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It outsourcing for startups — does it make sense?

There is a common belief that IT outsourcing can be beneficial only to mature organizations and big enterprises, and startups don’t stand a chance against “big guns”. Probably the most usual thing you may hear from startups is that they are not ready for it yet, and at their early stages they need to have all staff based locally. Well, it’s partly reasonable, if the company’s founders have no experience in outsourcing and managing remote IT operations. But the idea is pretty tempting, and here is why.

Startups need to undertake tremendous amounts of development with limited time and budget. And they need to figure out how to enter the market faster than someone else with a similar solution and to start generating profit. The startup industry is merciless, and only the lightning-fast survive. In this context, outsourced product development can save precious time and resources, and allow focusing on other strategic competencies.

There are many renowned instances when successful startups built their businesses with the help of outsourced developers or remote development teams. AppSumo, Github, SeatGeek, Skype, Slack, Staff.com, MySQL, Opera, Alibaba.com, MindSpark – these are only a few examples. Want to follow their success story, but still think your company is not ready? Believe me, they are not smarter or luckier than you.

Let’s face possible concerns and see that the devil is not so black as he is painted. We’ll find out how they can be eliminated, so that an evolving startup can benefit from outsourcing to the fullest.

There are 5 major concerns that may scare startups away from outsourcing:

  1. The risks of hiring low-qualified developers that can negatively affect the quality of the company’s product or service, which may result in a massive failure.
  2. Lack of communication and understanding due to different cultures, poor language knowledge and overall attitude to the job.
  3. Lack of control over remote employees that may work from another country and mostly from their homes.
  4. Lack of team chemistry between the in-house and outsourced team.
  5. Insecure intellectual and commercial property that can be a result of fraud, theft or other illegal activity.

Is there a magic pill against all these risks? How to get legal guarantees and rest assured that your remote developers would be as productive as your local team? As long as you make the right choice – it is really easy to achieve.

Here, we are not talking about freelance developers or traditional project-based outsourcing. Consider establishing your own outsourced development team with a trusted outstaffing provider, which will be a part of your company, only based in another location.

HOW DOES IT WORK?

After years of outsourcing evolution, a new model of unique strategic partnership was born. It has now become the #1 solution for most companies. In this model, the outcome depends on how carefully you choose a service provider that would set up your remote team. Service providers are offshore or nearshore-based companies that help their clients build a remote dedicated development team.

Setting up a remote team means that you will have your own team of developers at your disposal. Your new team will be based in another country, but they will be working exclusively for your company. Just like your in-house team.

Also you won’t have to deal with legal and financial aspects of running an office and hiring staff abroad - these are the responsibilities of your chosen service provider. Such providers use years of experience and deep knowledge of local labor market to guarantee the high level of IT outstaffing services and provide the developers that you are looking for.

Your share of responsibilities can be summarized to these three points:

  1. The first one is choosing a trustworthy and professional outstaffing provider.
  2. The second one is conducting final interviews and choosing whom you want to hire. The rest of the hiring process is your partner’s responsibility, as well as almost all day-to-day operations.
  3. The third one is staying in touch with the outsourced team. It is a good practice to treat your remote development team as part of your regular team, which can be achieved through regular checking, online one-on-one and team meetings, providing regular reviews and appraisals, etc.

HOW DOES IT MITIGATE ALL THE ABOVE RISKS?

The dedicated development team model will allow you to forget about all the abovementioned concerns.

The risk of hiring low-quality remote staff is mitigated by the fact that you personally interview and choose every team member among the shortlisted candidates, thoroughly pre-selected and tested by your service provider.

Choosing the right outsourcing destination, you will forget about poor communication and understanding due to culture and language issues. For instance, Eastern European countries like Ukraine are quite similar in mentality, culture and business approach to Western Europe and even to the USA. English isn’t a problem as well – according to the latest reports 80% of IT professionals have Intermediate to Advanced level.

And stop worrying about the lack of control over your remote staff. First of all, your dedicated team will work from one development center, and not disseminated God knows where. And under the contract, your service provider undertakes to supervise and take care of your team at all times to enforce your control.

Then, with the dedicated development team model a high level of team chemistry is simply inevitable. Because every in-house team member will directly communicate with every remote developer on a daily basis without any intermediaries, as if they were sitting in one building. Skype, Slack, Trello, online conferences, e-mails etc. – you and your team will always be in touch when needed.

When it comes to security, your trustworthy provider will sign an NDA agreement with you, as well as a detailed cooperation contract that covers different legislative aspects of involved countries, including confidentiality, non-solicitation and ownership clauses. Also under such contract, all measures will be taken to ensure complete IP rights protection and security of all your data and networks.

So, rephrasing the title of this article – does it make sense to hold your startup back and neglect all advantages of hiring a remote development team? Such lucrative risk-free outstaffing model will allow you to save up to 60% of your costs per year and spend them on different aspects of your business to grow faster and beat your opponents. Just think about it, according to PayScale, the wage median for US developers is three times higher compared to the average rate in Eastern European countries, like Ukraine. Now it’s your turn to decide if your company should step on this success path.