April 29, 2020 Last updated April 29th, 2020 1,105 Reads share

Why Should Startups Outsource Software Development?

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In his book The E-Myth, Michael Gerber describes the three faces of any small business owner: entrepreneur, manager, and technician. Although most startups have more than one person in their team, doing everything in-house, especially software development, boils down to the danger of turning an entrepreneur into a technician.

Outsourcing development means that entrepreneurs spend less time thinking about the technical details but instead can focus all their energy on implementing the vision, bringing the product to market, and attracting more funding. If there was a job description for a startup founder, it wouldn’t necessarily include coding but would have all the above is mandatory.

How Do You Know You Are Making the Right Decision?

Hiring a team in-house or outsourcing software development is a fundamental decision that should be taken, ideally, at the moment of writing the business plan. There are pros and cons to each solution, but success stories tend to favor the outsourcing option.

Ask yourself if software development is part of your core proposition, or it is something just helping to bring your business idea to life. If your startup is focusing on creating a SaaS, for example, you might need your own team to design and develop the product. However, if you are trying to provide a service such as a rideshare, education, or rentals, you might be better off with an outsourced solution.

Take a look at your business plan and identify the customer categories. Is your product dedicated to the general public, or you have a niche audience that is highly tech-savvy? Then you might be better off with an in-house team in the latter case.

Most importantly, is the technology so specific that you need to build if from scratch, or can you reuse and adapt exiting software?

To sum up, you only need to hire your own team of developers if you want to create an entirely new solution aimed at high-tech users, and this is part of your core proposition. In all other cases, your business is a great candidate for outsourcing.

Top Advantages of Outsourcing Software Development

Even if you decide to outsource, it still comes with questions and fears. Here are a few reasons why outsourcing might be a good idea.

Less Hassle With Hiring and Training

Real talents are hard to find, and the best ones are sometimes hesitant to work for companies that have not been validated on the market yet. It’s more likely to find top talent in well-established companies that have both the procedures and resources to select and retain them.

By working with a specialized development company, you also cut the associated HR costs. These are not negligible, as they include recruiting, hiring, training, and payroll. As a startup, you don’t want this kind of overhead on your list.

Effective Collaboration Instead of Emerging Chaos

Even if you can get top developers to work for your company, there is no guarantee that they will function well together as a team. It’s not a new phenomenon; it also happens to sports teams when they get an infusion of new players. It takes time for people to start working well together.

When you outsource software development to an established company, they already have things figured out, as well as their operating procedures and even inside jokes. They will start working on your tasks immediately instead of spending time on getting to know one another.

Experts at MBicycle estimate that you will be saving at least one month of paid work per team member, and you don’t need to spend extra time instilling your corporate culture into people who need to get productive so that you can actually run the company successfully. You also save thousands of dollars on qualifications and training in the long run; you only pay for what you get to use.

No Administrative Costs and Idle Time

When outsourcing, you don’t have to pay for your team’s workstations, equipment, sick leaves, or vacations. You don’t have to cover maternity leaves or endure a disruption when a team member wants to go on a sabbatical. It’s your outsourcing vendor’s duty, set in the contract, to find a suitable replacement as soon as possible.

A Reliable Pool of Talent

Once you realize you want to outsource your development activities, only your budget dictates who you can afford to work with. What’s more, working with a dedicated company means that you get access to the experience the members have gathered working on various past projects. They are agile and will have timely solutions in place for most of your problems. Furthermore, they will not leave you in the middle of the project because they got a better offer.

It’s Cheaper

When you first hear the price tag a software development company tells you, sometimes you can consider it unreasonable. However, when you start breaking it down following the steps we’ve mentioned earlier, it will appear to you that the price covers a lot of the risks which could otherwise destabilize your startup.

More Time to Focus on Core Business

If software development is not the centerpiece of your business but something you need to get it running, by having someone else deal with the implementation, you can save hundreds of hours. You can invest these in market research, product development, marketing, sales, or pitching to investors.

Every responsible software development company will also give you a dedicated product manager to supervise the team that is working on your project. This person will serve as the liaison between you and the programmers and will save you some additional hours of communicating with each team member individually.

Final Thoughts

For many companies, the top reasons for outsourcing are cost-cutting, as well as the ability to focus on the core business and solve capacity issues. Instead of thinking about what technology to use, as an entrepreneur, you should be focusing on how to make money to reach breakeven, how to grow your customer base, and eventually, get a commercially sustainable market share.

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Ilya Kislenko

Ilya Kislenko

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