5 Things Startups Should Consider Before Outsourcing Software Development

It is not unheard of for startups to outsource some parts of their software development. There is a host of reasons why most startups resort to outsourcing rather than hiring an in-house software developer. The reasons could range from cost, the need for different expertise, a lack of time to develop the software alone, to the need to put the task in more experienced hands.

For whatever reason, there are key factors a startup should consider before taking the plunge into outsourcing software development. Below is a rundown of some of those key considerations startups should consider.

1. Nature of the Software

Before you outsource your software development to another company, it is important to understand if it is your key competency/competencies. (“Key competency” means are important qualities deemed by the company that an employee should possess.) The rule of thumb is that you do not outsource your key competency/competencies whatever the circumstances.

Entrusting your startup’s ‘secret sauce’ to a third party is similar to relinquishing control of your company.

If the software is not at the core of your business, you may proceed to hire an independent software developer.

In the same vein, is the software operational or creative? Good practice is only to outsource operational products such as reservation systems or process automation— systems which may be large but mundane. For creative products like chip design programs, consumer games, or architectural renderings, do them in-house.

Also, is it a software product or a software service?

Software developers will agree that once a software product is written, it usually doesn’t need lots of effort and skill to deliver it to clients.

Not so with software service. Software service is often customized for a specific need. Therefore, outsourcing service software almost always never works and needs to be managed carefully.

2. Technology Standard

Whether to outsource or not is also predicated on the technology standard of the software. If you intend for the technology to feature the most up-to-date technologies; to be scalable to handle many millions of users, and to feature multi-system failover and recovery, then you need to do it in-house. Don’t outsource. However, if it is simple software, opt for the lowest cost solution which is outsourcing.

3. Cost

Cost is among the most crucial considerations when it comes to getting any service or product. Outsourcing may provide you a cheaper cost depending on what you want accomplished.

When considering outsourcing, always think about the costs in the short run versus the long run.  Usually, outsourcing tends to provide better costs in the short run, but may not in the long run.

You should also be able to identify what the other indirect costs are to see if outsourcing is the best option.

4. Intellectual Property Considerations

As you prepare to entrust your software development to a different independent company, it is important to understand that some legal jurisdictions have little, if any, respect for software as intellectual property. For instance, you may be aware that approximately 90 percent of software used in Vietnam and China is pirated.

Fortify your intellectual property against any theft and misuse by coming up with contracts and non-disclosure agreements.

 5. Ability to Get the Skills When They Are Needed

Most businesses need the input of a diverse range of resources and skills which you might not be able to acquire full time.

For example, you might not be able to afford software architects, designers, and testers as full-time employees. The beauty with outsourcing is that it will permit you to access the resources when and as you need them.

Conclusion

If you have a typical startup and you agree with your co-founders to work on the first product without pay, that’s fine. Software outsourcing in such a case may not be appropriate.

However, if your firm is not software oriented and you need some software-related work to be done, you can consider outsourcing rather than hiring a team of software developers.

It’s for you to decide!

By Nabin Paudyal Co-Founder, Siplikan Media Group