7 Things Startups Should Know About Outsourcing Development
For a startup to get through the teething stage and gain recognization, it must have its own unique system. It must consider as all-important such activities as hiring, training and the outsourcing of development, plus such elements as brand, structure and values.
Along the way, outsourcing is a common practice many startups use to complete these tasks. In fact, I know startup entrepreneurs who outsource virtually every task.
There's good reason for that: Outsourcing can lead to high levels of productivity at relatively reduced costs. A study by Intetics revealed that outsourcing can save companies 60 percent on overhead costs.
What you outsource depends on the nature of your business and your goals, of course. But you’ve got to approach outsourcing the right way or risk losing money and even putting your business at risk.
For example, you may want to outsource the development of your mobile app, because you don’t have the technical expertise required. Better yet, you may want professionals to handle things at a lower cost so you can focus on a a higher revenue-generating task, such as marketing.
The truth is, you can outsource every aspect of your business if you choose, but considering how vital one aspect -- development -- is to every startup, you should look particularly closely at the following seven things to know about outsourcing it.
1. Choose the right third party to work with.
Creating a brand that you’ll be proud of requires deliberate efforts. One of the daring steps involved here is deciding who handles your development (e.g., app development). Should you hire an agency or freelancers? Most of the startup entrepreneurs I’ve interacted and worked with prefer working with agencies.
However, if you’re tight on budget (most startups are), seriously consider going to a place like Meetup.com to find a technical co-founder.
Remember that whether you’re going to hire an agency or individual freelancers, there are both pros and cons to each. Conduct your research first.
2. Consider technology standards.
Technology has redefined web and app development, or any type of development for that matter. For this reason, when outsourcing, consider the technology standards you're using.
As an example, mobile usage has almost drowned desktop usage, with a 58 percent growth rate year over year. If you’re developing a website for your startup, you can’t possibly hire professionals who don’t understand responsive design.
More so, if you plan to generate traffic, leads and customers from search engines, Google expects you to make your web and mobile applications mobile-friendly.
Chaim Sajnovsky, founder at B7Dev.com, suggests that, “Being able to feature up-to-date technologies in your development is critical. Otherwise, your project will be outdated.”
3. Include personalized communication.
Don’t outsource development if there’s no guarantee of a personalized communication. Why? Because sooner or later you'll encounter technical issues after the project has been completed.
To ensure a seamless communication, be aware of the time-zone difference to help you make smart decisions about when to outsource your services, and whom to put in charge.
If you’re based in California, for example, and you’re in the process of hiring an agency/freelancer in Johannesburg, South Africa, do well to understand when to send emails, put a call across or submit a support ticket.
4. Don't neglect intellectual property considerations.
What rights do you have on your mobile app properties? I’m not an attorney, but from my personal experience, I’ve found that some legal jurisdictions have little or no regard for intellectual property like software.
It may interest you to know of estimates that say approximately 61 percent of software used in most Asian countries and 58 percent in India are pirated. How many of these crimes have resulted in lawsuits? How many of those lawsuits have been litigated?
That said, when outsourcing developments (web, app, software, etc.), it’s your responsibility to secure your intellectual property against misuse and theft. So, create those limitations by drafting contracts and nondisclosure agreements which the freelancer/agency will be required to sign and adhere to.
As always seek professional legal advice if you have any questions.
5. Consider the unique quality of your software or other product.
There are some delicate developments you should never outsource to a third-party. Why? Because if you're talking about a key competency -- a key product or service that makes the company unique -- you don't want other people to hijack your edge.
This is your company’s “secret sauce,” so trade it with extra care. If you truly want to get the project done, consider hiring an in-house developer to handle it.
You may want to outsource operational products such as reservation systems or process automation, but when it comes to creative products like architectural rendering, chip-design programs or consumer games, don’t reveal the secret. Work on these in-house.
6. Get regular updates on your company's progress.
You’re in control of your business. So don't be like all those other CEOs and founders out there who relinquish to a third party 100 percent control of their company's development. That’s not ideal.
Inasmuch as outsourcing development is important, you need to get regular updates to keep abreast of the behind-the-scene processes.
Don’t be interested in just the end result, such as the functional software, either. Rather, get involved in the ongoing development. Provide ideas, answer questions, give suggestions. You’ll learn a lot more from the processes than from the end result.
If you’re ignorant of software malfunction, or even some minute fact about app development, you may make irrelevant decisions.
7. Get what you pay for.
At any phase of your startup, be careful not to think that getting cheaper services is the best way to go. I know that you want to save money, and that's important: 46 percent of startups that fail do so because they run out of money. Specifically, not seeing projected ROI is the reason why fully 80 percent fail.
However, you need to keep in mind that you always get what you pay for. That's a fact of life. And I’m not necessarily suggesting that you should make expensive hires.
The bottom line is, choose freelancers/companies that have the experience, modern tools and right skills required to handle your project. At the worst, pay the industry standard fee when outsourcing developments of your software applications.
In a world where you’re required to be creative, productive and tenacious in order to cut through the noise, consider outsourcing as your master key. If you’ve tried it in the past but didn’t get the results that you wanted, don’t give up.
Use the above seven-item checklist. Of course, you don’t have to implement everything at once, but be disciplined enough to resort to these tips every so often. That way, you’ll be assured that your startup is in good hands when you outsource development.