Should a Startup Outsource Its Software Development?

Delegating complex tasks to an external experienced team has enabled many startups to get ahead in the industry. Be it manufacturing, marketing, website development, accounts, human resources, or any other process, getting help from niche experts never harmed a startup. In fact, outsourcing helps startups deliver quality products faster and cost-effectively. 

And when it comes to a tech startup, planning to transform its new software idea into a product, the decision to outsource or build the software in-house can be pivotal in success. 

With the software as their core competency, they want to keep it in-house. But at the same time, they need to be swift in executing their ideas. Else, witness their idea be launched by their competitor. Also, being a startup, shouldn’t they have some experience-holding experts work on software development to avoid the pitfalls? 

These are not all, several questions arise in the mind of an entrepreneur when they plan to transform their idea into a working product. So, how do they know if they should outsource software development or build a full team of developers, QA engineers, designers, and others to get the software developed in-house? 

Let’s find out now. 

What Does Software Development Outsourcing Means For Startups?

Before asking if software development outsourcing is the right choice for startups, it is imperative to understand what outsourcing means for startups planning to build software. 

In simple words, outsourcing means getting an external team of experts sitting at an offshore location to build the software. The startup can choose from the best software development companies from across the globe to make their technology partner. 

This external software development team takes care of everything including ideation, research, technology selection, prototyping or MVP development, back-end and front-end coding, testing, QA assurance, launch, scaling, and even marketing. This means the complex task of building the software is handed out to experts who have niche experience in building similar products.   

Should Startups Outsource Software Development?

This is the most crucial question for any startup with an idea wanting to turn it into a working product. And to answer this question, there are three major factors that a startup needs to answer. These are:

Do you have an existing in-house software development team?

If you already have an in-house team, you have the option to choose between the two. Get your team on-board and assess their technical expertise as well as their experience with building a software product as you intend. If you think they have the required technical knowledge, experience, and expertise to build it, outsourcing should not be on your mind. Even if an addition of a single developer or technology expert can make the team apt, you can hire in-house or even hire a remote developer expert in that skill to get your required software team. 

However, most startups start with just a few founding members. They do not have the in-house team with the required skill-set to handle the development. This is when you consider the next question. 

Do you have the budget & time for setting up an in-house team?

Most startups don’t have an in-house development team. And setting up the same could be draining on several levels like financial, time, energy, and much more. You will need a team to bring together a team of developers, managers, UI/UX designers, QA engineers, testing engineers, and many more. Typical in-house hiring can take more than a month and even more time to get familiar with the idea. 

In addition, in-house teams cost much more. There are several costs in addition to the regular salary like paid benefits, infrastructure cost, hardware cost, software licenses cost, overhead costs, technology training, and much more. This can take the software development cost really high. Not to forget the energy consumed in managing an in-house team. 

Outsourcing, on the other hand, takes up much less time. One can choose the best software development company from listing sites like Clutch, GoodFirms, etc., and discuss the terms of working. Knowledge transfer might take some time but most outsourcing companies are agile now and work in sprints, which takes down the time. 

As for costs, outsourcing is known to be the savior for startups starting on a shoe-string budget. You only need to pay for the number of hours the team is working on your software if you hire a dedicated team. And if you outsource end-to-end development, the costs can be even more calculated and constrained. There are no added benefits, no infrastructure cost, nothing additional. 

In addition to that, outsourcing the software development to the external team means they handle the work while you work on the core competency or innovating the product. 

So, if your startup is running short on time or has limited funding, outsourcing is the most viable choice.

Do you consider technology as the core proposition?

The next question to consider is the core competency of the software you are building. Take a look at the idea and see how prominent technology would be in the product. Is it the core competency or is it there to solve a business need. This means checking if the software is there to help other technology persons get a technology solution. For example, if you are building software like Loopback, a framework to help build REST APIs, you know technology is the main offering. Keeping such software development in-house is a wise choice. 

However, if the technology is there to support your main idea, like Uber or Airbnb, where the main aim is to help people find cabs or places to stay, outsourcing can be the perfect solution. An external outsourcing company can build the product while the in-house people can work on improving and innovating with the core competency. 

In A Nutshell

There are several pros and cons of outsourcing as well as in-house development. In-house gives you complete control over the development and eliminates any communication gap. Outsourcing, on the other hand, saves costs, reduces time to market, brings experienced experts on board, and takes a lot of burden off the startup core team’s shoulders. A startup should outsource software development if:

• It wants to save costs
• It wants to reduce the time to market and launch faster
• It does not have an in-house team for the development
• It wants to reduce the risks
• It lacks the required skill-set and experience in the software development 

Overall, software development outsourcing is a great choice for startups, especially in the initial phase. They can get an MVP built first by the outsourcing company and get it tested on the early adopters. Based on the response and the functionality of the prototype, they can move ahead and get the full software built by the offshore remote development team. You can get in touch for a no-obligation conversation to see if bespoke software development is right for you.

Author Bio

Tanya Kumari leads the Digital Marketing & Content for Classic Informatics, a global web development company. She is an avid reader, music lover and a technology enthusiast who likes to be up to date with all the latest advancements happening in the techno world. When she is not working on her latest article on tech dynamics, you can find her by the coffee machine, briefing co-workers on the perks of living a healthy lifestyle and how to achieve it.