Building a startup is all about risks, uncertainty, and rush. You’ve got an idea, even raised funding or took a loan, and here is the toughest stage comes—the implementation of the idea itself. At this point, you start looking for an outsourced or co-located team. The first option is in most cases is cheaper, especially if we are talking about South and Central Asia. The outsourced teams are becoming more and more popular now. According to Statista, the outsourcing market is projected to reach US$0.49 trillion by 2029, growing at a compound annual growth rate (CAGR) of 4.67% from 2024 to 2029.
However, while outsourcing offers undeniable advantages, it has challenges. Common pitfalls include shifting deadlines, scope creep (work expanding beyond the initial agreement), and a lack of transparency, which can erode trust. This article will help you navigate these challenges and make an informed decision about whether an outsourced team is the right fit for your startup.
Clarifying idea
42% of startups fail because there is no market need.
Before the implementation, go back to your idea and think it over again:
What problem do you address?
What will potential users save time using your product?
Have you really experienced this problem personally, or have you imagined it?
What is the potential market share you plan to cover at the launch?
Who are the competitors in the market and how is your product different?
Market research is your best friend here. Conduct surveys, run targeted ads, and analyze competitor data. This will help you understand your target market, identify potential roadblocks, and refine your product before investing heavily in development.
Testing your hypothesis is crucial. Consider creating a low-fidelity prototype or running test ads to see if your idea resonates with your target audience. This will help you validate the need for your product and gather valuable feedback before committing to full-scale development.
Only after you've validated your idea and defined the minimum viable product (MVP) scope should you move forward with development.
Forming the scope of work
The heart of any successful startup? A minimum viable product (MVP) that validates your core hypothesis. Building an MVP focuses on the essential features that solve your users' core problem and save them time.
Think of it this way: Would you dive headfirst into a new language by traveling to a country where you don't understand a word? No! You'd likely learn it step-by-step, mastering basic vocabulary and grammar first.
The same applies to startups. Building an MVP in phases allows you to gather user feedback early and iterate quickly. This narrow scope offers several advantages:
Get your product into users' hands quicker, especially crucial in competitive markets.
Minimize development time and resource allocation, allowing for more focused planning and research.
Make informed decisions about future features based on real user data, not just assumptions.
Focus on features with the highest user impact, delaying non-essential elements (like video calls in a forum app) for later iterations.
Don't be afraid to eliminate features that make sense to have in the future, but are not critical now. For example, it is nice to have video calls in the forum app, but it is not a necessity at all.
Monetization is key: While a free launch can be a good strategy, it's crucial to have a clear plan for future monetization. This will ensure your startup's sustainability and growth. Consider how much users are willing to pay and develop KPIs (key performance indicators) to measure success.
Why choosing outsourced team
23% of startups fail because they didn't have a right team.
As businesses continue to face economic pressures and the need to adapt to rapidly changing technologies, outsourcing will likely remain an attractive option for many organizations.
In fact, outsourcing development can be a strategic advantage in these uncertain times. Let’s list the key benefits:
Cost savings & efficiency
It's no secret—outsourced teams cut expenses. You avoid the hefty overhead associated with full-time employees, including benefits, taxes, and training.
A 2023 Deloitte Global Outsourcing Survey indicates that 74% of surveyed companies reported achieving cost savings or maintaining costs when outsourcing IT functions.
Faster development & scalability
Outsourced teams can ramp up quickly, delivering results sooner than building an internal team from scratch. They often have existing team dynamics and expertise, reducing the time needed to become a cohesive unit. Plus, they offer the flexibility to scale staffing up or down based on your project needs.
A study by Clutch, found that 63% of businesses reported faster project completion times when outsourcing software development, allowing them to get products and services to market quicker.
Access to top talent
Tap into a global talent pool, finding developers with specific skills and experience you might struggle to find locally. Building your own international presence is complex; outsourcing partners give you access to this advantage without the hassle. Even beyond general talent, consider domain expertise—industry-specific knowledge that can be invaluable for your project.
A report by Auxis IT Consultants on IT outsourcing trends highlights the increasing use of nearshore outsourcing (outsourcing to geographically close countries) to access specialized skills while maintaining cost-effectiveness and communication advantages.
Accountability & transparency
The right outsourcing partner embraces Agile methodologies, providing consistent progress updates and keeping you informed as your project evolves. In the ever-changing world of software development, a team that adapts with you is crucial.
