10 Things You Need To Know When Outsourcing Software Development For Startups

December 10, 2021

outsourcing software development for startups

For most companies, outsourcing software developers is a thrilling adventure. It allows you to add more knowledge and usually finish projects you want to work on faster. On the other hand, outsourcing has many challenges and risks. That is why finding the right outsourcing partner is essential since it has a significant impact on the success of your project.

Outsourcing software development allows startup founders to save money for software development services, especially when starting. This blog post will explore ten things you need to know when outsourcing software development for startups so that you get the most bang for your buck.

Why Outsource Software Development for Startups?

Entrepreneurs who outsource software development to a team avoid concerns like deciding on the right technology, spending nights and days coding, then testing it. An entrepreneur can develop effective marketing procedures, seek investors, or generate new innovative ideas with a startup company or development team.

Time is spent toward the development of a lucrative business. Stakeholders frequently possess a fantastic concept but need assistance in technical implementation since technical performance is often a burden to bear.

software development companies

Outsourced software development has several advantages, including higher productivity, improved product quality, and cost savings.

How Do You Set Up Your Outsourcing Plan?

Outsourced software development has several advantages, including higher productivity, improved product quality, and cost savings. However, you won’t be able to outsource IT development successfully without a clear plan, so having a well-thought-out outsourcing strategy is the number one step towards hiring a software development team to meet your project requirements. But how can you develop one? Consider the below tips while making your decision.

Define your goals

Cost is a popular reason to outsource, but it is not the only compelling incentive. Don’t be restricted when searching for a vendor based just on price. Outsourcing has several advantages over in-house development, including leveraging cutting-edge technologies, simplifying procedures, and lowering the risk of expansion.

Consider your goals and objectives carefully before you set them. Make sure they are realistic, well-balanced, and achievable.

Define tasks for delegation

Some companies are well-known for their coding skills, while others provide exceptional consulting services. To discover a suitable outsourcing partner, you must first define which activities you wish to outsource.

Determine your technological profile

Your software development outsourcing company must have a technological profile suited to your needs since most projects are conducted in a remote environment.

As a result, creating a list of all of your project’s resources would be best. Also, remember to include security and data protection features since data leakage is not uncommon.

Establish an excellent job climate

Foster healthy relationships between your employees and outsourced software development company by informing them of outsourcing goals, avoiding rumors, and closing any cultural gap that may exist between your team and the outsourced software development partner. Ensure your company is readily prepared for any changes.

startup outsource software development

Software Development Outsourcing Models

There’s more to outsourcing software development than simply handing over money to a third-party firm and having them code something for you.

In reality, the decision on an outsourcing model is the beginning of the process. The following are the three primary options: time and material (T&M), fixed price (FT), and dedicated team:

Time and material

Time and material (T&M) is a cost-effective method of outsourcing development companies, which means you pay for only the time spent exclusively on your project development. This approach works best for small or medium projects that do not have a set of criteria. Also, it is appropriate for projects that only require a few resources.


The fixed-price structure implies that both parties agree on the requirements, project scope, and of course, price before starting work. This model is ideal for small projects because it has no limits for modifications. A fixed price is a perfect choice when trying out a new software development vendor.

Dedicated team

You pay a set monthly salary to the hired professional team and administrative expenses with the dedicated team model. This model style is perfect for long-term projects with vague requirements and big in-house tasks when employees lack specific expertise.

software development services

Top 10 Tips You Need To Know Before Outsourcing Software Development For Startups

Outsourcing software development is not uncommon for startups. There are numerous reasons why most startups choose to outsource software development rather than hire an in-house developer.

The following are some reasons: cost, a need for specific knowledge, a lack of time to develop software alone, and the necessity to entrust it to more experienced talents. There are lots of things you need to consider before outsourcing software development.

Here are some essential factors to bear in mind when outsourcing for startups. These tips can assist you in mitigating the risks and developing a mutually beneficial business relationship with the software development firm you choose to work with.

1. Nature of the Software

Before outsourcing your software development to another company, it’s essential to know if the skills are your company’s core competency. (“Core competency” refers to critical qualities deemed critical by the firm that a software development company should have.)

The general guideline is not to outsource your core competency, whatever the issues. However, if the software isn’t central to your business operation, you may outsource software developers.

Is it creative or operational software? Only operational products, such as reservation systems or process automation— which might be complicated but not critical— should be outsourced. Do them in-house for innovative products like chip design programs, consumer games, or architectural designs, and many more.

Also, is the project a software product or a software service? When it comes to delivering software products, most developers will believe that they do not need a significant amount of effort and expertise.

