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Why Startups should Outsource Software Development

Outsourcing software development is very common nowadays. Many successful companies hire offshore development teams. With high-speed internet and remote collaboration tools development team is no longer required to locate within one office, or even one country. Distributed development teams allow hiring specific candidate with most appropriate expertise and at best cost from talent market worldwide, not only local specialists.

IT-startups and growing internet businesses differ from well-established companies. Due to their nature, IT startups aim to hire all developers for their needs. They say that a startup is an idea and a group of dedicated people trying to make it work. Even being short on funds, entrepreneurs hire developers who work part time after day jobs, offering part of shares in return. At the same time not all developers feel enthusiastic about the new business and require high salary referring to high risks they meet leaving day job and joining the venture company.

Let’s face it, IT startups still outsource many aspects of business chores. Most often they search for outsourcing providers in specific areas like accounting, recruiting, consulting, legal and intellectual property matters (including work with patents, trademarks, copyrights, trade secrets, licenses) or low-tech tasks: cleaning, cooking, etc.

To that, there’s infinite amount services providers on the market that offer IT and high technology services for growing businesses that help to cut down expenses on vital and expensive quality infrastructure and tools: hosting providers, telephony conferencing and networking tools, analytics, testing services etc,

We see, that startup ventures keep core infrastructure elements in cloud, outsource the majority of routine tasks and still, they hesitate to outsource software development.

We believe, not only because we develop custom software, that every growing venture should think thoroughly to decide if development outsourcing is right for them and ask themselves:

What is your startup about?

Define what is the cornerstone of your company: is it a tech product with strong dependence on programming? Or is it some service to meet customer expectations and website is mostly a communication mean, where all the value is provided by service and information behind it.

Do you actually need one more developer?

Some project parts require knowledge and experience in specific areas, like integration with some software and tools, or import/export feature development. To implement these tasks entrepreneurs can either hire dev into a team, use a freelance, independent subcontractor or outsource to a company.

Before you hire in-house developer, or freelancer as independent contractor don’t forget to:

  1. Consider complete payments for legal collaboration: wage with bonuses and all payments (VAT for Europe, know the difference between a w2 and a 1099/independent contractor for USA
  2. Calculate recruiting expenses and make sure you are ready to hire person for long-term commitment.
  3. Include office outlays (rent, hardware and software costs, insurance, education and social bonuses)
  4. Consider that hiring person gives you one unit, while specialized outsourcing companies usually have several similar resources and can add extra from bench whenever needed.

Sum up all of the above and put outsourcing costs on other side of the scale and see what is cost efficient and time-worthy.

Do you have time to wait?

Outsourcing is a good solution to achieve set goals within required time-cost constraints and at a high quality level. Hiring a new in-house development team will require time for education, coordination and building up all the processes. Of course, finding a proper outsourcing partner and hiring a new team may take time, yet major consumption is taken up by development process. In this case, experienced team is preferable in sake of using best practices and guaranteeing high quality

I believe for most cases outsourcing software development should be considered as

  • Option to cover immediate needs of expertise in non-core areas( new frameworks, languages and development tools)
  • Backup solution to scale up fast and at low cost
  • Ability to discover and try new areas for startup with temporary team prior to hiring ling term experts.

There is no perfect solution for all. Every business should think of what they can do in-house and what can be outsourced. Nevertheless, software development outsourcing option should be considered in all cases.

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