In a popular blog, “Top outsourcing lessons learned from 5 successful and failed startups,” Maitrik Kataria listed the views of founders who outsourced their product development.
Innovify, a product foundry currently working with a number of start-ups, identifies a checklist for founders wishing to outsource their product development.
Luis Montes of PatientDox shared: “Outsource developers typically work on various projects at the same time and simply cannot proceed at the speed you need them to during this stage.”
Innovify replies: Many outsourcing companies use a shared pool of developers to work on client projects.
Always ensure that the company you outsource to, is allocating a cross-functional team to work exclusively on your project.
Also, ensure that the delivery criteria are mutually agreeable and achievable against the product roadmap.
Luis Montes has further stated: “Outsourcing your core competency and relying on a third party to execute on the quality of your product can be a dangerous proposition. Think of it as a restaurant that outsources it’s cooking.”
Innovify replies: Yes, it is dangerous to outsource your core competency to a third party but many start-ups fail to identify their core competency in the first place. The best recipe for success is to retain your core competencies and outsource everything else. Just because you need technology including apps, software, web, and the like for your needs, that doesn’t mean product development is the core competency. Sample Starbucks who is not a coffee maker but a sourcing specialist who sources coffees from all over the world. Not realizing one’s core strengths is one of the most gruesome mistakes that many start-ups commit. Hence, before deciding to outsource, identify your core competencies and outsource only if the product development is not one of those.
Mark McGuire of Nextt shared his pains too: “Before hiring a fantastic iOS dev to our team, we relied on two mobile development firms to build out versions of Nextt on the iPhone. We ended up wasting time and money.”
Innovify replies: “We sympathize with your losses of time and money, sir. However many times there is a lot of confusion between the founder and the outsourcing company. For many non-tech founders it is difficult to articulate the requirements in a way for developers to understand. Hence you need a development partner that is experienced enough to convert raw ideas to a working product iteratively, gathering feedback along the way. A true Agile expert is what you need. Also, there would be a lot of rework along the way, hence it will be preferable for you to work with a low-cost supplier.
Sarah Bryer of Rivet and Sway also stated her fault, “We outsourced to a big-company 3PL way too early”
Innovify replies: Identifying the right company and the right time to outsource is important definitely.
Work with a partner who is committed to your success and is flexible enough to accommodate your evolving needs.
A partner who is not only lean and mean in the early stage but also able to implement the right process and frameworks in place, for you to scale as and when required.
Kevin Linser of Nauapp was agitated when said this, I think: “While my blood pressure grew each time I had to explain some changes in design, functionality or screenflow”
Innovify replies: Similar to Mark, this happens with companies who are not agile and want to have a clear scope before developing the product, a.k.a. waterfall. You need a partner who strongly follows the agile methodology and implements a flexible delivery structure, one who can accommodate as many changes as needed to get the core user experience right.
Kevin was equally pissed of holidays playing a spoilsport: “I would have never thought that the Muslim holidays would actually affect my daily business so soon.”
Innovify replies: India is a land of festivals and occasions but some companies are committed to deliver the goods on a timely basis irrespective of holidays. For example, Innovify’s team is dedicated to fulfil what is committed irrespective of the off days. Always opt for a partner who has a robust IT infrastructure and adept team in place. A physical visit to the vendor headquarters would help in this regard.
Gil Sadis of Licensario had this to say: “If you have to outsource, never never never outsource anything that’s core to your business.”
Innovify replies: By following agile practices, the development company can help you design and define your product as they are building them. By having an onsite team close to the client would be a option for the development vendor too.It is detrimental to the growth of the organization to outsource the core of one’s own business but as we explained earlier, one needs to identify their core expertise and then proceed to outsource the non-core operations.
Joe Fernandez of Klout shared his success story, “I outsourced myself and stayed with my team (sleeping on one of the developers couch) for more than 3 months. I came back with a working prototype that let me fill out the rest of my founding team here and then raise money.
Some other side benefits is it was much cheaper to live over there on a daily basis than it was here. This extended the amount of time I could bootstrap the company. It also let me focus completely on what I was building since there was a lot less distractions.”
Innovify replies: Congratulations on your success, Joe. Yes, the costs are quite low when a project is outsourced and this helps companies to bootstrap themselves. Well, one thing is doubly assured, you will never have to sleep on the developer’s couch, especially when working with a competent and experienced development company who also has an onsite presence.
Jason Goldberg of Fab.com/ Social Meridian shares his ideas, “A few notes about working with an offshore team. If you’re gonna do it, do it right. What I mean by that is that I’ve seen it done wrong so many times it’s sickening. Folks in the U.S. all too often have this mistaken belief that there are these inexpensive coders outside the U.S. who are just on call and ready to write code based on specs. That’s a recipe for disaster.
Jason says that saving money is important for startups in the long run, “The notion here was that spending our cash is the same as spending our equity. The more we spend early on, the less the company will be worth in the long run.”
Innovify replies: True, the misconception is about inexpensive as a synonym to inefficiency. Not always. It is crucial for start-ups to save on money but inefficient workers will ultimately prove to be a bane in the long run. Opt for a company which offers reasonable pricing and competent services for a firm footing.
Dimitry Stillermann of Squawker stated this: “The Squawker team is a prime example of how to work on a development project. Their core team had between them many decades of trading and financial technology experience, so they were perfectly capable of steering the project while bringing in external partners to build an integrated implementation team.”
Innovify replies: Yes. The core team needs to be honed for excellence.
With integrated implementation teams, one can find the right mix of competency and innovation to the project.
Ryan of JPay shared how outsourcing worked for him and his company, “JPay experienced hyper growth based on their technology, but the technology team was scattered around the world, creating a whole new set of challenges. Ryan decided to take back his tech team, and the rest is history. An entrepreneur needs to know when and which parts of the company to outsource.”
Innovify replies: Congrats Ryan on the success.
The identification of outsourcing parts is as important as finding the right partner.
They would be able to offer full stack of development and support services that a start-up would need at different stages.