March 24, 2016
Rapidly growing startups are applying outsourcing techniques as a strategy to venture into technology in a major way. There are a lot of misconceptions surrounding outsourcing for software development which as a result has led to many potential startups wasting both time and resources that they honestly can’t afford. Fast paced startups as well as mid-sized businesses can benefit from software development outsourcing which helps them exploit their full potential through the development of powerful web platforms along with mobile apps that are intuitive. In this article, we share eight of the best tips startups should observe to make software development outsourcing work for them.
1. Shop Around
There are lots of software developers out there, which means that whether the difference is in size or background, choosing the one that’s right for you, can be difficult.
Always ask your peers for recommendations, and find out about their past experiences. Find out if the potential software development supplier has previously worked with companies similar to yours, with the same requirements and if they are willing to provide references in confidence. Determine the strategic importance of your product or project and try choosing based on that.
2. Big Isn’t Always Better
Outsourcing a large consultancy for software development often equals a capacity to deliver certain types of projects on a timely basis and within set guidelines. However, this is not always the case for all kinds of projects, regardless of how big or small your company is.
Large vendors may sometimes offer very good or bad services. It is not surprising to see such companies encounter similar issues that would normally be associated with outsourcing to a smaller supplier. Some of the common problems include an inadequate level of skills, difficulty in the temporary replacement of a key resource, loss of staff which results in insufficient knowledge, and so on. These types of issues are not inherent to large or small consultancies, this is normally the nature of the industry, which means size shouldn’t be your main focus for outsourcing.
3. Don’t Focus On a Specific or Fixed Budget
By fixing a specific price range, you are automatically setting a fixed budget for your project, which will be based on the specs you made available at the beginning. This means that you get to pay the exact amount of money you specified in the contract regardless of how long the developers take to complete your project.
If you want to successfully run your startup in a fast-paced software market, even before you outsource for your software development, ensure you come up with an idea that is both innovative and flexible and one that is based on the notable trends in the market. Keep in mind that the specifications for your software project could at any time change. Nevertheless, as with any contract you enter into, it must include a defined range of tasks, the project’s specs, and its terms. Due to this fact, any subsequent change requests will result in the need for another price negotiation between both parties.
One of the downsides of this is that whatever progress had been made will be stalled, and in case this becomes a frequent occurrence then it may negatively affect your long-term relationship. That is why when it comes to outsourcing software development for a startup business, where change is always inevitable, it may not be ideal to have a fixed price model. However, this works for larger enterprises with scope projects that are fully defined. Startups will most certainly evolve, scopes will change, take up new technologies and improve overall for their end product to so as well.
Additionally, a fixed price project is likely to be more expensive in contrast to other models. The outsourced service providers assess and record the risks possible into their fixed price quoting. Because they are not versed in your technology, they will account for all unknowns and the knowns, to avoid losing out on the fixed price quote.
Don’t make a fixed price your main price model in the long-term, but instead, use it as a basis to ask for a test drive to decide if you want to develop a working relationship with the service provider.
4. Ensure You Formalize All the Requirements
Requirements for outsourced software development that are vague or incomplete are of the major causes of failed or close to failing projects.
There is no other way around this, do your due diligence to make it clear to your team and the company you plan to outsource, whatever you want to be done and the parameter set for it. In a situation where you or your team lack the time to document the full details of what you want, then find a different external resource to do it for you, whether it’s a third party or someone provided by your outsourced software developer. This will serve as a documented evidence of what you expect from the supplier side.
5. Stay Actively Involved
For your product to succeed through outsourcing, it is important to ensure you are constantly involved with the software development team you are working alongside, regardless if they are in-house or offshore engineers.
Ensure you diligently interview each of the developers you wish to recruit individually or alternatively, request for someone else in your firm to do it for you. Don’t rely solely on a choice made by a third party. In the case of startups, it is often found that adequate engagement from both parties and constant communication means better results in the long term. The efforts from both sides lead to a software masterpiece.
6. Pay Attention to the Process of Communication Established
It is crucial to establish reliable communication practices for the overall progress of the project. For instance, ensure that in your offshore team you have a Project Manager who is very familiar with the developers and a Product Owner in your in-house team, who has a vision focused on the direction your product is set to take. These are the central people for your outsourcing strategy to succeed, therefore, ensure that open communication channels are set in place and are used in the right way and frequently.
Another key part of the entire communication process is having detailed and transparent reports as often as possible. Pay attention to missing deadlines and avoid situations where Project Managers forget to submit their reports whether daily or weekly. In most cases the assumption that there are no problems could also mean that you are simply unaware of them, thus, maintain contact to always be in the know about the development process.
Finally, in a scenario where your outsourced developer is constantly unreachable, isn’t giving feedback or calling back, it may signal trouble. In which case, changing vendors should be considered rather than hoping time will make it better.
7. Check for Any Legal Issues
One of the biggest concerns that a lot of entrepreneurs have when it comes to outsourcing software development is intellectual property. However, there are three approaches to consider to avoid losing sleep over this.
First off, as part of your contract with an outsourced company ensure that a non-disclosure agreement is included.
Another option is to find out all you can about the best practices applied to vendor outsourcing to secure both your source codes and rights. For instance, you can safeguard all the code by ensuring that that it is safely protected in a repository that can be accessed globally like GitHub, where you won’t lose it because of an unforeseeable event, in other words, a force majeure.
The final and third approach is signing an agreement that gives you the sole ownership of all the source code and the Intellectual Property Rights, even after the software development is complete. In most cases, this agreement is included as part of the overall contract with an external software development vendor.
Paying attention to everything that is cited in your contract plays a huge part in saving you from any sort of trouble in the future, legal or otherwise.
8. Let Your Core Expertise Remain In-House
As a startup company, it is important to keep all your core expertise in-house when it comes to software development. Nevertheless, it is worth noting that most of the routine development tasks involved require efforts associated more with intrinsic value rather than those related to core expertise. By simply offloading these types of tasks to an outsource software developer, you can leave the value-creation efforts in-house.
However, when it comes to the development of the core elements of your products or the creation of innovative features, it is advisable that such development efforts are left to your best in-house talents. An alternative option is to consider asking your software development vendor to relocate some of their developers to your local offices. Naturally, this would require a proper agreement that addresses a few legal issues and the expenses for relocation. Even with this in mind, this would be a much faster and cheaper solution compared to the recruitment of a local team with a similar size and quality.