Should startups outsource software development?

Whether a startup or an enterprise demands for software development is widespread for industries of all scale. The questions that arise is, is it good for startups to outsource software development?
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I provide the answer to this question and also point out the benefits to software outsourcing for startups. I also address a few myths surrounding software outsourcing for startups.

All set with the vision of software that your small startup requires? Well! The next step is hiring a software development team. You have two choices. You can hire an in-house software team or outsource software development.

This decision can have a huge impact on the success of your business, more so, during the initial years of business! Being into software development outsourcing business for almost a decade now, I've worked with a number of early-stage startups as well as huge enterprises. I've tried to leverage my experience and expertise in software outsourcing and analyse how startups benefit from it.

Ask yourself these questions before making any decision?
  • Is software development your startups' core competency?
  • Do you have the money to hire a software development team and buy the infrastructure that follows?
  • Will this software/app be your core business activity? Like, does your target audience require the software/app for every single instance they communicate with your business?

If the answer to all of the above is “YES”, you should opt for developing software in-house. If you already have in-house developers and you are already footing the bill then in-house development can definitely be an option.

Also, if the software dominates your business, you will require daily upgrades, maintenance and constant support. So, if you have the money, hire an in-house software team. But, if you don’t have IT expertise or a budget, it’s better you let some specialised IT people from another organisation take care of it. Trust me, you will be better off! Take a look, why.

How can software development outsourcing help your startup?
  1. Access to an enormous and global talent pool


    When you are just starting out, you generally don't have many options to choose from. If you want to recruit local talent based on technical criterion, it will get costly and not to mention, time-consuming. With software outsourcing, you will have access to the global talent pool and can pick and choose freelancers or software development companies that meet all your technical criterion. All that in your specified budget.

  2. Reduction in costs


    This is given! Companies can cut their development costs by 40% if they outsource software development to countries like India, China, Poland, Ukraine, Mexico etc. This is because the wages are lower in these countries compared to the US or UK. Also, these companies mix and match their senior and junior developers that result in a blended development, further reducing costs. So, with outsourcing, you are getting high-quality software at a much less cost.

  3. Focus on core business


    Though outsourcing starts with an initial time commitment, over time, your time commitment will be less for project management. This allows yourself and your team to focus on core activities that will help your startup to innovate and expand. Outsourcing frees up a lot of time that would otherwise be spent on employees struggling over work that doesn’t match their skill set. This will, in turn, free up resources that you can allocate to your core business processes to generate more revenue.

  4. Time zone advantage


    With offshore software development, you also get some time-zone advantage. If you indicate a bug or an issue in the evening, you don’t need to wait the whole night and probably half of the next day for a solution. Your development team, working in another time zone, find a solution before you wake up and start the day.

    Also, if you have an in-house team, then, your business runs 24x7. When your in-house developers are resting, your offshore team is managing the show.

  5. Faster time to market


    The one advantage of hiring an offshore software outsourcing team is that you can dictate your schedule, as long as the schedule is rational. Your outsourced team might upsize or downsize according to your requirements.
Skype, Slack, Github, Opera, MySQL are just some examples of companies that once outsourced software development that did not go wrong.

I have some idea as to why startups don’t opt for software outsourcing.

Busting myths


Here are some myths related to outsourcing software development.
  1. The bigger, the better and more, the merrier


    Many startups get an idea that working with big software development firms accords them an advantage. Similar thing when it comes to software teams. This doesn’t stand true. When it comes to partnering with large companies, not only are their development rates high, their lack of a personalised approach might also be a problem for the startup.

    Similarly, when there are too many heads in a team, the development speed decreases. There are just too many opinions. So a smaller company, with the right skill set, may give you a quick and personalised solution to fit your needs.

  2. Outsourcing means a compromise in quality


    According to Statista, in 2018, the global outsourcing market amounted to US$85.6bn. This statistic speaks volumes. If you choose the right outsourcing company that is technically sound and has a good work ethic, the quality of the end product and the code can sometimes be superior to that of in-house developers.

  3. Venture capitalists don’t fund outsourced startups


    This is not true! VC’s don’t fund startups when they don’t see an opportunity, or there are too many competitors, or they don’t like the idea. Slack, Skype, Github all started with outsourcing. If VC’s are not funding your startup, there may be a problem with your idea or showcasing your idea, but not necessarily a problem with outsourcing software development.

Summary


Outsourcing software development to an offshore company can highly influence your costs and your product quality. With your initial investment in hand, software outsourcing means a reduction in software development costs and focus on core activities to help increase your revenue. But before you choose your software outsourcing partner, run a complete due-diligence of the company.
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About the author

Jyotirmay Samanta is an entrepreneur and technocrat with more than 18 years of experience working at companies like Google, Amazon, Salesforce etc. He is currently the CEO of BinaryFolks, an offshore software outsourcing company
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