How to Outsource Software Development and Win – Disruptive Guide for Startups

Should startup outsource software development? Well, Outsourcing has been on the rise for a while, it was there before the pandemic but since the pandemic, a lot of companies have switched to outsourcing. According to Statista, In 2019, the global outsourcing market amounted to 92.5 billion U.S. dollars, and almost 54% of all companies use third-party support teams to connect with customers.

The definition of “outsourcing” is – a business practice in which a company hires a third party to perform tasks, handle operations or provide software development services for the company. 

Imagine, how much stress of burning out of the team, missing deadlines, losing market opportunities and losing to the competition is avoided if you Outsource. On top of that, Outsourcing is economically beneficial because you do not have to provide working space to the staff, you do not have to buy expensive equipment, and you certainly don’t have to pay for their coffee while they are on break! 

Everything sounds awesome, right? But the million-dollar question is, how do you outsource the right software engineering partner? We will look at the pros and cons of outsourcing software development to figure it out.

If you have no time for all this reading – keep calm and watch a short video we made on this topic for you:

Examples of Startups Unicorns That Outsourced Software Development and Became Big

We focus on startups when we tell you about outsource app development, but many large companies use outsourcing services, for example, Google transfers development to India, Skype, WhatsApp, and Slack also use it. 

Slack:

Slack makes it easier for companies of all sizes to communicate with their employees, here at ProCoders, we also rely on Slack for everyday communication. The interface is user-friendly, but how was it created?

The founders realised that creating an interesting interface is not their speciality and decided outsourcing would be the right way to approach this, which led them to the design company MetaLab. Then 6 weeks of development followed and they hit the jackpot.

Since then, the founders have never looked back! Slack has attracted more than 5 billion dollars of investment thanks to outsourcing development and according to surveys, the reason why Slack is so popular is because of its interface!

Skype

In the Urban Dictionary, “Skype” is not only the application’s name but also a full-fledged verb with the meaning “to use the program in order to call someone instantly, chatting or voice messaging”.

Skype came into existence when the founders came up with an idea and used the services of Estonian outsourced developers. And thanks to startup outsource software development, Skype reached a new level, and eventually, was acquired by Microsoft for 8.5 billion dollars. It has been 19 years since its creation and Skype still is in demand! 

WhatsApp

WhatsApp is designed to facilitate communication and allows you to send photos, videos, and documents. It allows you to share your location, which comes in handy when my pizza delivery guy can’t find my house!

The founders actually hired an outsourcing developer from Eastern Europe on a freelancer platform. And then this developer became one of the team leaders, and over the years WhatsApp has been downloaded more than 220.5 billion times.

6 Main Challenges Faced by Startups and How to Overcome Them by Outsourcing

There are some obstacles that you are going to face as a startup for sure, We have outlined some of the common ones to let you know how to solve them:

1. Big Companies win the talents

Startups often struggle to attract talented developers due to the intense competition from large corporations. Developers, especially those with middle to high-level skills, tend to prefer the compensation and benefits offered by larger, more established companies. This makes it difficult for startups to find the best candidates for their needs. 

Outsourcing can provide a solution, allowing startups to access top-level talent from around the world through reputable outsourcing companies like ProCoders.

2. Long Learning Curve of Junior Devs

startups cannot afford to spend time training new developers and need a team that can hit the ground running. Outsourcing can provide access to experienced middle or senior developers at a cost similar to that of junior developers in their local market. This way, startups can obtain a high-quality workforce that is ready to develop and within a reasonable budget.

3. Staff Burnout

When a team lacks experience or manpower, burnout becomes a risk. Common causes of burnout in startups include overloaded responsibilities, chaotic workspaces, lack of work-life balance, and no current results leading to loss of motivation.. 

Outsourcing has an answer for it! if you are partnered with an experienced company, they can advise you on the number of engineers you need for your project, how to evenly balance their effort, and when they should be replaced or recruited. 

