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Outsourcing Software Development for Startups

Outsourcing Software Development for Startups

Are you looking for a reliable engineering team for your startup? Surely, you want it to meet your requirements, have relevant expertise, and offer high-quality services at a reasonable price.

Sounds like a hard nut to crack, right?

That’s why outsourced software projects for startups are becoming the real alternative to in-house development. According to the Deloitte report, 70% of the respondents opt for outsourcing because of its cost-effectiveness, and 40% highlight flexibility as the key reason.

However, some still prefer the in-house solutions. It’s a choice each business should make based on its specifics, goals, and project requirements. Therefore, when making this decision, one should weigh the pros and cons, considering numerous important factors.

So should startups outsource software development? Let’s sort it all out!

Drawing on DigitalSuits’ solid experience, this post breaks common stereotypes about outsourcing and explains why a startup can make the most of turning to this solution.

Why outsource software development for startups?

Many believe that in-house software development is a more reliable and consistent choice. Businesses are afraid that miscommunication, lack of control, and poor project management are probable consequences of hiring offshore teams.

However, many successful startups’ experience proves that this is not the case. Outsourcing software development for startups might be beneficial in many ways. Let’s look at the key reasons for turning to this solution.

Access to expertise and knowledge

No, hiring an outsourcing development team doesn’t always mean that you will have to compromise quality. And yes, offshore specialists are often more experienced than in-house ones.

Why? Well, the outsourcing team you hire has worked on numerous projects, maybe even similar to yours. They probably have relevant expertise and, thanks to their knowledge, you won’t waste much time and effort training the hired professionals. Instead, their rich background gives an opportunity for more effective and timely solutions.

Experienced outsourcing companies offer numerous models, approaches, and frameworks they are ready to work within. Normally, they aren’t limited to strictly specialized services.

Here are the key components of a full-fledged outsourcing software development for a startup:

Depending on your project’s specifics, the outsourcing experts will provide you with a comprehensive consultation to help you choose the approach that will suit you best.

Access to tech talents

Imagine that you hire a team to work on your product in your HQ. Is it likely that you will immediately find all the necessary professionals with the required knowledge and skills? Probably, it will take you weeks or even months.

IT talent shortage is a rapidly growing problem that worries recruiters in the US, Canada, and many other countries. According to the McKinsey survey, 87% of businesses are currently experiencing a talent shortage or expecting to deal with it soon.

In contrast, outsourcing is a great way to solve this problem. You will access a much wider talent pool where you can find, hire, and onboard the required professionals in no time.

Beneficial retail of rates and skills

Keeping the above in mind, let’s consider another important benefit of IT outsourcing for startups: normally, it’s often much cheaper than in-house solutions. Of course, the price varies depending on numerous factors. The following ones are the most influential:

  • Project’s scope
  • Features’ complexity
  • Team’s location
  • Developers’ expertise
  • Chosen tech stack

There’s no one-size-fits-all solution. However, it’s better not to look for the cheapest option. Seek the right balance that will allow you to save your budget while not compromising the product’s quality.

Ability to gather a team

With outsourcing, you can forget about staffing pain. The vendor takes full responsibility for choosing and hiring the needed professionals. You will likely deal with the project manager and may sometimes have calls with the core team. All other aspects don’t require your direct involvement, so you can focus on your business instead.

Outsourcing also enables alternative staffing models that may be perfect for particular projects. For instance, outstaffing allows completing your in-house team with the specialists you lack.

No need for micromanagement

Apparently, nobody likes dealing with micromanagement. Outsourcing for startups allows founders and product managers to avoid it. When hiring a dedicated development team, you hand all minor yet important management issues to their project manager.

The PM’s direct responsibilities are to keep consistent project documentation and choose the most relevant methodology. They manage the budget and provide time tracking reports to ensure these workflow aspects are kept within the settled agreement. Also, project managers conduct team management to control the team’s productivity, make appointments, and cope with communication.

A good project manager of an outsourcing team uses effective pre-tested methods to provide good sprint planning, as well as risk, conflict, scope, and change management. On top of that, a PM is responsible for product backlog elaboration and updating, which means they are directly involved in controlling the backlog items and changing their statuses when required.

With such an approach, the product owners can be sure that the project is on the right track and that every aspect of the workflow is effectively managed. Thus, they can spend less time controlling multiple workflow processes and be more focused on business tasks.

Agile approach

Agile method is a popular approach to managing projects by dividing them into several stages called sprints. Each sprint has a particular goal or an increment predefined in a backlog. At the end of the spring, a product, its feature, or a prototype passes a test with real users’ involvement. Thus, you can see whether the implemented component works well and satisfies the customers’ needs.

Agile methodology is suitable for startups that need an in-depth, fast, and creative approach. It enables shifting project requirements on the go and validating each aspect of the product development lifecycle. Thus, a team minimizes the risks of unnoticed issues by detecting and eliminating them as early as possible.


The startups are often unpredictable, and you may need to change requirements. So the ability of dedicated developers to scale up is a great advantage.

