Hiring an Offshore Software Development Company for your Startup: To Do or Not to Do

Startups who have validated their product idea and who know their market need to begin building the product right away in order to kickstart sales, raise money, or just scale the business. 

In startup life, there can be so many scenarios of building the product - those can involve adding or killing features in a really short time frame or pivoting the whole business and trying to get into a different market. There is so much pressure in building a product in a limited time that it can be a challenge to do that in-house. 

Should startup founders quit if they feel their in-house development resources are not enough to continue building the product? Of course, not. An ideal solution to a problem like this will be hiring an offshore software development company. First of all, because as a startuper, you might not be able to find and hire software engineers in your local area. The cost of hiring might be too high for a small business like yours, and the whole hiring process can take months, if not a year. However, on the other hand, there are plenty of people out there in the world who would gladly take up such a project and work as a remote team for your startup company. 

Let’s quickly define what we mean by saying “an offshore software development company.” 

An offshore software development company is one that can take your software development project and do the implementation for you. The word “offshore” suggests that the software development company is located in another country. For example, if you are a startup company that is based in Detroit, you can delegate your software development company to an offshore software development company located in Yerevan, Armenia. 

Let us now see why it’s better to hire an offshore software development company over hiring developers in-house. 

Why hire a third-party entity for software development

Hiring an offshore software development team will be cost-effective. According to a 2016 report by Quartz, 90% of startups fail, and 46% of them fail because they run out of cash. On the first days of getting funds from the investors, many startup founders feel empowered and excited to hire more people and kickstart the development. However, after some time passes, they find out that the resources are getting less and less, and hiring more people could eventually crash the whole thing. 

Let’s also not forget about costs like office rent, insurance benefits, vacations, recruitment fees, payroll, other benefits such as gym memberships, lunch vouchers, bonuses, and so on. 

How will hiring an offshore company help you get over these challenges? Well, because in Armenia, the cost of living, the salary rates of developers, and the rest of the benefits cost less money, you will spend less cash on creating your MVP if you hire an offshore software development company.

Another perk of hiring an offshore company is saving time. It may sound trivial at first sight; however, if you get into this in more detail, you will see that offshore development teams don’t require training cause they already consist of skilled software engineers. They also don’t require project management on your side since they usually have their in-house project managers and product owners for Agile teams. They also don’t require HR activities to be carried out on your side cause they do have their HR folks who take care of the staff and help resolve any issues and challenges that can come up along the way. 

With an offshore development company, you will be able to focus on your product and the business itself instead of attending daily stand-ups, grooming sessions, engineering meetings, or HR activities. 

Hiring an offshore software development company gives more room for flexibility too. The challenge with in-house teams is that it can be hard to scale your team as needed, switch from one project to the other (read this from one feature to the other), or make changes in the tech stack. These usually take so much time and effort. However, since the offshore development teams are specifically designed to meet the clients’ needs, they can adapt to new requirements way easier than in-house teams could. 

We have mentioned skills; however, let’s talk about quality in more detail now. As a startup founder/co-founder, you need your MVP to work smoothly and have as few bugs as possible. In in-house teams, quality assurance is a challenge since quality control is not a joke. The developers could be debugging their code, but you need more focus on the quality more than usual. 

Just as a reference point, here are some numbers based on a recent McKinsey report that says 43% of organizations are currently experiencing skill gaps. 

How to hire an offshore software development company? 

Now that you know how helpful it can be to hire an offshore development company let’s see how you can do that. 

Step N1: Define your business goals 

Your business goal could be scaling your product or just creating an MVP, or adding new features to your existing product. Whatever the business goals, make them clear for you and the development company you will be working with. 

Step N2: Understand what skillset you need for the project 

There are tens of thousands of offshore development teams out in the world that you could potentially hire. They have various skill sets, different levels of seniority, different tech stack. Evaluate your needs in that respect and see who you need to hire, understand who can complete your project with quality in mind and with the time limitations that you have for them. 

Step N3: Align on the tech stack 

At Simply Technologies, we do JS development. We have written a whole article about JS development and why we have chosen to use that programming language for all our projects. While interviewing offshore software development companies, make sure you fully understand what tech stack they are employing and the potential limitations. You are going to scale that product one day, and the tech stack should not pose any problems. 

Step N4: Discuss the costs and the time frames 

Once you feel you are aligned with your potential offshore development team on the tech stack, start negotiating the pricing of their services and the time frames. As a startup founder, you need to keep an eye on smart budgeting and spending money wisely. 

When NOT to outsource?

Of course, outsourcing software development for your startup can be helpful in many ways. But there can be challenges and downsides too. Let’s quickly go over them below: 

Too many companies to choose from 

You can end up spending weeks and even months searching for the perfect outsourcing company. Many such companies are a good thing generally; however, in terms of finding one, it can be time-consuming. And since you have to find a company that meets all your requirements in terms of quality, flexibility, and finances, you might end up wasting precious startup time… 

Cultural differences 

Since you will be hiring people from overseas, there are going to be cultural differences between your in-house team and them. Even in this age of globalization, culture often affects how people communicate, what’s their attitude towards quality, how they treat deadlines, and a bunch of other aspects of daily work. So, it would help if you were careful here as well. 

Time zone differences 

If you are in the US and you are hiring a team in Armenia, keep in mind that there will be up to 12 hours of the time difference between you. Ask your team if they are fine doing late night or early morning calls; if not, then you’d better hire a local company. 

Trust, trust, trust 

Con artists are everywhere, in all industries. Unfortunately, the tech industry is not an exception. They might have a very solid online presence and great salespeople, but they might also provide poor code or underdeliver or just rip you off eventually. You need to be careful with whom you trust your product, or should you trust them at all in the first place? 

Summing up 

While startup life can be challenging, it is also fun and exciting. Building a product is both hard and rewarding. And when you have trusted partners/vendors by your side, you can basically put some of your shoulders' weight onto theirs and concentrate on pitching your product and making sales. Just keep in mind that you cannot and should not trust anyone who offers software outsourcing. Do your research, consider all the cons and pros and only then sign under the dotted line.