4. Investor’s Control of the Hiring Process

Investors are usually not technically familiar with the development process, but they sometimes love to be in control of the hiring process which leads to the wrong personnel being hired.

When outsourcing, all you need to do is introduce your vendor, explain why you chose him, and highlight any successful projects he has worked on. This usually suffices to reassure investors that the project is in capable hands. 

5. Long-term Hiring Process

Imagine you want to start the development process within the next 2-3 weeks, but that is not always possible if you are hiring in-house, you might spend up to 6 months just getting your team together, that is 6 months of budget spent and time wasted. 

Reputable Outsource Companies have a pool of experts that you can hire immediately without having to spend an extensive amount of time looking for qualified individuals.

6. Unexpected Tasks or Unrealistic Goals

Someone who is not well-versed in the world of development might set impossible goals for the team, which can lead to staff burnout, and on top of that, there might be a couple of unexpected tasks along the way. That is why you need a helping hand in order to avoid these mistakes.

Companies like ProCoders have a dedicated step for it called the ‘Discovery Phase’ They create a development plan at this point, a strategy to implement the project and a roadmap of how the project will be created.

Most Popular Outsourcing Models for Startups

Let’s consider the top three models which are used by startups:

Fixed Price Contract

Let’s assume a situation where the outsourcing company has a client with an idea, but they lack the technical knowledge, plus they have a fixed budget. The company has to make a strict plan about the price, deadlines, and marketing campaigns.

At ProCoders we have Discovery Phase just for that. We present a plan to the client and if they feel comfortable moving ahead we get to work, if they want any changes made then we tweak it according to their will, but we make sure that the price and duration initially agreed will not change. 

It is worth considering in outsourcing software development for startups there might be some obstacles where you cannot give hundred percent guarantees that is why this model has its drawbacks, because a startup is always about risk, and if there are flaws in the development process, then changes cost additional money. That is why choosing the right partner is essential! 

Dedicated Team

It is characterized by a team that is with you from the start to finish. So, when you choose your team, you have the comfort of knowing that they will be with you through thick and thin. 

This is exactly what ProCoders are known for, our long-term clients would confirm that service is our superpower. We have a strict hiring process with full verification according to the customer’s standards. Because, what is the point of choosing a developer that does not satisfy the client?

One of the cons of startup outsourcing software development with a dedicated team is experience and problem-solving. When you have the same people working day in and day out, you are limiting your project development to their skills and knowledge. So if you end up with a problem which your team is unable to solve, you would still have to hire outside help.

Freelancers

Freelancers can provide cost savings for startups and offer more flexibility in terms of hours and payment. They can also relieve some of the responsibility on the startup side, as they are typically responsible for their own equipment and workspace.

However, there are also risks to working with freelancers. There is no guarantee that the task will be completed, and quality control can be an issue. Additionally, while freelancers may sign an NDA, there may be limited protection for a startup’s intellectual property. Finally, if a startup needs to expand their external team, managing multiple freelancers can be challenging and time-consuming.

Main Reasons for Failure with Outsourcing and How to Avoid Mistakes

Everybody makes mistakes, that is how we learn but sometimes in business, we do not have room to make mistakes especially when you are a startup with not enough wiggle room in terms of finances and time.

Some of the main mistakes in outsourced software development for startups are:

Lack of QA engineers

If you spend a lot of money on the development process and do not have a quality assurance expert as one of the team members then there is no way to guarantee a successful launch because your product might be full of bugs.

Even if you do not have a QA engineer working full-time on your team, please consider getting someone on board on a part-time basis.

Unclear Goals

Setting unclear or unrealistic goals can only lead to an increase in stress and a worse job done by the development team which will lead to more time spent and more expenses just to solve problems.  

That is why we here at ProCoders discuss with our clients and set initial business goals which the entrepreneurs and the staff both are satisfied by.

Unclear Workflow

Unclear workflows can lead to delays, misunderstandings, and ultimately, a less successful project. To avoid this mistake, it’s important to establish clear and transparent workflows from the beginning. This includes identifying communication channels and frequency, setting expectations for deliverables and timelines, and establishing roles and responsibilities for each team member.

