, they will basically slowdown. But if they partner with someone else who is good at a particular service, they can stay focused on their core activity. It’s better off for companies if activities which are not its core DNA are being done by somebody else.”
Even cost wise, it would be beneficial as a company which is building on its expertise will handle the process in a most cost efficient manner, he adds.
Recently, taxi hailing service Uber partnered with Safetipin, a map-based mobile safety app that gives users the tools to make safer and smarter decisions regarding where and when they travel throughout a given city. Karun Arya, communications lead, South Asia and India at Uber said, “We want to ensure our customers are driven safe till their end point. While Uber is a technology company that connects drivers and customers, Safetipin, has a commendable model for safe ride. So our collaboration is necessary and it’s hyper efficient.”
According to a PricewaterhouseCoopers (PwC) report titled ‘Outsourcing comes of age: The rise of collaborative partnering’, leading outsourcing customers and service providers are shifting from traditional to collaborative business models. “Traditional long-term exclusive outsourcing arrangements work very well for a near commoditised service (such as IT infrastructure services). They do not work as well with ‘secondwave’ outsourcing arrangements
that are generally less commoditised. Both customers and providers are employing more multisourcing, joint ventures, and open business models,” the report said.
Another instance is where online real estate portals like CommonFloor and Apartment Adda have partnered with BetterPlace, that offers packaged background verification services to apartment associations for apartment complex staff, tenants and domestic help.
Pravin Agarwala, co-founder & CEO at BetterPlace Safety Solutions says, “The idea is to connect collaborate and conquer. We connect with like minded people, collaborate with each other to add value to customers, and we aim to become the default choice for the service we offer.
In that way, each of us have our own market share and there is no threat to business.”
** Uber partners with Safetipin: for mapping the safe zones and generate safety scores for various locations
** Snapdeal partners with Gojavas: for delivery of goods
** CommonFloor partners with Betterplace: for verification of apartment complex, tenants, domestic help
** Urban Ladder partners with Vizury: for data analytics (to gain insights into TV advertising)
** Zomato partners with Paytm: to enable seamless payments for food ordered through its platform