An article by McKinsey & Company discusses how Agile methodologies, particularly when paired with strong communication practices, can enhance transparency and accountability in outsourced software development projects.
Outsourced development teams deliver cost savings, adaptability, access to top talent, and built-in accountability. This potent combination empowers you to weather economic storms and emerge stronger.
Key considerations when choosing an outsourced development team
In addition to the benefits and collaboration models discussed in previous responses, here are some crucial factors to consider when selecting an outsourced team to ensure a successful partnership:
1. Look for a partner that goes beyond just coding. They should guide you through the entire planning process, including:
- Project planning and cost estimation.
- Wireframing and UI/UX design.
- Ideally, they can handle the entire development lifecycle, ensuring an optimal project plan.
2. A strong leader with technical expertise is crucial. They will:
- Assemble the development team with the necessary skills.
- Be your primary point of contact throughout the project.
- Ensure clear communication and alignment between you and the team.
3. A proven development process fosters efficiency and helps navigate challenges. Look for a team that utilizes an agile methodology like Scrum, promoting:
- Adaptability in planning.
- Early delivery of features.
- Regular project updates.
4. Clear communication is essential to avoid issues at every stage. The team should have:
- Project management tools.
- Collaboration tools.
- Strong communication skills.
- Regular updates and multiple communication channels are key for a successful project.
Additional tip:
It also makes sense to have a trusted person on your side—a CTO or Product Owner who will interact closely with the technical team. This is especially important if you have never worked with the technical teams before. Consider hiring a Fractional CTO, check our related article Fractional CTO Roles and Responsibilities to get more insights.
Working with the team
Transparency of working processes
Working with remote teams can be stressful sometimes since you are cut off from the daily information. Therefore, you may require a team to provide you with a certain level of transparency. It should be at least:
Daily standups – either in a Slack channel or at the call
Clear tasks in the issue tracker
Regular demo meetings and iterative approach of implementation
Time tracking and detailed description of the work done, especially if you work on an hourly basis
Regular reports and retrospectives
In addition to that, the team should be open to communication.
Regular communication
Unlike the co-located teams, one of the issues working with an outsourced team is the low involvement of the team in the project idea. The good news is there is a solution for that — regular communication. It is extremely important to be on the same page. Therefore, calls should be conducted several times per week and there should be a meeting summary approved by all the team members.
Step-by-step results
As we discussed before, in the case of the startup iterative approach is much preferable since it allows us to get the results faster and ensure the chosen track is the right one. In addition to that, you will know exactly what the product meets the expectations or identify the risks of failing the deadline earlier.
Trustful atmosphere
There is no way to have a project about the problems. It is all about telling them at the right time. The trustful atmosphere will encourage the team to speak out their ideas about product improvement, suggest alternative solutions for the tasks, and rise up the potential issues. Working with the team for a long time will allow you just to share the problem you want to solve with the team and they will come up with a solution on their own.
Intrinsic motivation
It is a rare case when people are motivated by strict deadlines and penalties. Moreover, it often demoralizes the team and leads to poorer results. There is no way good idea to force the team overtime all the time thinking they’ll work faster. Constant extra work decreases productivity and consequently, the product quality will fall and not allow you to demonstrate the product to users.
The best means to cheer up the team and encourage them to perform better are:
Your own attitude to the project — you should be extremely involved and passionate. Sharing the product vision and business value to let a team see that it writes code, not for the sake of code, but to solve a real problem. Users’ feedback is another inspiration tool. For example, when the project will be already in production, you may arrange retrospectives meetings and present the business metrics for the team to show how the project is growing.
Outsourcing work to a hired team is risky. Yet the risks may be eliminated with the proper working processes and regular communication.
To wrap up
Outsourcing development can be a strategic advantage for startups. By carefully planning, choosing the right partner, and fostering a strong working relationship, you can leverage the benefits of an outsourced team to propel your startup. Clear communication, trust, and an iterative approach are key to successfully collaborating with your outsourced development partner.
Mad Devs offers a free consultation with our delivery department to discuss your project needs and explore how our outsourced development services can help you achieve your goals. Build a successful startup with the right team by your side!
FAQ
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Why consider outsourcing for your startup?
What are the common challenges of outsourcing?
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How to maintain transparency and regular communication with your outsourced team?
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