Here at Eastern Peak we have had clients of all shapes and sizes – from one-man-shows and small companies to large international corporations. We know that, depending on its size, each company is looking for its own benefits from outsourcing. However, I personally strongly believe that small to medium-sized startups benefit the most from taking all or some of their development offshore.
Nowadays, rapidly developing startups gradually realize their need to get access to alternative talent pools in other countries through outsourcing. Yet there are many other reasons why outsourcing is so essential for the successful development of startups.
Under the intense conditions of today’s increased competition to find a good programmer (like any other employee), doing so quickly can be a very difficult task. For startups specifically, it’s practically impossible. You cannot afford to offer a high wage to a potential employee, so you must compensate him or her with a considerable profit share of the company. Even so, many workers want to reap all the benefits all at once, leaving you to fight a battle you’ve already lost.
When working with an outsourcing company, there is neither a need to allocate options among new employees, nor a need for a long and tedious period of luring your employees in with the help of free lunches, great health insurance, corporate cars, and so on (whatever current programmers want). Besides, it’s unnecessary to compete in wages (which is extremely helpful when you are in the heart of Silicon Valley). Why? Because an outsourcing company has already done it for you!
Forget about the months (and in some countries, even years) of a “farewell” with employees. Forget about the huge negative social impact after an employee’s departure. Forget what it’s like to keep a skilled programmer / designer / manager who is a really good professional, but at the present moment, irrelevant, just because you don’t want to lose him in the future (you are familiar with such situations, huh?). What could be worse than all of this traditional business model nonsense for the developing young startup that is searching for investment, where every penny counts? A powerful outsourcing company will allow you to forget about all of these issues.
You can “fire” employees who are temporarily irrelevant just as fast as you can “hire” them back.
Just warn your vendors that, within two or three months, these programmers will not be working on your project, allowing you to cut costs and close the next round of investment. When you need these employees, you can easily rehire them. That is the beauty of outsourcing.
This is important for any company, but is critically important for any startup.
Outsourcing allows you to reduce costs significantly without sacrificing quality (if you have chosen the right outsourcing company, of course). But, be careful: it is very important to take some time and diligently search for the most optimal solution. You shouldn’t rush to markets with $6/hour rates for a senior Python developer. It should be obvious that no good will come from it.
No matter how paradoxical it is, by hiring workers through an outsourcing company, you are truly improving the climate among your in-house employees. It is very simple: because you don’t need to give outsourced employees the company’s options, you can distribute the company’s equity among key members of the in-house team within your startup. That way, you make them more motivated and freely encourage them to work in their spare time. This means that, in the long run, you get more money, and motivate them to work at the same time :)
When you team up with employees from other countries, you are getting access to the best talents from all over the world, as opposed to simply hiring people that are available within a radius of 30 km from the location of the company. This factor becomes especially crucial when you have not just a company, but a startup: where every new employee is an important decision that will almost certainly affect the outcome of your business.
What about your core expertise?
It is well known that core expertise is the main value of any startup, which is why many companies are hesitant to outsource software development to vendors, as it’s very important to save and keep all expertise in-house. However, there are two crucial points that many startups do not think about:
- You don’t need to outsource all of the development, but only the parts of it that have no or very little expertise value.
- In many cases, if you find a valuable person within an outsourcing company, you can recruit this person (in case of the additional contract with the vendor) and actually make him or her a part of your team, thus increasing the core expertise of your startup and improving its investment attractiveness.
Ready to take your startup to a whole new level of a tech quality? Contact us to get a free quote for your project.
- Types of Outsourcing: Local, Nearshore and Offshore
- 7 Golden Communication Rules in Offshore Software Development
- Top-5 Questions About Outsourcing to Ukraine
- Creating an MVP that can get your startup funded