Why More Startups Consider Outsourcing Software Development

Launching a product startup and keeping it afloat requires a significant investment. And when it comes to managing resources, they are scarce for most startups. Not only for human resources, but also financially. Less than 1% of startups are backed by solid investments.

Building an in-house development team is much more expensive than outsourcing software development services to a third-party service provider.

Why are startups and small businesses opting for outsourcing?

There are many more reasons startups choose to outsource over building an in-house software development team, including:

  • Access to rare skills, experience and knowledge

Hiring software engineers in-house can take months, with the global developer shortage reaching $8.5 trillion.

Larger companies still have unfilled engineering positions for months, especially when it comes to rarer programming languages ​​or specific niche experience.

There’s been a whole slew of tech layoffs in the current economic situation. The shortage of developers still exists, but the overall job market situation has improved.

  • Flexibility and scalability

When outsourcing, you can scale up or down your software development team at any time to achieve your desired results.

Depending on your project needs, you can select a fixed price, time and materials, or a dedicated team engagement model to save a pretty penny over in-house expenses.

When outsourcing, you don’t need to spend days and weeks building a software development team from scratch. Since time is money, you protect your financial resources by saving time.

But don’t get tricked into choosing the cheapest outsourcing provider. Instead, check the skills and qualifications of the vendor before pulling the software development trigger.

All startups differ in product, tools, and development time. Therefore, before starting the search for your outsourcing provider, analyze the requirements to find the best provider for your project.

Top Challenges and Risks of Software Development Outsourcing and How to Mitigate Them

In the debate about the pros and cons of outsourcing, the pros definitely outweigh the cons. However, the benefits come with some risks:

  • Bad evaluation of the supplier

When choosing a software development vendor, you need to analyze their previous projects, make sure they work with the technology stack required by your project, and so on. An evaluation based only on rates and ratings is not enough to build a successful project.

Time zone differences, poor language skills, and cultural differences can negatively impact communication between a customer and a supplier. However, all of these factors can be mitigated if:

– Supplier and customer have overlapping working hours

– All exam sessions and calls are scheduled in advance

– There is a dedicated project manager who acts as a bridge between the client and the development team

  • Intellectual property issues

Intellectual property security is one of the top concerns of technology entrepreneurs. When choosing your outsourcing partner, remember to check their security policies, data loss prevention systems, and data handling methods. Additionally, signing an NDA with your supplier can also help protect your intellectual property.

Overhead costs can weigh heavily on your project budget. This can happen because of a flawed cooperation model. The fixed price is an excellent choice for a project with clearly defined requirements. The dedicated team engagement model works well when you need to focus on your core business and vital processes. Finally, the time and material model comes in handy when there may be multiple iterations.

Choosing the right engagement model will help you optimize your budget and minimize the likelihood of cost overruns. So, when drafting a contract, ask your provider to specify the hourly rate and fees for each service they provide.

To simplify code maintenance and make it easier for a team to fix bugs, your code should be uniform. Otherwise, you may need to rehire the old contractor for additional maintenance and support.

Developing a software solution in a single language and with a similar architecture structure facilitates all integrations and maintenance. This type of approach can save you tons of money in the long run.

Get the most out of software development outsourcing

Startups and established companies choose software development outsourcing over building in-house teams to save time and money, access a larger pool of software development talent, and achieve a rate-expertise balance .

But only with an experienced and diligent provider can you easily reap the full benefits of software development outsourcing. So always search, speak, verify, reflect and analyze. This will help you choose the right software development partner and create a product that will be used and loved by millions.

Featured Image Credit: Photo by Christina Morillo; pexels; Thanks!

Andrei Kasyanau

Senior executive and advisor with over 20 years of success in the software, technology, healthcare and real estate industries. My areas of expertise include leadership, team building, coaching and mentoring, software development, business strategy, business analytics and growth. I started Glorium Technologies in 2010 and have built the business from the ground up for the past 11 years.

Gordon K. Morehouse