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Startups’ Guide to Software Development Outsourcing

Transforming a startup idea into reality is easy for startups with one or more technical co-­founders. But for others, managing technical resources can be a big mess. Tech product development is not just expensive but it’s also hard to find right people to do it.

Software development outsourcing is increasingly becoming popular among startups as it comes with huge cost and efficiency benefits for them. However, success with outsourcing is always subjected to various factors.

This article will discuss the pros and cons of outsourcing software development and tips for startups to identify when, where and how to outsource product development for maximum efficiency.

Way Signs "Outsourcing - In-House Solutions"

Let’s start with a quick comparison of in-house development and outsourcing.

In-house Outsourcing
You can hand-select and train your staff. All you need is to specify your requirements, and experts will do it in specified time.
You team is completely dedicated to your work and there’s single point of focus. You can get other important things done in the time you save from hiring process.
You can control team’s pace of work. Consultants can help you with complete strategy.
If all key employees have an equity-stake in the business, they will be truly loyal to the business and work hard for success. Technology development firms will not just help you building the product but can also assist you in marketing through their partnered agencies.
Being in a close circle, the chances of communication errors are least.
It requires parallel time to hire and train ideal resources. It may be expensive option if you do not find the right outsourcing partner.
If the startup founder doesn’t know the required skillsets and cannot assign proper roles and responsibilities the success would certainly be shady. While working with multiple teams, the communication may not be that smooth as they all are not managed by a central team.
When Is It Favorable? When you have the budgets and the technical knowledge, building in-house teams is ideally the best option. For first time entrepreneurs, who do not want to risk the product development, or those on strict time constraint, outsourcing is a quick and easy solution. Outsourced product development can be highly successful provided all parties are clear on goals and being tightly managed.

Moving Forward:

The early stage startups have to choose one of the above, but as a startup moves ahead, the founders may decide to implement a hybrid solution, i.e. having a mix of both in-house and outsourced teams. Ideally, the mission critical concerns are internalized, while other processes are outsourced.

I won’t go into the details of in-house operations, as you can control most of them, but it’s critical to discuss the concerns related to software development outsourcing.

We all have heard the stories of poor code, ideas being stolen, pre-payment scams and the language barriers. But, the positive point is that the outsourcing industry is continuously growing at an incredible rate.

Though there may be some not so good experiences of some people, but we cannot generalize the whole industry on the basis of those few bitter experiences.

outsourcing 3

How Can a Startup Have Success with Outsourced Software Development:

Since, more startups are taking advantage of software development outsourcing every day, it’s essential for them to know some key points to success. Whether a startup plans to outsource product development completely or keeps it in hybrid model, the success pattern is same.

So, how can you outsource the product development without turning into another disaster?

First and foremost, invest time in finding the right offshore team. You may find the search engine result pages full of self-claimed best offshore service, but beware of advertising and spamming. The time you spend finding the best team is time well spent. Remember projects outsourced wrong, are very expensive!

The key to find a good offshore team is knowing who is behind them. A good offshore software team must be led by a highly experienced and seasoned technologist who himself has outdone something in the field. For instance, I found one authentic firm called Ignite Outsourcing, founded by a Aviram Eisenberg who has developed Ignite’s Crystal-box Outsourcing methodology, a cutting-edge framework for managing offshore R&D projects. He constantly works on new products, delivery models and strategies as well as perfecting the onsite-offshore methodology to enable uncompromising software development while maintaining cost-efficiency.



Read the offshore company’s vision and check founder’s background (use Linkedin and other business networks to verify) and you’ll instantly know whether they are good fit for your development needs or not.


Once, you’ve found the right offshore development partner, half of the hard work is done from your end. Rest is all maintenance and here are some tips to keep your project on the right track:

Here are some tips for long term success with software development outsourcing:

1- Be prepared; offshore projects fail because they are harder to manage than in-house. The better manager you have, the smoother the process will be.

2- Since, it’s all about having a good manager, make sure that you provide the offshore team with clear specification.

3- A good offshore team manager is supposed to train people on tool use, understand what the team is doing, do real risk management, analysis for schedules and budgets etc. If you cannot do any of these, better is to hire a good manager to run the project.

4- No matter how good your project manager is, you must have to keep a tight grip on the day to day tasks and project details.

5- Make sure to answer every developer query quickly.

6- Do test every release yourself and quickly update the team about the bugs. Well, it may seem time consuming, but it’s going to save your startup’s life!

7- Keeping a team 10000km away, motivated is never easy. Praise them for the good work, visit them if possible or send them small gifts for their hard work and they will get an enthusiasm boost.

whiteboard schema : outsourcing benefits cs5

Concluding Words:

Outsourcing product development can be incredibly successful for startups, but it must be done rightly. It can bring huge savings and optimum efficiency, but to avoid the outsourcing nightmare, you must make sure that you have good management and, you yourself can invest energy into it!

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