Possible pitfalls of outsourcing vs in-house development
For sure outsourcing is not a silver bullet and there are a few advantages and disadvantages you might want to consider before you decide whether you want to try and build up a sufficient team of software developers integrated into your business or find people somewhere out there. Let us consider the drawbacks outsourcing for startups may have.
Nurturing your own development team can seem to be a sure-fire cure for a startup with their own core ideas. What you strive for is a dream-team of like-minded people working together. Common goal, strategy and value cannot be outstaffed and if it is what drives you, hesitation will be really strong. It is sometimes difficult to integrate into your team people who are not inspired by the same things. You might need to take some additional time and effort to get them acquainted with your company culture, rules of behavior and thus hope to win some synergy.
Time and cultural differences
Imagine you go to bed when your overseas team is just starting their working day. How do you align your tasks, see what they are doing, control the progress? What if you have some questions pop up and need instant feedback? Mind that “instant” could mean 5 to 9 hours depending on where your subcontractors are located. To say the least you can’t just have a cup of morning coffee with your development team to see what their mood is today. The cultural gap is another point that may hinder building an effective work environment. A simple example is not to plan a huge release for your overseas team’s holiday season. Cultural diversity is a challenge for communication at workplace and if you go for outsourcing, you will need to be ready for it and be open-minded.
A distributed team needs coordination, they are probably not people sitting beside each other in an office. In such case communication becomes a real craft and takes more resources than with an inhouse team. Startup owners may have the feeling the outsourced staff is not so much under their scrutinizing eye 24/7. For some employers it might be even uncomfortable not to have their employees in their office, so you need time to accommodate.
Of course, no company would give access to their data without signing an NDA and other necessary contracts, but there are lots of other restrictions and regulations (e.g. GDPR) your outsourcing service provider complies to. These regulations vary from country to country, and you might need some additional legal advice to figure out all data handling requirements regarding your business. You might also want to have a separate infosec training, which every member of the outstaff team will need to pass, sometimes it is even necessary for outsourcing service providers to pass certain certification required by the state the client works in. And that is an additional peculiarity when talking about external software developers for startups.
Advantages of outsourcing for startups
Why then is outsourcing so popular? Lots of startups do not hesitate to delegate parts of their tasks to development teams outside their companies and even overseas and succeed with their projects resorting to outsourcing again and again. Let us consider what urges startups to refuse from hiring inhouse engineers.
Insourcing will also include a lot of work with employment and head hunting. Finding web developers for startups needs some effort and is also time consuming. Working with outsourcing company like Honeycomb Software means recruitment costs and efforts is something you will not worry about; you just get a ready team with the necessary skills. Moreover, you can easily change and adapt this team to the needs of your product as most outsourcing companies have a pool of engineers with various stack configurations. Another benefit is you don’t have to think about the social package, staff training, vacations, staff turnover and so on.
Developers working for an outstaffing or outsourcing company have the benefit to be surrounded by professionals within an atmosphere of skills growth and knowledge sharing. At Honeycomb Software as an example, they follow a set roadmap of their own improvement and learning and at the same time have a valuable experience in software creation in various domains. This is a huge contrast with tunnel vision of an engineer in a small team of colleagues working on one project for years. Diverse experience allows engineers to adapt easily to the use of new technologies and very often they can advise on how your ideas can be more effectively implemented in efficient and high-quality software.
What if there will be a need to stop active software development for some time? Will you risk laying off all the developers or will you just continue paying them while they are on hold? Both ways sound not too enthusiastic. Choosing the creation of your software by an external team gives you the opportunity to manage its size easily as well as to stop active development for a period and come back to it later. And don’t worry about the support phase of your software, this can also be outsourced. Moreover, you can always call for an external professional to perform a specific task without the need to engage the whole dev team long term. This gives you flexibility and possibility to accommodate to the market conditions.
An inhouse dev team implies an office space with the necessary equipment, computers with certain configurations, which need to be regularly updated, or testing devices for QA engineers. Let your outsourcing partner assure all that while you concentrate on other product activities. This will considerably reduce your costs. In addition, you will not have to take on special office support staff. Your dev team from an outsourcing company may be distributed geographically but knowing well how to communicate efficiently they will provide consistent service within the set working hours and you can be assured that they have everything they need for work without involving equipment delivery and complicated logistics.
How to outsource successfully
As you see there are some pros and cons to consider, however you can always minimize your risks if you take a careful and wise approach to outsourcing for startups. Companies opting for external service providers have developed some life hacks, which could turn the process from painful to satisfactory, and here are several things to be considered when you choose software developers for startups.
You get what you pay for
Cheaper does not always mean better, so mind the rates of the engineers you hire. Surely you want to save expenses, but there is a common trend showing that companies with average market rates offer both affordable and high-quality service. Today’s global economy allows doing business all around the world, the IT specialists are now widely offered from companies in India, Latin America, South-East Asia, East and Central Europe. The European market represents the middle tier rate-wise and is complemented by the fact that engineers there usually have fluent English plus the time difference tolerable for work almost all around the globe including the USA and Australia. This makes Europe a very popular region to find web developers for startups.
Learn about the previous experience
Do your homework and research the portfolio of your potential service provider. This will give you the insight into what exact experience the company had and what are their solutions of the requests like yours. Read the feedback and recommendations of the previous clients or even ask your business partners for references. Analyzing this information in combination with the mentioned financial aspect will let you make the right choice and get good value for your money.
Protect your data
We have already mentioned the NDA and the infosec trainings above herein. A well-negotiated contract at the very beginning will spare you the troubles if some of your data are misused. Another good idea adding up to security is using VPNs within your engineering team. Most of the respectful outsourcing companies care about data protection themselves and have their own security policies, so it is worth asking about them before you start cooperation.
Even a well-organized team needs coordination and guidance. And this can be efficiently performed by project managers, coordinators and scrum masters which may come as a perfect addition to the dev team. At outsourcing companies like Honeycomb Software managers already know the engineers they work with well and have extensive experience in setting up effective development processes and communicating the needs of the client to the engineers. The project coordinator can be that inevitable link between the owner of the startup and the technical team, which enhances and facilitates the work.
Make sure you will be constantly in the know about how your project is going. Emails and reports may be bulky, and you may get lost in the loop. Luckily, there are numerous project tracking systems, which allow you see the work in progress, done workload burndown chart, comments and questions in one table. Among the most popular ones are Jira or Microsoft Azure, but you can find any other that suits you. And they can be customized and configured to your needs! Another tool to help you here is a messenger like Slack or Microsoft Teams where you can create group chats, use instant messaging, and share files. All these will let you keep the hand on the pulse at any time.
The saying “If you want a thing done well, do it yourself” is in the past, the modern business says, “Find professionals and delegate”. It is no wonder such huge companies as Google and Facebook resort to outsourcing. Software development is a service which can be bought as any other, you just need to be aware of all the possible differences of working with inhouse developers vs finding a dev team outside your company. When handled correctly, outsourcing is a valuable tool, which can spare you lots of time and money and it is well worth considering.
Head of QA Department & Business Analyst at Honeycomb Software