Top 10 Reasons Why your Startup should Outsource Software Product Development

Daniil Kopilevych
Daniil Kopilevych
Marketing Manager
May 3, 2018 9 min read
On Startups
On Startups May 3, 2018 9 min read

To outsource or not to outsource… that is the big question. Why do companies outsource software development? There must be a good reason for this, as the number of outsourced project and outsourcing agencies grows steadily.

The available statistical data shows that, despite certain dips, the overall trend to outsource services continues to climb.

Outsourcing trend - Top 10 reasons why your startup should outsource software product development
Image credit: Statista

For startups, outsourcing their product development may be a great solution to jump in the market at the minimum cost and within the shortest time possible.
Indeed, with in-house development, the time between the idea and the finished product is much longer, as it involves renting an office space and setting up the entire development infrastructure, as well as putting together a professional team. Naturally, the cost of the in-house development will increase the initial investment greatly and can affect the company’s capital requirements and its overall starting position.

While outsourcing definitely does not mean the absence of investment, it is a much more cost-effective solution. Besides, both for startups and established companies, outsourcing brings other benefits that allow them to develop, promote and market their product more successfully.

Apart from the direct benefit of cost- and time-saving, there are also other advantages of product development outsourcing.

#1 Access to deep knowledge and experience

One of the main reasons startups outsource software product development is that by engaging an outsourcing agency you are getting much more than just the software development.
In fact, you can come to such agency with only a product idea that only exists in your head, and you will get a complete package of consulting, analytical, marketing, design, and development services. Outsourcing agencies will work with you from the very first phase of your project – the discovery including market research and user interviews resulting in building the product prototype.

Depending on your product type, project specifics and budget, you can proceed to the development or can start with creating an MVP, or minimum viable product, to validate your idea and make certain changes if necessary. In this case, the marketing and design experts of the outsourcing company will help you design the most optimal MVP and then interpret the analytical data it yields.

Project planning, cost estimation, wireframing, UI/UX design, software development – outsourcing companies can do it all, and in all cases, they can put together the most optimal project plan.

Of course, you can only outsource the services for which you lack own resources, for example, assign the development to an agency while doing your own marketing. In this case, you will not have to worry about the development and can focus on your tasks.

#2 Access to great tech talents worldwide

When you decide to outsource your product development, you are not limited by your geographical location. Your primary choice criteria are the team’s skills and professionalism.

Browse the company’s portfolio, look up the customers’ feedback, check the reviews, try the products that the company has delivered, and you will be able to find the team that is perfect for your project’s purposes. No matter where they are located, whether they work together or remotely, their development talent will contribute to the creation of your product.

Software developers worldwide map USA, UK, Eastern Europe

However, while contemplating collaboration with a team that is half a world away or distributed over many countries, we recommend considering the considering the cultural differences and taking steps to minimize their influence on the project development process.

#3 Optimal balance of skills and rates

With outsourcing, you can find the perfect balance between the team’s development skills and their rates. The outsourcing geography is rather broad, India and Eastern Europe being among the best-known outsourcing hubs.

The countries of Eastern Europe, such as Ukraine or Belarus, are quickly rising in the outsourcing rankings. The software development companies operating in these countries provide quality service with the optimal balance of expertise and creativity.
At the same time, the development rates in Ukraine are lower than, for example, in the US or Western Europe. Therefore, by outsourcing to Eastern Europe, you are going to get a professionally delivered product at a considerably lower cost.

#4 Ability to gather the best professional team for the project

If you start your project with putting together your own startup development team, this process is going to throw you off schedule quite considerably. For a successful product launch, you need not only the developers to write the code and the DevOps to deploy the product. In order to ensure a smooth product release, you also need to engage the following professionals:

  • Business analysts to identify the requirements to the project functionality and translate them into features
  • UI/UX designers to plan the user experience, create wireframes, design user flows, arrange UI components and, finally, create the UI mockups for the UI developers
  • QA engineers to test the product during and after the development
  • Copywriters to create UI texts and product documentation

Subject to your project specifics, there may be a need in some highly specialized skills. For example, your idea may include some advanced technology, such as virtual reality or AI. Finding such experts may take quite some time.

Usually, outsourcing companies have a complete team on board or can quickly recruit freelancers to fill the positions that they have no experts for. Already at the project planning stage, the project manager proposes the team that is capable of delivering the project stating the approximate time required from each team member.

#5 No need of micromanagement

When you assign your project to an outsourcing agency, the project is coordinated by a project manager whose job is to take care of all matters related to the product development and launch. The project manager will be your main point of contact in all issues that may arise.

You will meet the PM at the first stage of your project development and will work with them on its plan. Once you have approved the project plan and estimate, it will be the responsibility of the project manager to keep to the agreed schedule and budget. Usually, the PM already has the tried and tested methodologies for managing remote teamsas well as in-house teams.

