Software Outsourcing for Startups: A Guide to Fruitful Partnerships

Technology remains a lucrative business even in the times of a worldwide economic recession and uncertainty. Gartner projects the global IT spending to slide only by 8% in 2020 and recover slowly but steadily over the next year, and certain segments, such as remote working software and cloud services, will see an increase in spending. Also, due to the unceasing proliferation of IoT, artificial intelligence, and blockchain, the market still offers rich opportunities for every budding tech entrepreneur with an innovative idea in mind.

Startup founders tend to be tech visionaries, who aim at disrupting the industry with their software and landing a good acquisition deal at the same time. However, they and their team rarely turn ideas into compelling and competitive products under their own steam. In most cases, they resort to software development outsourcing instead. 

Hiring vendors to perform a scope of development work is nothing new to startups. Outsourcing is a sound cost-cutting measure that allows the startup owner to save time on hiring talent and focus on more important business development tasks. An array of world-famous companies, from Skype to GitHub and Slack, outsourced at some point to make their way up in the market. Our company also has a long record of providing custom software development for startups, and this gave us the perspective for analyzing what tech business newcomers seek when they turn to outsourcing.

This article will explore the major types of outsourced projects and the scope of tasks typically associated with each of them. It will also highlight the expertise and capabilities startups should look for in their partners-to-be to ensure meaningful cooperation from the get-go.

The good old "build me another Uber" story

Sometimes tweaking an existing idea may prove more than viable, and startups know this better than anyone. A fair share of startup owners is inclined to adopt tried-and-true business models rather than try to realize an innovative idea. For this reason, in the last decade an impressive number of venture-funded companies molded their service models after Uber, the startup that disrupted the ride-hailing market and gave a boost to the global gig economy.  

Uber’s on-demand disintermediated service model has inspired hundreds of companies to launch “Uber for private jets,” “Uber for janitors,” “Uber for dog walkers”, and other such variations. Although the value of Uber and similar digital unicorns is visibly diminishing today, this model can still prove competitive and lucrative when the concept is fresh, marketable, and realized properly.

If you chose to find your way into the lives and hearts of an already heated audience with an Uber-like technology, then seek an outsourcing partner who offers:

• Broad tech expertise. When you choose a partner with a specific web or mobile technology focus, it may seriously limit your future solution’s tech stack. If you have only a rough idea of your “next Uber” app, it's better to have multiple development options and be able to select technologies that will prove most suitable and beneficial for your business idea.

• Mature maintenance and support services. As you aim your product for a long-standing success, look for a software vendor who would cover both pre- and post‑deployment needs of your project. This way you will ensure your application will get updates, improvements, and bug fixes in due time.

Domain-savvy innovators looking for expertise

Not all startups are unicorns with groundbreaking ideas. Some of them are companies that target niche markets.

Even though today most companies put qualitative growth on hold, the desire to innovate will persist in the future. According to the Global ICT Spending forecast by IDC, ICT spending in 2020 will not increase due to the pandemic but will gather pace in the following years, accelerated by the rapid development of new technologies. 

Keeping their finger on the pulse of the industry, domain-savvy startup founders are quick to detect the need for innovation and come forward to meet it. In their outsourcing partner, such companies look for end-to-end development expertise and a diversely skilled team to handle all aspects of software launch, support, and maintenance.

If you are one of the startups that recognize a gap in automating and streamlining previously untapped processes and workflows within your industry, look for a vendor with:

• A solid IP rights management policy. The surest way to secure your intellectual property assets is to prevent them from being exposed or leaked. Thus, make sure your outsourcing company not only offers to sign a standard non-disclosure agreement but also has a multi-level IPR management and protection policy. Above all, the document should include measures for assuring the physical and virtual security of the vendor's facilities and infrastructure as well as production-related IP protection.

• Strong expertise in emerging tech. When looking for an outsourcing company, favor the teams with a proven track record in such areas as artificial intelligence, IoT, big data, virtual and augmented reality. Empowering your solution with emerging tech, the vendor will make it future-proof and more competitive on the market.

Startups in need of dedicated tech talent 

The success of every startup depends on many elements, and one of the central factors is the development team. Poor management, team incompetence, and incompatibility are continuously cited as top reasons for startup failures. For these reasons, outsourcing one or several individual freelancers for your project has an element of risk, since they might be unable to work well together and communicate productively, or can even disappear, abandoning your project halfway through.    

In this regard, outstaffing, or outsourcing a whole dedicated team, makes more sense. Such teams are already balanced skill-wise and, since its members work in one company, tend to be more tight-knit. More often than not, they have an internal manager who keeps track of their performance and reports to the client. Last but not least, the manager can swiftly adjust the dedicated team to your changing business needs or technical requirements by adding new talent to your project.

If you are looking for quick-and-easy access to highly qualified developers who will augment your startup team, make sure to:

• Never compromise on a team's competence. One great developer can often outperform several mediocre ones. When recruiting your outsourcing team, ask each candidate for a CV to assess whether they are capable of getting into the project details on the fly and start contributing right away. Cooperation and communication within the team are important, but fine‑tuned processes could never compensate for the lack of subject‑matter expertise and project-critical skills.

• Don’t hesitate to delegate. Newcomers to the tech business world frequently try to do everything on their own. This usually drains resources and money, leaving them frustrated with the lack of progress. Meanwhile, there is a good selection of multi-skilled technology partners, who can take over a portion of your responsibilities or all of them. Get such a team involved from the onset of the project and don’t be reluctant to ask for professional assistance.

Know what you are looking for

From ubiquitous “Uber for X” mobile apps to the software solving everyday challenges of niche companies — each new business idea needs the right team to bring it to life. Although software outsourcing for startups may be a common practice today, many things still can go awry if you fail to hire a suitable vendor. This is why you should approach the search for your outsourcing provider with a clear understanding of your project’s scope and technical requirements along with the necessary skills and expertise of your future development team.