Why Startups Should Outsource Software Development Projects

Turning ideas into ready-to-use products is the goal of young, entrepreneurial startups. In fact, they are under significant pressure to demonstrate to the market and investors that they have a solution to a real problem. However, along this path, startups face many challenges.
In-house development teams at startups are much smaller than those at established companies. They may also have much smaller operational and recruitment budgets. Startups face difficulties: 90% of them fail, and more than 20% dissolve within the first year. Smart business decisions are crucial for survival in the early stages.

Software development is a necessary component for any modern startup. However, software development is a vast field with too many specializations and technologies to list. Hiring permanent software developers can be an expensive and time-consuming process. Fortunately, software development outsourcing can solve these problems.
Outsourcing companies focused on software development are oriented towards delivering a specific product according to the startup's terms. Outsourcing this work has many advantages, including cost reduction, saving time and resources on recruitment, leveraging the benefits of an outsourced development team, increased scalability, and access to software specializations that are missing from the core in-house team. This helps companies avoid the issues related to the current global talent shortage.

Reasons Why Startups Should Choose Outsourcing

#1 Cost Savings

Top-tier talent is expensive. A software developer can cost a company from 5 million to 15 million rubles per year in salary, plus benefits. Additionally, it is difficult for new companies to hire talented developers because working for a new company involves some risk.
Their total compensation package may be less impressive than at established companies. Bringing in new developers also means training, providing hardware, software licenses, and a workspace for the employee. On average, a company spends 400,000 rubles per new hire.
Outsourcing labor significantly reduces the cost of developing a new software product. The company does not need to pay for renting a larger workspace, sick leave, or benefits. Overall, the cost of outsourced labor is cheaper. Software development outsourcing companies located abroad provide significant cost savings on developers' salaries.
India, the Philippines, Mexico, Argentina, and other countries are popular choices for outsourcing. If time zone differences or language barriers are a concern, nearshore options can still provide fantastic savings.

#2 Product Development Expertise

Companies specializing in software development outsourcing for startups have experience in product management and the development lifecycle that the startup's internal team may lack. This won't be their first rodeo. Such companies work with a wide variety of clients and understand how to assess the unique needs of a startup.
To ensure software development proceeds according to the set tasks while avoiding potential mistakes, it is important to choose the right outsourcing service provider. Such software development outsourcing providers will have access to a pool of professional product managers, project managers, DevOps engineers, etc.
Startups would have to budget for their own management team, but they may want to focus on other areas, such as customer engagement. External product and project managers will work in the startup's interest. They are obligated to comply with the terms outlined in the contract with the startup. Additionally, they serve as the primary point of contact between the internal and external teams.

#3 Scalability

Startups may be highly concerned about their ability to scale the product properly. Investors want to see a software product capable of operating and evolving according to new consumer demands. If the product is not built with the ability to adjust capacity, it can lead to serious failures and software downtime.
Due to social media and social media marketing, the market can be incredibly volatile. A startup can go from a very small user base to a viral project without any warning. The ability to easily and quickly update and improve software is a critical component of development.
If the scope of the initial product increases or decreases, outsourced development teams also have the ability to adjust labor accordingly. The software development service provider can quickly add new developers to the team because they have a large pool of developers ready to join the project.

#4 Specialized Skills

At the initial stage of the software development lifecycle, project participants develop the concept and describe all the intended features and technologies needed to implement the project. If this includes any skills that are not yet provided by the in-house development team, outsourcing is an excellent option. Instead of forcing the in-house team to learn new technologies, a specialist can handle the task.
As the project progresses, the goals set by the startup may change. After all, business is constantly evolving, as are its users. If half-way through the project there is a critical need for new skills, the software development service provider can easily select a specialist from their existing pool or hire one on a contract basis.

#5 Eliminating Recruitment and Onboarding Time

Finding talented specialists is a difficult process, and the time investment is also an obstacle. Recruiters hire employees for highly technical work, so finding the best candidate for a permanent position can take a considerable amount of time. Typically, a startup wants to find someone who fits the company culture, meshes with the team, fits the budget, and has the necessary skills. Sometimes this process can take several months, from the interview stage to hiring.
Outsourcing software development allows the company to skip this process entirely. Recruiters can take their time selecting the best employees for permanent positions because the outsourcing agency will immediately provide all the necessary staff. These companies have already vetted their developers and know what they can deliver, so they can choose the best ones for a specific project.

Outsourcing: A Common and Beneficial Solution

Outsourcing is a fairly common tool used in the early stages of many now-established companies. The most popular messaging app, WhatsApp, outsourced its app development, and it is now worth over 1.9 trillion rubles.
GitHub is a giant in the software development world: its version control and code management platform is used by over 70 million developers. GitHub's CTO, Scott Chacon, started working with the company in its earliest days by writing the Gist backend as a freelancer. Slack, UpWork, Alibaba, Opera, and MySQL are other companies that greatly benefited from using software development outsourcing during their formative periods.

Get the Most Out of Outsourcing

Startups should carefully consider using software development outsourcing, as it has many advantages and few disadvantages. The startup needs to create a favorable work environment for both the internal and external teams, as well as ensure effective communication between them.
Ideas and planning are the first steps when hiring an outsourced development team. After the planning phase is complete, the outsourced development team moves on to designing the layout and structure of the software. Finally, the team begins coding and testing the software. After the product development is complete, the startup may decide to engage the external team part-time to handle deployment and maintenance.