Top Reasons Why Startups Are Turning To Outsourcing CFO Services
New Delhi (India), March 23: India’s startup economy has grown rapidly, with businesses mushrooming across the country, as there has been a lot of progress in the Indian startup ecosystem in the past decade. With the rise of digital technologies and an increasing number of young entrepreneurs, the country is now home to the third-largest startup ecosystem in the world.
The Indian government launched Startup India to support and sustain its growth. Statistica suggests that in 2022, 19,000 startups were recognized by the Department of Promotion of Industry and Internal Trade (DPIIT). DPIIT had officially recognized 80,152 startups as of 2022.
India has 105 unicorn startups, and surprisingly only 23 of them are profitable. The rest of them are a resource sink drawing in billions in funding from venture capitalists and investment firms around the world. In 2021 alone, Indian startups received $41.4 billion in funding, and the year also marked the rise of 42 startups.
According to a study conducted by IBM Institute for Business Value– 91% of startups fail within the first five years, and one of the reasons is unceasing cash burn.
Mohammad Asif, CEO of JaZaa Business Services, points out the importance of outsourcing CFO services to startups and small businesses in order to help the owners make sound, informed decisions when it comes to scaling up and finances. He says, “2022 delivered a sharp blow to the Indian startup economy with losses piling up and huge employee layoffs. Indian startups are facing financial issues such as limited access to funding, regulatory challenges, and a weak financial strategy.”
Startups, in order to save capital and time in hiring an entire staff for finances and accounting, are opting for outsourcing CFO services. “Finance is the blood supply of a business. Hiring a full-time CFO can be expensive, especially for a startup that is still in its early stages. Outsourcing CFO services allows startups to access the expertise of a CFO without the high salary and benefits costs that come with a full-time hire. Also, outsourcing CFO services allows startups to pay for only the services they need, rather than a full-time employee’s salary.” Asif adds.
While there are many advantages to outsourcing CFO services for startup owners over hiring a full-time internal finance team, Asif suggests the service is beneficial for business owners who want to cut down on expenses and customize the service as per their requirements. He points out, “CFO services are cost-effective and time-saving for them and help them get access to experts who can help startups navigate complex regulatory requirements, develop internal controls, and manage financial risks.”
If one’s running a startup looking to grow and succeed, outsourcing CFO services may be the right choice for you.
JaZaa Business Services provides business and financial advice that helps startups and MSMEs to grow and scale up. The company is a boutique business consulting and strategic advisory firm with 10+ Years of Experience. The team consists of financial and analytics experts who have very strong academic backgrounds and varied industry experiences. Catering to clients across the US, UK, Europe & GCC, in 2022, Jazaa became an authorized service partner of the industrial hub of RAS AL KHAIMAH, RAKEZ in UAE.
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