All-around Outsourcing [by Jobresponse]

Software outsourcing is a way of meeting the rising tech needs. Companies outsource software of all types from around the globe, and the internet is full of articles and reports detailing what it may entail to engage with a vendor. In this note, let's review some non-obvious things that are not always on the surface when considering software outsourcing. Moreover, the need for a service may evolve in an ever-changing environment as we see a shift towards remote work over the last few years.

Why hire an outsourced team

The most obvious reason is that software outsourcing comes in-game when there are no resources available in-house to work on the project. However, some companies also see the advantage of fairly lower prices, access to the global talent pool, and access to expertise. As the idea-stage startup looking for a tech team to work on the MVP, the enterprise executes the same strategy when outsourcing software development.

Hiring a software outsourcing vendor proved to be a great option for startups looking to build MVP. Given the nature of a startup, it presents a considerable challenge to fight for resources against large enterprises and other startups. Hiring in-house is too early and is also accompanied by a high burn rate. A very short runway keeps the company always at risk of not making it to the next stages if the team fails to validate the market. In short, if you were to run things in a startup as in any other company… you better not do it… startups run at different life cycles and require broad skillsets and approaches. Same with software development at a startup — the software cooks at a different pace than enterprises.

Software outsourcing provides agility and fits most startup profiles. You can literally have a team working on the project at a shoestring budget — runways and constant product iterations are the lifeblood of any startup. At the same time, the vendor can scale up the team once things get better.

Software outsourcing as a differentiator

Software outsourcing is a skill that can be learned as any other. For example, if the founder takes a risk and learns how to outsource MVP development, they take advantage of getting the product built, while others may still be looking for local hires for months.

It indeed requires different efforts for companies at different stages to be able to engage with software development vendors. The larger the company, the more complicated the software development process, the more teams involved in the product, the more stakeholders involved in the decision-making, and the harder it is to compete for the resources. However, outsourcing still presents the same benefits for any company. As we discussed above, are:

• Faster time to market
• Variety of budget options
• Global talent pool
• Expert knowledge and quality

Expert knowledge and quality were always part of the argument as many clients have seen quite low software quality. While this is true, the other part of the argument is that great vendors can be much more skilled in working on a particular technology. Most of the time, a startup's first hires are more versatile full-stack engineers that could make the product work without paying much detail to the quality. This is where the outsourced vendor can greatly complement the core team by bringing the quality to an acceptable level.

In two startups, one is adopted outsourcing practices, and the other is not — trying to pursue local hires and only in-house experts. Which one is going to win the battle? The former seems to have more chances of winning the competition than the latter. That's why we teach companies how to be good at outsourcing and differentiate the business to win the markets.

Attractive price tag

The problems come when founders and tech execs try to cut corners and hire developers because they offer attractive prices. The problem is not attractive prices themselves, but what comes with them. You don't need to be an expert to understand that age-old saying: "you get what you pay for.” Same with outsourcing, cheap devs are tempting, but the real cost of it is sobering. Here are some drawbacks to consider.

For an idea stage startup, there might be so many things at risk, as the whole concept of an early stage company is the risk. However, founders at the idea stage don't have many shots to execute, and the vendor is the only one who can define how things will go. Most of the time, by hiring non-professional teams, the startup founders now have to spend long hours babysitting the team, documenting every single feature, and writing feedback. According to peers in the field, this is counterproductive and takes time that the founders could spend talking to customers.

But these are not all the features you may get with non-professional teams. Quality and culture suffer a lot. Maybe for the MVP, the quality of the code won't matter much, but still, that entails a longer feature release, application crashes, and unserved customers. It's fine if, at some point, a startup redesigns the whole product from scratch (usually at the Series A stage), but until then, there won't be peace of mind as to what the team is doing on the project.

But let's imagine that you end up hiring in-house engineers or had the team prior to hiring the software development vendor at an attractive price tag. Your team, as opposed to the cheap vendor, is much more professional, and if the vendor adds up a poor code, your internal culture will suffer, and the team may lose motivation to be as great as when they were hired. Moreover, if you pair great engineers with mediocre ones, the great engineers will leave.

And more likely, you won't get your product at the time planned. In the best case, you'll get the product at the budget but later. A focus on cost at the expense of quality ultimately comes with increased risks and added stress of partnering with a less skilled, less stable, or less efficient vendor. If you're building an A+ team, low quality not only affects the product but, more importantly, can affect the company's culture and the team's motivation.

Engineers don't like to rewrite poor code and redo poorly managed applications. To sum up the results of hiring non-professional teams:

• Commitment to babysit the team
• Low-quality product
• Suffering culture
• Missed timelines

Honestly, the higher end of the vendors' pricing spectrum is far more dangerous. If you were to hire the US-based dev team, you might need to fund the project very well, as the cost would be much higher. It is possible that you get a great-looking product on time and the cooperation turns out to be enjoyable, but it's going to cost you a lot. Finding that the app isn't making a product-market fit will ruin any ability to iterate on the product, as $150 per hour is for long pockets.

Pro tip: Try to find the same-size partner for your software project. Large vendors won't give as much attention to your project as the smaller ones. Working with a large or expensive vendor won't guarantee you results and can ruin the project as working with non-professional teams.

Value over price

Another approach you may consider when planning outsourcing at your company is getting value justified by the price. This is a far more reliable strategy to take rather than seek for a lower price tag.

Plan ahead what values you are looking for in the vendor and outline those in your requirements. Some of those may include:

• Better communications
• Process-oriented teams and predictable results
• Cultural proximity
• Knowledge transfer
• Hiring assistance
• Educational component

Adding a few bucks to the hourly rate won't damage your budget much, while in return, you'll get much more value than the drawbacks from saved cash. It's just a global tendency of companies needing software engineers to be willing to pay slightly higher prices in exchange for quality. Don't cut corners, and don't put your partner in that position.