Why is Outsourcing Important For Startup Product Development?

One of the biggest questions that tech startups face in today’s times is whether they should develop the product in-house or outsource it to external teams. That’s why it’s a mandate for you to know the answer of  : why is outsourcing important for startups?

There are multiple options available in the market to execute your task. However, when it comes to startups, they have a conventional thinking that outsourcing is for enterprises only.

This is wrong! I mean Really? What is it 1999? How can somebody think so backward when Elon Musk is setting his fleet to Mars. Jokes apart! You can certainly outsource product development as a startup and this is important to your business as well. Here’s why-

Why is Outsourcing important?

There are multiple reasons behind it lets start with cost.

Cost cutting: Managing budget is a big challenge for startups. However, outsourcing helps a lot to do it right.

In fact, according to a research, 87% of US companies outsource product development to save cost. 

Outsourcing provides a global talent pool in low cost. You hire a backend developer (in-house) at  98000 USD/year and when it comes down to 22000 USD/year when you outsource.

The risk is lesser: In case of new products whose market is yet to be tested, outsourcing plays an important role in mitigating the risks of trying out something new.

Since the outsourced teams work on flexible models the risks are definitely lower.

It’s Faster: Outsourcing the development helps in faster development with Agile model and helps in tremendously reducing the time to market.

9% people globally outsource only to fasten their process.

Technical Expertise: You may be new to market. That’s not an issue until you have technical expertise with you. If you already have that, then it’s good, however, if you don’t then its better to outsource.

15% people globally outsource to access expertise

Free up time and more focus: For startups, investing time to high priority things is very important. When you outsource, you free up your time for other important things. This helps a lot.  This image will show you some other reasons why is outsourcing important:

You can also check this list from entrepreneur of successful startups that were built with the help of outsourced teams.

Now, as you know why is outsourcing important, here are some key steps for your startup to effectively outsource product development:

Choose the Right Vendor

Choosing the right vendor for outsourcing application development is a must. An outsourcing company with expertise in the required development skills, will surely be helpful. Picking up freelancers is definitely not advisable, as they cannot be relied upon, for taking up product ownership.

One of the important points to consider,

while selecting a vendor for outsourcing development is flexibility of hiring models.

This helps the startup choose a hiring plan that will optimize the costs of outsourcing in accordance with the development requirements.

It is also important to evaluate the portfolio of the hiring vendor to understand the level of specialization in different business verticals.

Defining The Scope Of The Project

The second most important step in outsourcing your product development is to define the scope of the project. First you need to convert the business idea into a business plan and then put down what all you need from a successful product. Defining the technology with which you wish to develop your product is another crucial decision. This also helps in defining the skill levels of the teams you wish to hire.

Once the scope of the project is defined and the vendor for product development has been chosen, the service level agreement with the vendor can be created.

This helps in ensuring that the outsourced teams are working according to the plan of action.

The outsourced teams must be clearly communicated about the expectations and the milestones. This helps in developing mutually beneficial relationship with the outsourcing partner.

Communication

Keeping in touch with the outsourcing partner on a regular basis and reviewing project work in progress on a constant basis is important. This is helpful in improving project productivity level. Motivating remote teams with incentives and appreciation is helpful in getting better business results.

Overall, a continuous communication helps you to finish tasks smoothly.

Looking to outsource your startup project? ValueCoders provides expert agile teams for all kinds of startup site and application development. Here are some key advantages of hiring with ValueCoders:

1. Flexible hiring models
2. Advanced technical project consultation
3. Agile methodology and timely project delivery