Software Development Outsourcing for Startups: a Guide to Successful Partnerships

Technology remains a profitable business even in times of global economic downturn and uncertainty. Gartner predicts that global IT spending will decline by only 8% in 2020 and will slowly but steadily recover over the next year. In some segments, such as remote work software and cloud services, costs will rise. 

In addition, due to the continued proliferation of the Internet of Things (IoT), artificial intelligence (AI), and blockchain, the market still offers great opportunities for every aspiring tech entrepreneur with an innovative idea.

Startup founders tend to become tech visionaries who are looking to disrupt the industry with their software products and, at the same time, close a lucrative acquisition deal. However, their in-house teams rarely turn ideas into attractive and competitive products on their own. In most cases, they resort to outsourcing software development instead.

Hiring vendors to do several development jobs is not new to startups. Outsourcing is a smart cost-cutting measure that allows startup owners to save time hiring talent and focus on more critical business development tasks. A lot of globally renowned companies, from Skype to GitHub to Slack, have gone over to outsourcing to get ahead in the market. Our company Evolve has extensive experience in building bespoke software for such startups as ZeuxHasteee-bateOfferd, and others. This allowed us to analyze what newcomers in the technology business are looking for when they turn to tech outsourcing.

This article will cover the main types of IT outsourcing projects and the scope of tasks usually associated with each of them. It will also highlight the experience and opportunities that startups should look for in their future partners to ensure constructive collaboration from the very beginning.

Good ol’ startup story

Sometimes refining an existing idea can be more than viable, and startups know this better than anyone. A fair share of startup owners tends to adopt proven business models rather than implement an innovative idea. For this reason, over the past decade, an impressive number of venture capital-backed companies have shaped their business models after Uber, the startup that kick-started the global gig economy.

Startup Discovery Session at Evolve
Startup Discovery Session at Evolve

Uber’s on-demand service model has inspired hundreds of companies to launch “Uber” for private jets, “Uber” for windscreen wipers, “Uber” for dog walking, and more. While the value of Uber and similar digital unicorns is diminishing today, this model can still be competitive and profitable if the concept is fresh, in-demand, and implemented properly.

If you’ve decided to tap into an already heated audience using Uber-like technologies, then look for an outsourcing partner that offers:

In-depth tech expertise

When you choose a partner specialized in web or mobile technologies, this can severely limit the technology stack of your future solution. Suppose you only have a rough idea of ​​your “next Uber” app. In that case, it’s better to have multiple development options. You should have the flexibility to choose technologies that are most appropriate and beneficial to your business idea.

Business maturity 

If you are focused on your product’s long-term success, look for a software vendor that will cover your project’s pre- and post-deployment needs. This way, you can ensure that you receive updates, improvements, and fixes for your application on time.

How different types of startups can leverage software outsourcing

Domain-savvy innovators who lack tech expertise

Not all startups are unicorns with innovative ideas. Some of them are companies targeting niche markets. Although most companies have suspended qualitative growth today, the drive for innovation will continue in the future. 

According to IDC’s forecasts, global ICT spending will not increase in 2021 due to the pandemic. It will continue to rise in the coming years, fueled by the rapid development of new technologies.

With their finger on the industry’s pulse, domain-savvy startup founders are quick to recognize and respond to the need for innovation. In their outsourcing partners, these companies are looking for end-to-end development experience and a multidisciplinary team to handle all aspects of software development, testing, launch, support, and maintenance. 

If you are one of those startups that are aware of the automation and optimization gaps in workflows within your industry, look for an outsourcing provider with the following capabilities:

  • Proper intellectual property (IP) rights management policy. 

The surest way to protect your IP assets is to prevent them from being disclosed or leaked. Thus, make sure that your outsourcing company not only offers to sign a standard nondisclosure agreement (NDA) but also has a tiered policy for the management and protection of your IP rights. First of all, the document should include measures to ensure the physical and virtual security of the supplier’s facilities and infrastructure and IP protection related to the production of your software product.

  • Extensive experience in new technologies. 

When looking for an outsourcing company, look for teams with a proven track record in areas such as AI, IoT, big data, virtual reality (VR), and augmented reality (AR). By empowering your solution with the latest technology, the vendor will make it promising and more competitive in the market.

Startups that need dedicated resources and talent 

Every startup project’s success depends on many elements, and one of the central factors is the development team. Poor leadership, team incompetence, and incompatibility are consistently cited as the root causes of startup failures. For these reasons, bringing in one or more individual freelancers to your project comes with a particular risk as they may not be able to work well together and communicate productively, or may even disappear, leaving your project halfway through.

Outstaffing, a.k.a. team outsourcing or staff augmentation, makes more sense in this regard. External teams are already skill-balanced and, since their members work in the same company, tend to be more cohesive. Most often, they have an internal manager who monitors their work and reports to the client. Finally, a manager can quickly customize a dedicated team to meet changing business needs or technical requirements by scaling your team up and down depending on your current financial situation and project needs.

However, according to Evolve’s MD and Chief Delivery Officer Philippe Peron, you should treat your outsourced team as a product to get the best value for your money. That being said, you, as a client, should manage your dedicated external team from the very beginning of the project all the way through to the final release and support, not your provider. 

You can read more about how he built two successful dedicated teams in Ukraine for ricardo, a leading Swiss ecommerce brand, and Just Eat, the UK's leading food tech company.

If you’re looking for quick and easy access to highly skilled developers to complement your startup team, make sure you: 

  • Don’t compromise on team competence 

One mature developer can often outperform several mediocre ones. When recruiting an outsourcing team, evaluate each candidate’s abilities to delve into the project’s details on the fly and start contributing right away. While collaboration and communication within the team are crucial, smooth processes can never make up for lack of domain knowledge and critical skills. That being said, no matter what cool methodologies your provider uses if they can’t provide you with CVs of really strong and mature candidates.

  • Delegate as much as you can

Newcomers to the world of tech often try to do everything on their own. This usually drains resources and money, frustrating them with a lack of progress. Meanwhile, there is a good selection of highly skilled technology partners who can take on some or all of your responsibilities. 

Know what you are looking for 

Every new business idea requires the right team. While outsourcing startup software development has become common today, many things can still go awry if you can’t hire the right vendor. This is why you should approach your search for an outsourcing service provider with a clear understanding of your project scope and technical requirements, as well as the necessary skills and experience of your future development team.

Are you a startup with a cool story/product that you believe deserves a shoutout in the media? Send us your pitch to hello @ and and we'll be happy to feature you on Software Focus!

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