However, with software service, it is not so. A software service is usually designed for a particular purpose. As a result, outsourcing software service rarely delivers the expected results, and they must be managed with extreme care.

entire development infrastructure

2. Record and Experience

One of the primary benefits of outsourcing is gaining a high level of experience that your in-house team does not currently possess. It’s critical to consider how much experience they’ve had and their connections with previous clients.

Look for opportunities to check for their previous work and authenticate a software development firm’s prior work quality. You’ll get a birds-eye perspective of their actual service offerings in action.

software company

3. Technology Standard

What exactly are you looking for in a software development firm to build your product? This is not simply a technical choice. There’s a business side to technological decisions that might impact your time to market, product stability, and budget.

Keep an eye out for generalists: if a software development firm tells you: “They are not limited to certain technology development or stack; they can do all stacks and technologies, or they can do everything.”

What they mean is: “They are not specialists in any particular technology.” Ideally, it would be best to collaborate with dedicated software development developers who are tech specialists in web or mobile application development and specialize in a specific technology, such as solely JavaScript frameworks or Java.

You’re looking for a team of technology specialists with extensive expertise in just a few technologies/stacks and not a development team that gets caught up in the following trendy new framework while leaving the older one half-understood.

tech  competency

4. Cost

The expense of any service or product is one of the most important factors to consider. Outsourcing may offer you a lower price depending on your software development project plan. Always think about the short-term versus long-term operational costs when considering outsourcing.

Usually, outsourcing provides better costs in the short run but may not in the long run. In general, outsourcing tends to result in cost efficiency in the short term, but not always the case in the long run. You should tell what the other hidden costs are to see whether outsourcing is a viable option.

project manager

5. Intellectual Property Considerations

As you get ready to outsource your software development to a different independent firm, keep in mind that legal systems have little, if any, regard for intellectual property rights in the software. For example, you may be aware that roughly 90% of all software utilized in Vietnam and China is pirated.

However, to safeguard your intellectual property from theft and misuse, draft software development contracts and non-disclosure agreements.

project management

6. Ability to get the skills when they are needed

Many businesses require the participation of a wide range of resources and talents, which you may not be able to acquire full time.

The impact of outsourcing is that it allows you to use the resources whenever and as often as needed.

For instance, you might not be able to afford software architects, designers, and testers as full-time employees because of your budget. The impact of outsourcing is that it allows you to use the resources whenever and as often as needed.

development services

7. Lean/Product-centric Approach

A Lean software development firm will likely suggest removing features from your initial list. Analyzing with a software development company about cutting the scope, it’s critical clear that you can trust them. This shows that they are more serious about their goals and have a clear vision of what they are about to create.

Furthermore, it demonstrates that they are not “salesy” since, to put it simply, they are setting a low budget (contradictory to their financial objectives). However, if a software development company claims to reduce and cut features, give them an extra star.

minimum viable product

8. Time, Roadmap & Process

Are they straightforward about how things work? The development of any software is always a challenging task. If you want to outsource a development agency, they must have a strong structure and be completely open. They should communicate the software development process ahead of time and how it entails.

app development

9. Effective Communication

When you employ a third-party company, it’s essential that they can effectively communicate with you to grasp the project’s needs. This is the step at which you can find out whether or not they’ll be able to complete the project successfully. It will also let you know that they are approachable, making problem-solving much easier in the future.

A critical point to avoid is failing to comprehend the scope and feature of the project and the potential for misinterpretation. This will have a significant influence on your project planning and budget.

Most product-centric firms use “user stories” to describe their needs and construct UX prototypes before creating a clickable UI prototype. This is a crucial stage that must be completed before any further implementation. This will help you avoid feature creep and keep things simple.

office space

10. Scalability & Flexibility

If you don’t want to experience the burden of managing your staff, consider an outsourcing agency that can adjust its team size and time allocation.

Don’t be a victim of a one-sided contract that is too stringent. Commit to small sprints and deliverables first, then outsource them for months or years.

When you commit to a smaller, project-based working relationship, there’s no real pressure to keep it going long term, which allows your company to hire “as and when” needed. This makes everything more adaptable and cuts expenses.

outsourced company


Outsourcing is a time-consuming and complicated process, but it is rewarding and necessitates the employment of the top experts to get output for your business. However, if you follow these tips, working with your software outsourcing firm will be a lot easier for you. With the appropriate service provider, careful contracting, and clear communication of your project needs, you will receive a thorough understanding and capital-saving methods that allow you to get the most remarkable outcomes within schedule and budget.

About the author: Joe Silk -

Joseph is a Start-up Consultant, Copywriter & Business Owner with 9 years of PQE. He is extremely client-centric, able to work on a wide range of topics and deliver high-quality standards on projects of all sizes for clients all over the world. View on Linkedin