Some teams may find it challenging or impossible to increase productivity and accelerate certain processes when necessary. In contrast, outsourcing teams are better prepared for such shifts due to their rich experience and wider staffing opportunities.

Normally, an outsourcing development team is fully-equipped with must-have specialists to cover any project requirements. If additional expertise is needed, the vendor will provide more professionals to join. For instance, a simple MVP doesn’t require many tech experts to be involved. Sometimes, the team may consist of a UI/UX designer, an engineer, DevOps, and a project manager.

In contrast, a full-fledged project with sophisticated features and ready-to-market prospects requires a more complex approach, so more professionals are required, including an architect, mid and senior developers, QA specialists, product designers, and business analysts.

For a reliable outsourcing agency, it won’t be difficult to find and onboard additional specialists whose expertise will be relevant to your expectations. All staffing changes are conducted on the vendor’s side, which is time- and cost-efficient for businesses and startups.

Steps of startup outsource software development

For effective outsourcing startup development, one should make wise decisions, consider many factors that affect the project’s flow, and build a results-driven strategy.

Here are six important steps to take after hiring an offshore engineering team.

1. Signing a contract with a reliable tech partner

Once you’ve found a reliable vendor with relevant expertise, good communication skills, and a suitable offer, it’s time to sign the contract. This document will approve the main points of your cooperation. Let’s look at the most important aspects of the agreement between a client and an outsourcing vendor.

The services

It’s crucial to define which services will be outsourced to the hired team. Your tech partners may be responsible either for full-fledged product development or certain parts. Many companies prefer building a single offshore development center, while others distribute tasks among a few vendors or expand their in-house team’s capabilities. It’s worth choosing the engagement model that suits your project best, depending on your business objectives.

Project time and cost

Depending on the current state of your startup’s funding and the expected release date, your agreement will determine the workflow pace, specific approaches, and methods. Many startups strive to reduce time-to-market and define the key milestones beforehand. At the same time, a good outsourcing team is flexible and ready to speed up when necessary.

Acceptance testing

It’s also worth agreeing upon conducting acceptance testing and establishing it in the contract. The tests will be performed after the final development evaluation stage. They will help you see if the product’s design, features, and functionality meet the end-user expectations.

Intellectual rights and confidentiality

There are numerous privacy restrictions and confidentiality rules your tech partner should follow. To prevent any security issues or data leaks, sign an NDA (Non-Disclosure Agreement) that limits the dissemination of confidential information and protects your intellectual rights.

2. Discovery

The discovery phase is one of the initial software production stages. Your development team connects the collected theoretical information with the ways of its technical implementation. During the discovery, the experts analyze the product’s strengths and weaknesses, audience’s needs, stakeholders’ expectations, business and market specifics, etc.

The discovery phase helps get a better idea of the project goals and define its scope, which is necessary for building an efficient development strategy.

3. Design and prototyping

During the design and prototyping stage, UI/UX specialists do their best to ensure good user-product interactions. Normally, they start with building wireframes and a simple UX prototype. It might not include beautiful UI elements, but it contains all core functions that real users can test. Thus, you can evaluate your product’s usability and functionality at the early production stage.

Then, UI designers start implementing the interface elements based on predefined branding solutions and style guides.

4. Software development

Your product development starts with choosing a tech stack for the frontend, backend, and databases. The selected technologies should be future-proof and suitable for your product’s features. It’s also worth choosing frameworks with a sufficient developers’ community.

Frontend development focuses on building the product’s side visible to the users. That’s the interface they see and directly interact with. Backend, in turn, is responsible for the server-side of the app. It ensures the product’s internal logic and stability of its APIs, libraries, databases, and other system components. It’s important to consider the project’s specifics and tailor the solutions to your needs.

In many cases, it’s worth starting the development process by building an MVP that will show if your product is viable and meets the audience’s expectations. At the same time, it will help you significantly reduce costs and save time.

5. Testing

Involving quality assurance specialists as early as possible is necessary. QAs regularly test software checking the code quality and cleanness. They can detect and fix bugs, preventing potential risks that may become more serious or even critical. Normally, QA specialists are constantly involved in the workflow, being an integral part of the outsourcing development team.

6. Deployment and maintenance

The startup launch might seem to be the happy end of your product development. However, this is far from the case. If you want your website or app to continue evolving, improving, and satisfying the customers’ needs, the release is just one of the steps to your product’s bright future.

It’s good to stay in close contact with your tech partners after the development process is finished. Knowing your product well, they can update, support, and maintain your software to keep it competitive and successful.

Focus on your core business tasks, outsource the rest!

So should your startup outsource software development? Although there’s no single answer for every business, outsourcing can benefit you greatly. This solution ensures cost-efficiency, flexibility, shorter time-to-market, and the widest talent pool access. Moreover, you can choose an outsourcing model that best suits your business goals and project requirements.

Looking for a reliable outsourcing partner?

We at DigitalSuits have rich experience working on various digital products for successful startups. Our services include custom software development for startups, UI/UX design, concept discovery, MVP and PoC development, and a dedicated team approach. Drop us a line to share your project’s specifics and get our experts’ advice in no time!

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