Should Startups Outsource their Software Engineering Projects?

Posted by Bydrec, Inc on Nov 7, 2018 4:46:00 AM

Should Startups Outsource their Software Engineering Projects

As a startup, you typically have a dozen different things to worry about and not nearly enough hours in the day to handle them all. On top of spreading brand awareness, you have to put 500% of your effort into securing sales and attracting leads—and that’s on top of nurturing relationships to build a loyal consumer base. With everything that you’ve got going on, are you sure you want to relegate a portion of your (already limited) time to software engineering?

Software engineering, by all intents and purposes, is a necessary function for many small businesses regardless of niche or industry. From designers and coders to back-end developers, a software engineering department typically needs a handful of people to be quick, efficient, and productive.

For established businesses that are more on the larger scale, putting together an in-house engineering team should be a walk in the park.

For startups and small businesses?

The logistics can be problematic.

The Outsourcing Solution

Outsourcing has been around for some time now, and needless to say it has been a godsend for hundreds—if not thousands—of entrepreneurs, business owners, and (of course) startups.

Here’s why;

Outsourcing, by rough definition, is the practice of a) temporarily renting fully experienced employees for one or two projects, or b) temporarily hiring an external third party to handle the activities you have neither the time nor expertise for.

In both cases, the impermanence of the system and the guaranteed experience are the selling points.  

Imagine skipping the entire hiring process—posting the job listing, combing through applications, sitting through interviews, discerning the final candidates, sitting through interviews again—but still getting experienced, talented and highly capable individuals to handle all your software engineering needs.

On top of that, imagine not even having to manage them.

All you need to do is tell them what you want and clarify any and all questions they have. That’s it. You don’t have to track their hours, you don’t have to monitor them every step of the way (unless you want to), and you don’t have to scramble thinking of new projects or new things for them to do once the current project is done. Once they’ve fulfilled their obligation, the contract is ended, and you stop paying for their services until you need them again.

With an in-house software engineering team, you have to pay for them every month whether they had a project to work on or not.

As a startup, your finances might be tight and should be used for company growth and stability. Spending a portion of it on people who haven’t worked for the month due to a lack of available work seems impractical. What’s more, it’s sure to leave a bad taste in your mouth.

With onshore, offshore, and nearshore outsourcing, you’ll have no such problems.

Want to Learn More About the Process of Software Development Outsourcing? Read this!

Why Outsourcing?

Should Startups Outsource their Software Engineering Projects1Aside from the benefits just mentioned, there are a number of incredible advantages to outsourcing. We’ve listed some of the bigger ones below:

1. COST-EFFECTIVE

We feel this is one of the biggest benefits for startups, as finances may not be as expendable as you’d like them to be. Between hiring an in-house software engineering team and simply outsourcing your current project needs, outsourcing is a far cheaper alternative.

With outsourcing, you pay a one-time fee (or fixed monthly fee, depending on the length of your project) for the services you require. Upon completion, the contract is fulfilled and you no longer have to pay anything once you have the finished contract.

What’s more, nearshore and offshore outsourcing is much cheaper than onshore outsourcing due to the difference in cost of living. The professional fees of software designers in places like Hong Kong (offshore) or Colombia (nearshore) can be up to 80% cheaper than the fees of engineers in the US.

Hiring a long-term in-house team for a short-term project will only open up a whole new list of expenses: training and supplies, overheads, monthly wages, new equipment, and so on. Whether you hire five new workers or ten new ones, traditional hiring will come out costing you so much more compared to outsourcing.

2. FLEXIBILITY

Outsourcing also offers you tremendous flexibility. As established earlier, it’s not cost-efficient—nor is it practical—to have a full in-house team that you’re only going to need for one or two short projects. You’ll end up forcing yourself to think of ways to keep them busy or you’re going to pay for their hours even when they don’t do anything.

You therefore need a solution that’s less rigid and more tractable. A team that you only pay for when you use their services is ideal. Imagine a freelancer, only more stable and contractual. By outsourcing all your software engineering needs to a nearshore team or third-party company, you have the freedom to pay for only as long as the project runs.

Once it ends, you also have the freedom to work with a different outsourcing company (especially if you weren’t a hundred percent satisfied with the outcome) or pick and choose the developers that you particularly liked (especially if they stood out to you) for future projects.

3. TIME SAVINGS

Outsourcing your software engineering needs saves you just as much time as it does money. Aside from completely eliminating the need for traditional hiring methods (which can take anywhere between two weeks to two months), outsourced software engineers can typically deliver the product faster than in-house teams simply because they have the numbers’ advantage and the experience to pull it off quickly and efficiently.

Any outsourcing company worth its salt that specializes in software development and engineering will no doubt have dozens of seasoned engineers on their team, capable of hitting milestones before the estimated deadline and delivering a tested, debugged, and fully functional program well before the deadline.

In summary, yes. A strong, resounding yes, you should definitely outsource your software engineering needs. The fact is, every business owner and entrepreneur—regardless of industry—can see the inherent value in outsourcing. It is a practice that is extremely beneficial to startups, but even big-name brands and established enterprises are quite comfortable admitting that they subscribe to it every now and then. The advantages are plentiful, the proof undeniable.

eBook: Compare hiring in-house vs. outsourcing

Topics: software development outsourcing, software development