At ProCoders, we understand the importance of having a clear workflow and work closely with our clients to establish one that aligns with their expectations. We use project management tools and methodologies to ensure that our clients are informed about project progress at all times and can make adjustments as needed. Our goal is to ensure that our clients are satisfied with the final product and have a positive outsourcing experience.

Overspending

As a tech startup, it’s ideal to create a cost-effective product with the right UI/UX design and essential features to fit your budget. What if you need a simple drag-and-drop website builder instead of a custom costly project that requires 10 people?

Working with the financial specialists of an outsourced software engineering company can help you create an expense plan and save you from burning out your budget. At ProCoders, we can provide you with these services and more!

Time zone difference

Communication is important and if your time zones do not match with your offshore outsourcing partner it does not necessarily mean that you are not compatible with them, usually outsourced partners tweak their working hours to have a window where the client can communicate with their team.

At ProCoders, we make sure that we are in sync with our clients by making sure that our working hours suit their time zone and that we have a clear channel for communication.

Tips to Choose the Right Outsourcing Partner for Your Startup

In order to have a successful startup you have to find the right software development company. They will provide you with professionals who will bring your idea to life. So what are the things required for effective outsourcing? 

Research

It must be stressed that research is the most important initial step because if you skip this step, you might end up with more problems than solutions! You should keep your options open, and talk to as many companies as you deem necessary.

As part of your research, you should focus on finding feedback and recommendations from previous clients. Platforms such as Clutch and LinkedIn are excellent resources for this.

Case Studies

Check out their case studies to learn more about their prior experiences. You can read all about our experience in the Case Studies section on our website.

Also, make sure that the clients are real, if you can contact them, find out their opinions about working with the company. If these types of questions put the company off, there might be something that they are not sharing.

Communication

This involves considering factors such as the most suitable communication channels, frequency, and responsiveness to your needs. To ensure a successful partnership, look for a company that prioritizes effective communication and has a team that is able to quickly understand your ideas and respond to your concerns.

You will receive dedicated support from ProCoders around-the-clock, and we’ll make sure you’re aware of everything that is happening in terms of your project.

Talk to the Developers

Learn more about them, including their personality traits and whether you can communicate with them directly. If working with them would be comfortable for you, if they have adequate linguistic capabilities.

At ProCoders, we recognize the importance of effective communication. Our developers are fluent in English and we schedule team-meeting calls to ensure smooth communication and address concerns upfront. This helps us ensure that our developers have the right personality traits and linguistic capabilities to work well with clients, ultimately leading to a better outsourcing experience. 

How Much Does Outsource Software Developers Cost for Startups

Outsource software development for startups is a cost-effective way but what would the potential expenses be, let us give you an idea before you pitch anything to potential investors. 

South America

A popular option for startups. The region has a growing IT industry, and its developers are known for their strong technical skills and cultural affinity to the United States. The average annual salary of a software developer in South America varies by country, but generally falls in the range of $20,000 to $40,000. 

While there are pros such as a skilled workforce, time zone compatibility, and cultural affinity, there are also cons such as language barriers, limited pool of developers, economic instability, and infrastructure issues. It’s important to thoroughly research any outsourcing destination and consider the unique needs of your startup before making a decision.

India

The average developer income in India is around $20,000 per year. That means, your dedicated team model of four might cost you only $80k per year! But lately, it has become difficult for people to find competent professionals from this region. 

The main reason is companies like Google have headquarters there and hire all the local talent there, which leaves us all with whoever these big enterprises rejected. You must also understand that in these regions a lot of different languages are spoken, but English is usually not up to the level that is required.

The Philippines

The average annual salary of a software developer in the Philippines is around $15,000 to $25,000. However, there are potential cons to consider such as infrastructure limitations, political instability, and a limited pool of developers. 

Overall, the Philippines can be a good option for startups looking to outsource due to its cultural affinity with the United States and proficiency in English.

