How Can Outsourcing Software Development Ease The Hiring Pains for Start-ups?

Early-stage Startups: Outsource Only to Established Software Development Companies

This advice applies especially to non-technical founders. You are entrepreneurs with brilliant ideas and business acumen but not the technological know-how to create the software. You’re eager to validate your idea, but you aren’t a software engineer and codes may intimidate you.

In the pre-seed stage, an outsourcing software development company can build an MVP within months, allowing you to quickly validate your idea. Choosing the best-fit outsourcing partner can make or break your product. Here are some questions to vet a good software outsourcing partner for early-stage startups:

• Do they have experience working with a small business?
• Do they respect your constraints, such as budget, time, or opportunity, and plan for that?
• Does their portfolio include the kind of software you want to build?

A software development partner who can say yes to these questions is the one for you. As a startup founder, you may be new to the field, and you need their industry expertise. A mobile learning app would have a very different user base, design, and functions from an e-commerce web app. Since you’re still new to this, you have to trust their expertise because you can’t afford to mess it up. Thus, a portfolio of similar projects shows that they can advise you on potential roadblocks during development.

The right outsourcing partner for you is sympathetic to your constraints, with the experience of navigating them. For example, a startup has a shorter product roadmap prioritizing new and disruptive features, so some nice-to-have features can be ignored for the time being. Your outsourcing partners can help you focus on the most original features to make your product stand out in the market.

Once you make your choice, it’s best to go for a dedicated team who can take care of all aspects of the software development, keeping you in the loop, and delivering a complete piece of software by the agreed release date.  

Consider Getting a CTO First

To non-technical startup founders like you, turning to an outsourcing software development business seems obvious, but not so fast. You may easily feel overwhelmed by the technical details and decisions you have to make with your outsourced tech team. To avoid this, consider getting a technical co-founder first. It could be an outsourced Chief Technology Officer (CTO) or better yet, an in-house CTO who will be in the same boat with you and has your best interests at heart.

Why hire a CTO? Michael Seibel of Y Combinator advises that early-stage startups should outsource only when they can prove their growth potential to investors. At this early stage, what investors are looking for is not the product, but the team’s capability and the idea’s viability. Relying on outsourcing without in-house tech personnel, especially if your solution centers around a piece of software, does not give a good impression of these qualities.

Michael mentions that some startups have succeeded in outsourcing without an in-house CTO, however, they are the exceptions, not the norms, especially among those winning venture capital investment. Some reasons for possible failure when outsourcing without a CTO include:

• It takes longer than you may think to get the first version of MVP out. Without a CTO at your helm, you’ll have to work directly with developers. How confident are you in communicating with them? This doesn’t just mean overcoming language barriers, but also thinking in ways that would bridge the differences between businesspeople - you, and tech people - your outsourcing partner. A CTO can be that bridge for you.
• Despite your abundant enthusiasm for the product’s viability, building innovative software is hard work. Many founders have found it irritating when the outsourcing team delivers features that fall short of their expectations.  Without clear requirements and reasonable expectations, both sides may feel demotivated or confused during the process. A CTO can help you manage the gap between expectations and results, such as evaluating the deliverables and giving effective feedback for later sprints.

A trusty CTO can assess your technology needs and outline the technical requirements for your MVP. They can help you choose the best-fit outsourcing company, so you can focus on building a user base even before you have a product.

Outsourcing for Bootstrapping Startups

Bootstrapping startups are different because they build the product with the founders’ personal savings without venture capital funds. Bootstrapping founders prioritize earning revenue over attracting investors, even if it means slower growth initially. This means they may still be working at their day jobs. They also focus on building relationships with potential customers before launching a product, so that once launched, the product can generate revenue right away.

The most important thing for a bootstrapping startup to watch out for is their cash flow, because they are not looking for capital from angel investors and venture capital firms, at least, not at the beginning.

Bootstrapping startups in tech often have a technical founder, or at least, a founder - CTO partnership that can build an MVP with minimal costs. However, if the founders need specialist skills to code certain innovative features, then outsourcing software development to offshore places such as Vietnam is an attractive option.

One big reason is lower cost. If your startup is located in more developed economies, then the software development cost in emerging economies would cost you only a third of that in your local area. Countries like Vietnam, the Philippines, India, and Indonesia have mature software outsourcing industries, with some established offshore vendors operating for almost two decades. They have the industry experience that your startup needs, at an affordable price.

It may be tempting to go for cheap interns or freelancers but the best thing you can do for your startup, especially if you are a non-technical founder, is to choose an established offshore software development vendor. An established vendor gives bootstrapping start-ups three advantages:

• Flexibility with an all-in-one package: they operate according to established industry quality standards to move your software from start to finish. You can choose to scale up or down. Switching from a team of one to two developers focusing on specific features, to a full team of developers, testers, designers, and analysts, is the kind of flexibility you can never enjoy with an in-house team.
• Their experience working with similar customers and products provides you with much-needed market insights.
• They have the industry access to a specialist talent pool, with the HR capacity to hire suitable talents more effectively than your startup can. With a proven reputation, they’re savvy in hiring and quick to identify the best-fit candidates for your project.

Some founders may doubt that the offshore team does not care for their software as much as an in-house team does. This may be true for some smaller vendors juggling various projects and yours is not on top of their list. You can avoid this by selecting a more established outsourcing vendor. They have a large enough capacity in terms of people, infrastructure, and management, to accommodate your needs. They get to where they are by being committed to satisfactory service delivery for their customers. So, treat your relationship with them as a strategic priority just like any other stakeholders, and you can have a well-synced working relationship and an MVP completed on time for an impactful launch.

Some startup founders often think of hiring freelancers or interns as a low-cost way to build their MVP, but freelancing isn’t a good equivalent to outsourcing. Why go for disparate freelancers if you can have access to a self-managed team? Building a new software product requires a lot of strategic thinking, intensive sprints, well-researched design, and rigorous testing. An outsourcing team has these qualities all in one place. With them, you can avoid the stress of managing a disparate team of freelancers.