The term outsourcing gets used in various ways but when we talk about a start-up in its very early stages of product development with founders that are non-technical, outsourcing usually means hiring an offshore company to handle the engineering of your vision and the Dev Op’s aspect of deploying that product into the market. There is never a perfect solution and offshore development is no different. There are pros and cons. In this article, I’m going to focus on the pros but I will talk about the cons in a future article.
Cost Savings
When you outsource your development to an offshore team you instantly reap the benefits of the lower cost of living compared to the United States. In addition, you will not have the typical overhead of office rent, equipment, insurance, and all other costs associated with hiring employees. Every dollar is going toward building your prototype and MVP, which is where you need to be spending your limited funds.
Expertise
As a non-technical founder in the very early stages of a start-up, you need the expertise to build your product. Both onshore and offshore development firms can instantly plug in the expertise you need for your start-up. In many cases, onshore development is cost prohibitive so the founders need to rely on offshore teams. These teams will give you access to skilled individuals with a comprehensive set of competencies.
Increase capacity
As you begin the development process, each week you might need different resources. With outsourcing, the vendor is responsible for all the day-to-day operational duties and making sure they can add resources to the project when needed leaving you free to focus only on the prototype and MVP.
Focus on Product
You have to approach your venture with urgency because there is competition, even if you are not aware of it yet. Instead of having to spend weeks and months building a team, outsourcing allows you to jump right in and focus on the product and customers to get to product market fit fast.
Time to Market
As an early-stage start-up, you are in constant test mode. You are validating assumptions about the market, the business model, the customers and the competition. You have to be nimble and constantly pivot until you find the sweet spot. Offshore development allows you to do this as the offshore team takes the grunt of dealing with the day to day operations and adjusting to decisions being made about the product.
Questions to ask before outsourcing
Now that you’ve seen the advantages of outsourcing, it’s important to consider the questions you need to ask before going ahead with a provider. Here are the top things you need to consider:
Ask about their workflows and procedures. How do they manage to scale up or down, and about tools they use to manage communication and projects? These questions are intended to give you an idea of how sophisticated and mature their operation is.
Ask for information about the team. Ask who would be working on your project and have a five-minute conversation with these individuals. If you are not given access to anyone besides the owner, GM, or someone that is trying to get the contract and close a sale, consider it a red flag.
Do they offer a service-level agreement? This is one of the most important things you should look for in a provider, so you know exactly what they will provide for your company.
Their previous experience. Don’t just compare pricing between service providers, but also try to see their previous experience in your field. This will give you peace of mind, in the long run, to know your work will be completed to the highest quality.
How do they support incremental outsourcing? Check if the provider will support you in breaking outsourcing down into smaller projects. This is an excellent tactic for reducing the risk of outsourcing.
Ask questions regarding current technologies and best practices. If you have no way of making a judgment and neither does your cofounder, ask a friend or colleague with more technical acumen to join you on a call with the firm. A few questions from an experienced person will quickly reveal if the people at the firm keep up with technology and trends or not.
Here are some real examples
Alibaba
In the company’s early days, founder Jack Ma outsourced their website development to a company in the US. He found that development talent in China was limited, while companies in the US had the skills he was looking for.
Basecamp
Basecamp is a project development tool that helps businesses handle their project development more efficiently. To help progress their app further, they outsourced it to remote developers which allowed them to optimize their cost-opportunity gain.
Slack
This increasingly popular service outsourced during their development phase and used a design firm to create their logo, app and website.
The core development of this extremely popular app was outsourced to Russia. Their first contractor was an iPhone developer named Igor Solomennikov who eventually went on to join the company as their CIO.
Finding the right partner to help you build your vision is critical. The right partner will enhance your ideas while the wrong one will drain your bank account and drive your idea into the ground. I go into depth into this topic in my upcoming book, Side Adventure. Subscribe to my blog to stay up to date on the books release date and have future posts sent directly to your inbox.