Central Europe

When comparing the cost and skill balance, Central Europe outclasses all the other regions because the cost of hiring developers here is comparatively low, but you do not have to make a compromise on the quality of the work that will be provided. 

Junior Developers earn around $25-30k a year whereas middle developers could make around $40k and seniors take around $60-75k home every year

Central European countries also benefit from the fact that it is easier to work with North American clients because the time zones are not that far apart compared to Asia. Also, they have a similar mentality with the North Americans.

How ProCoders can Assist you in Outsourcing Software Development

To be clear, it is a very straightforward process that is divided into a couple of simple steps and it is what makes us stand out! We do not consider ourselves an Outstaffing Company, we have our own method that we take pride in. It enables us to avoid outsourcing software development projects‘ disadvantages, including:

– expanding budgets and overspending.

– changing objectives during development, which slows down the process.

– inability to finish the project in the duration expected.

We focus on the simple things, we make sure that we are doing our best when it comes to the little things because they are the things that matter the most! My mentor used to always tell me that if you perfect the basic things in any field, you will be one of the most skilled professionals in that particular field! Here you can read more about the work we have done! 

That is pretty much what we do here at ProCoders, so without further ado, let me bring to you the hiring process! 

1. NDA

We know that there is always a risk of sensitive information falling into the hands of people that we would not want to have access to the information, business ideas, etc. So, the first step that we take is signing an NDA (non-disclosure agreement), where we make sure that all the parties involved are bound by the contract to never disclose any sensitive material to anybody unless they are a part of the project! 

We take this very seriously because a lot of our clients come to us with their “million dollar idea,” and we want to make sure that ProCoders is a name that can be trusted by our clients! 

2. Discovery Phase

When we get to know your ideas and needs along with your desires, we get back to our drawing board and come up with a plan of action. We figure out how much time is needed and create a roadmap of how your project will be created. Usually, we have specialists in our pool already waiting for a client so they can start working on a project. 

Imagine that if we don’t have a person who has suitable technical skills or if we do not have enough people to complete a team of developers, we look for new top developers to hire. We hire developers who will work on the software or website based on their portfolios and experience. 

Here at ProCoders, we make sure that this process does not take long. If the developers are in our pool and ready to work, it takes less than 5 days to start the process! If we don’t have such people ready, then it is our task to find developers—the best professionals with all the tech skills required!

3. Team Selection

During this step, we have to find out the number of developers you would require for the job. ProCoders has been in the business for a while now, and our experts usually know how many developers are needed for the job.

If we have the required personnel in our pool, then it would just take a day or two for them to start. If we don’t, then we hire developers especially for you! The hiring process does not take more than two weeks on average.

We go through different profiles of the top IT developers for hire and shortlist a few of the leading engineers. We make sure to get to know the candidate, understand, and evaluate them psychologically and try to assess their level of the English language as well, because we believe in direct communication between the employer and the employee! 

4. Development

During the development process, the client is kept in the loop. They have full control, and can revisit the plans made during the Development Phase to make sure that everything is in order. 

The employer has direct communication with the developers and is able to convey any desires that they have and if the developers have an idea that would benefit the project, they will approach the client.

5. Release! 

If you thought that the developers are going to continue developing forever, well, you’re wrong my friend. There will come a time when the project will be ready! that is when it will be released (insert sarcasm here). 

We do not leave the project and run away after the release, we are always there to maintain it for our clients and we provide support round the clock whether its needed for the project or our client needs emotional support.

Conclusion

Should startups outsource software development? It is a frequently asked question that you might ask as a startup founder after facing initial hiring issues and missed deadlines. Outsourcing is a good option for any startup because: 

• It is cost-effective. 
• You can hire competent professionals even if you do not have the technical knowledge
• It saves a lot of time, you do not have to spend months gathering your team  

It must be stressed that you do your homework before you invest in anything or sign any contracts. Do not dive nose first into anything as it might end up being a pitfall where the results are exactly what you expected, that is why take your time, understand what suits you the most, and then make a decision!