Should a startup outsource their software development? There must be a good reason for this, but is there anything to concern about outsourcing a project? The article will point out some advantages and disadvantages startups should concern before deciding to outsource their software development.

Top reasons startups should adopt software outsourcing 

1.Reduce software development costs and operating expenses

Cost-saving is a top motivation for any company to adopt software outsourcing (According to Deloitte's 2016 Global Outsourcing Survey), but it is even critically important for any startup due to a bare budget compared to other enterprises.

Outsourcing allows startups to significantly reduce costs without sacrificing quality if they make the right decision on the partner to cooperate. In fact, the average hourly rate for hiring a senior software developer in the US is $100 - $170, a developer with similar experience and technical skills can be hired for $40 in Asia, according to The Scalers. Also, by delegating to a software outsourcing team, companies can diminish their labor-management costs, including recruitment costs, insurance, training, leaves, etc. 

Besides, the cost of equipment and other supplies is also a significant saving for companies to consider software outsourcing.

2. Access to great tech talents worldwide 

It takes a long time and a great effort to recruit a qualified team to start the project. When deciding to outsource product development, startups are able to reach a pool of talents with experience in the field just by choosing a vendor for the project. 

Tips to choose a good vendor for your product development: 

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 the product.

3. Improve Business with a Focused Strategy 

By working with a software development outsourcing team, a startup can free up energies to focus more on the core business idea and activities such as brand building and research and development to provide value-driven services to its customers. 

The available access to well-versed IT talents on a large scale allows clients to implement their projects efficiently while having more time to focus on their core competencies and business solution to gain competitiveness in the market. 

Moreover, to customer companies that are not in the IT industry, the software outsourcing team offers significant benefits as it offers companies expert consultations and an approach to most cutting-edge technology to be innovative and ahead of the curve. 

4. 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.

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.

5. Acceleration

To startups, product ideas are significantly important, though business ideas to quickly land on the market are critical to consider in the situation of competitiveness and fast-growing technology. A technology idea can be new currently but quickly gets obsolete. The available assessment to a pool of IT talents who are already experienced and well-versed in technologies allows a business to accelerate implementing the project without wasting time on training, onboarding, or researching. A software outsourcing company can enhance productivity without compromising quality.

Disadvantages of software outsourcing to a startup

1. The project is the core value proposition of the business

To a startup, before going outsourcing, the most important thing to consider is whether the project is the core value proposition of the business, or is it just a part of a certain business need.

In general, it is more likely to develop the solution in-house if the project is the unique point of the business. If it is not, a startup could greatly benefit from outsourced development.

It does not mean that startups definitely should not adopt outsourcing core technology. In fact, there are a great number of outsourcing vendors that are shifting toward building partnership with startups, not only taking project development, they can consult solution and business strategies with experience in the field 

2. Tight budgets can cause you to compromise on work quality

Developer fees differ with experience. When you have a tight budget, you tend to hire cheaper services. The developers in the team may not be skilled and this can affect your work quality. If you think, you’ll hire them and carefully observe their work, you are taking double the efforts, not to mention the extra costs.

To sum up, startups should thoroughly consider business goals and take time for researching software outsourcing vendors to make a good decision on choosing a trusted software outsourcing vendor. 

With years of experience in several industries, TPS Software has cooperated with multiple companies including a fintech startup which we have built a fruitful partnership. Not only the technicals part, but TPS also consults solutions and business strategies for startups to accelerate win the market. 

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