Congratulations! Investors believe in your groundbreaking idea! Now that you have funding, your product is in full-out competition for market share. Your budding business has gone through the seed round and developed an MVP. After round A, when you were once again backed, you found the right product/market fit. You made the right choice and didn’t spend all your seed money on outsourcing; you resisted the temptation and tested and proved your value proposition yourself.
As you’re looking toward the next rounds of funding, however, outsourcing risks that are typical for early-stage startups are now minimal. You can finally contract with a software development vendor without fear of running out of cash. By offloading development tasks, you’ll be able to optimize your processes, spending, and time. But how can you tell if it’s the right time to outsource?
How can you tell if it’s time to outsource?
A good outsourcing provider can be a good match for a late-stage startup. Quality providers know how to build long-lasting and mutually beneficial relationships. Meanwhile, late-stage startups have enough money to afford team extension and have a definite idea of what return on investment they’re looking for. Below are several cases when outsourcing comes in handy for late-stage startups.
When your startup is mature enough, but…
No matter what corporate success stories tell us, prosperous businesses do outsource, and they do it more than you might think. According to an extensive global survey on outsourcing by Deloitte, 85% of respondents outsource at least some of their IT functions including software product development.
85% of the survey respondents who are large established companies often outsource and have successful outsourcing stories to tell, along with positive feeling about the relationships with their providers, when only 15% of the respondents are an early stage or midsize companies that more or less benefit from the outsourcing.
At an early stage, startups search for individuality, fine–tune their work processes, define core values, and, well, try to get funded. Only once startups get funding can they focus on their primary business goals without compromising their strategy in favor of product development.
When you lack the expertise to implement your idea
This might be your first time turning an idea into a solid MVP that resonates with both investors and your target audience. Or maybe it’s your second time or maybe even your fifth time if you’re a lucky startupper. Still, a well-versed outsourcing company will have implemented dozens of successful startup projects. Late-stage startups can take advantage of an outsourcing partner’s domain expertise and let their partner become an adviser on both the technical and business sides of their product. Just be ready to trust, delegate, and manage your remote team.
When an in-house development team is too expensive
Although you’ve raised some capital, hiring in-house might still be an unattainable luxury. You can try to do everything yourself with a guru CTO, but the stakes are too high: you really need to grow functionality to prove the viability of your MVP and justify the hopes of your investors and customers. Joining forces with a competent software engineering company can help you get the project done quickly without recruitment, legal, HR, and other overhead. Contracting with an outsourcing vendor at this point may be the rational choice.
Benefits for late-stage startups of working with a software development partner
The bottom line is that outsourcing only works well for startups that are past the early stages. Late-stage startups can make the most of their money by working with high-quality engineering partners. The software outsourcing industry is competitive, and a win-win partnership is everyone’s goal. Virtually any startup can find an outsourcing partner they trust, and most vendors will do everything they can to keep their clients happy. Intellias has lots of experience working with late-stage startups. Based on that experience, here are some of the biggest benefits that we’ve seen startups get from working with a software development partner.
Scale and grow on schedule
Outsourcing helps late-stage companies develop functionality faster than they could on their own. An outsourcing partner can be a source of industry-specific expertise and advanced technical skills. An experienced partner will help you improve your product and launch quickly so you can scale in the right place and time.
Add skills with a professional team
At later stages, your startup needs access to a wide set of skills and services. But these can be costly to acquire in-house. Allocating shares in return for co-founder status is no longer a panacea. First, your business now has a lower equity stake. Second, your investors might oppose offering shares of the business they backed at large, so you’ll have to change your hiring model. This is the perfect time to reach out to an outsourcing vendor that can offer a close-knit team of professionals who are ready to work on your product.
Delegate development of future products
There’s one case when outsourcing works well for MVP development: when a startup already has one or several products and plans to introduce another. A late-stage startup launching an early-stage startup levels the financial risks that are present in a startup’s infancy. Also, the process of identifying the scope, validating the idea, finding investors, and setting up marketing and sales channels is no longer so intimidating and time-consuming the second or third time around. This gives startup owners more confidence to delegate projects to outsourcing vendors. Plus, owners can experiment with team composition by welcoming outsourcing engineers to the in-house team.
How can you find a trustworthy software engineering partner?
Choosing the right software outsourcing vendor isn’t easy, but it pays off. Our advice is to consider companies that have already worked with startups like yours. Ask for examples of startups that companies have helped to succeed. Take your time, compare, negotiate, bombard candidates with questions, and don’t hesitate to ask for references. And don’t trust first impressions or let candidates show off: test coding styles, review similar projects each company has done, and see if they’ve documented everything properly.
Be sure to clear up your doubts. You’re not just hiring engineers to outsource development. You’re choosing partners to trust with the most precious thing your business has – the idea behind it.
Numerous startups have risen to fame thanks to the tireless efforts of their software development outsourcing partners. It’s not a secret that Skype, Slack, WhatsApp, Opera, GitHub and other former tech startups included outsourcing in their product development strategies. When entrepreneurs reach a certain level of maturity after launching their MVP and raising investments, their need to scale quickly can be perfectly addressed by outsourcing. Moreover, outsourcing frees up time for founders to focus on growth and sustainability. Plus, it can save money.
We’d love to provide you with details about how Intellias cooperates with late-stage startups. Feel free to contact us anytime.