It will be the job of the PM to plan the sprints, set the deadlines, control the delivery, schedule and prepare feature demos. Any changes, suggestions, comments, complaints – you can always address them to the project manager and be sure that the required actions will be taken.

#6 Effective communication within the team

The importance of communication goes without saying.
Naturally, in a team where people know each other and have more than one project under their belt, the communication is next to telepathic. The roles, responsibilities, skills, and subordination are known in advance, and no time is spent on team-building.

An outsourcing agency has all tools and platforms for effective communication and collaboration properly set up and functioning. Preparing a collaboration environment for your project will take minimum time and effort – a workspace in Slack, a project on GitHub, a board in Jira or Trello – and you are mostly all set.

When a team is used to working together, all issues, big or small, will be handled in the quickest and the most effective manner.
Besides, in a well-established team, the project manager will have little problem with finding replacements in case of illness or other emergencies, as all primary and secondary skills of the team members are well known.

#7 Application of the Agile methodology

For a startup, keeping to the principle of lean development is often critical, as it allows delivering a product in the most effective way. Lean development minimizes the share of unnecessary tasks resulting from incorrect management, poor communication, excessive complexity, and other issues related to the project coordination.

The Agile methodology organizing the development as an iterative process favors the lean approach. In the most common model, the product creation process is broken down into sprints that are usually two weeks long. The tasks to be performed within each sprint lead to the completion of a feature or functional component that can be tested and then demonstrated at the end of the sprint.

Agile allows making changes on the go and adapt the development process to the changed requirements. With Agile, the necessity to redo a finished component reduces to the minimum.

Many development agencies adopt Agile recognizing the startups’ need to keep to the lean development approach. This way, the customer is always informed of the current status of their project and can suggest changes quickly.

#8 Easy scalability

In the course of project development, it may happen that the scope either grows or reduces with some changes that need to be implemented. In this case, the initially selected team should be scaled up or down which is extremely difficult to do with in-house development.

If you are doing your own development, it is not easy to quickly find another team member with the required skills, especially, if these skills are needed for one project only. If you need to reduce the team, you will either have to dismiss people or continue paying their salaries to keep them for future projects. Either way, the solution is far from optimal.

With outsourcing, you are likely not to see such problems at all, because the agency usually has enough staff to cover the project needs and, when very special skills are required, they can contract a freelancer or a part-time member on the hourly basis.

Image Credit: Medium Eightshapes

Similarly, reducing the team is no problem for an outsourcing agency, as they may be running more than one project at the same time and transfer the colleague to another assignment.

#9 Minimum risk

Of course, when you assign your project to a new team, you are always running a certain risk. Despite good reviews and positive first contacts, there is still a chance of miscommunications, delays, features developed differently from what you expected, as well as many other unpleasant situations.

However, the central concept of outsourcing can protect you from such risks or minimize them.
Start with contracting an agency for a small task. Make a complete agreement specifying the quality, deadlines, rates, acceptance criteria. If you are satisfied with their performance, go ahead and sign a contract for a larger chunk of functionality or even for the complete project.

At the same time, if you see that the agency is not up to the task, you can cancel the cooperation at any time (just check the contract carefully not to run into legal troubles).
Under some contracts, you can keep the already developed project components. In this case, terminate the contract and start looking for a new outsourcing company to continue.

#10 You will be in a good company

The methodology of startup outsourcing has been around for quite a while with a list of successfully outsourced projects amounting to hundreds, and the outsourcing geography covering the entire planet. You may never guess that some of the world-famous products were built by outsourcing companies.

Just to name a few:

  • Slack. This convenient communication tool that many development teams love for its simple and efficient functionality is, in fact, the work of MetaLab who redesigned the messenger at the early stages of its life and happened to hit the bullseye.
  • Opera. The lightweight browser first marketed by Telenor, a telecommunication company from Norway, was built by a distributed development team. The members worked from more than 25 different locations and managed to create a browser that has earned the appreciation of many users.
  • MySQL. Believe it or not, but this database management platform that holds one of the top ranks for its popularity was also a product of a distributed team who continue to support its operation.

Agencies or freelancers?

On a final note, let’s briefly look into the matter of which outsourcing structure is better for a startup project. It seems we’ve got you convinced of the advantages of outsourcing, but now you need to decide whether you should choose an agency or hire freelancers for each specific task.

Freelancer vs. Development agency

Both approaches have their pros and cons, the most obvious being the cost.
Freelancers usually have lower rates than outsourcing agencies, as they work with minimum infrastructure and management. However, this advantage has its flip side – with freelancers, you will need to provide management on your side, and coordinating a very distributed team with each person working according to their own schedule and routines is not an easy task.

Development agencies, on the contrary, do their own management which makes the process more streamlined. For this reason, if you are thinking of outsourcing a large, complex project, we recommend contracting a reputed company that can be expected to deliver the product matching your standards.