Should a Startup Outsource Software Development

Posted by Rashi Jaitly · 08 Nov, 2022 · 8 Min read
Should a Startup Outsource Software Development

With the increasing competition in the industry, it is now imperative for startups to find an efficient means to keep up with the competition. Outsourcing software development is one efficient way of getting your product/service to the market faster.

Outsourcing software development can offer startups a quick way to get off the ground. In many cases, they can even dramatically speed up the timeline of your business. But software development outsourcing is not something you should jump into lightly.

In this blog, we'll discuss the pros and cons of outsourcing software development and the situations where it brings the best ROI.

How does Outsourcing work?

Outsourcing software development can be a great way to get your product or service to market quickly.

​ The process is simple:

  • You give a company your specifications.
  • They produce the code.
  • You review their work to ensure that it meets your specifications.

Once you're satisfied with their work, they send it back to you — sometimes in the form of a working prototype or a full-fledged application.

It's important to note that this is not "outsourcing," as in hiring someone overseas and having them develop your software remotely. It's more like hiring a company specializing in the type of work you require. In addition, instead of hiring one programmer to develop the software for you, you hire several programmers who work together on different parts of the project.

Now, let's understand what makes outsourcing stand out and how it's not ideal in some scenarios.

Also, read: How to Build the Best IT Outsourcing Strategy for your Business?

Advantages of Outsourcing

1. Get a team of experienced and talented developers

If you are an entrepreneur looking to grow a startup, it's hard for you to find great developers who can work on your project from scratch.

When you hire an offshore agency to handle software development, they will provide you with a team of experienced and talented developers who will work on your project. You can get everything from simple web design to complex enterprise systems developed by experts with years of experience.

You don't have to worry about finding the right talent or training them; they already have experience developing apps and websites like the one you want to build.

The best part is that it doesn't matter where they are located physically. They work together as one team under supervision, with complete transparency on project progress and deliverables.

2. Pay only for the hours and resources you need

Hiring a team means needing office space, buying furniture, computers, etc., which means extra costs. You will also need to pay salaries on time every month and provide insurance coverage. It also adds up quickly when you have 10+ employees working in your office daily.

By outsourcing your software development needs, you get access to dozens or even hundreds of qualified developers worldwide who work remotely from wherever they want (from home). This gives you access to excellent talent at much lower prices than if you hired them directly from an IT company in your city or country.

3. Save time and money to focus on your core competencies

You probably have a lot going on as a startup or small business owner. You are probably trying to build the company and manage all the day-to-day operations.

Outsourcing software development takes away some of that burden by allowing you to focus on your business while someone else works on the development of a product or service.

Outsourcing saves time so you can focus on other important things like marketing or sales to grow faster within your market.

4. Scalability

Scalability is one of the most important advantages of outsourcing software development. A company that uses outsourced developers can scale up or down as needed.

Flexibility is not possible when the company employs its full-time developers because the salaries have already been paid out for that year and cannot be recovered if the project ends early or if it takes longer than expected to complete.

The cost savings involved with this advantage can be significant since many companies overpay employees due to a lack of experience or skill sets that are not needed to complete their projects successfully.

Although outsourcing has many benefits, it also has some drawbacks that you should be aware of beforehand.

Disadvantages of Outsourcing

1. Difficult an eye on the quality of the work done or control the project

When you outsource your software development work, you don't have oversight over what's being built or how it's being built. You lose some control over the process. This is because you don't have full access to all the resources required for developing your software product. This lack of control may result in lower quality or missed deadlines.

Outsourcing can be risky, especially if the person who outsourced the work doesn't have enough technical knowledge. They won't be able to ensure quality control over their decisions about what should be included in the final product and how it should be implemented technically.

2. Risk of communication problem

Software development involves a lot of communication within the company and with your outsourcer. There is always the risk of communication problems when you work with people from different cultures or countries. Software development can be a significant issue because you must communicate often and clearly with your outsourced team.

If the language barrier is too big, this can create problems in communication and lead to misunderstandings and delays. So, it's important to have clear communication guidelines before starting any project. It helps everyone understand what's expected of them and what they need from others.

3. Time zone differences

When you outsource software development, you often work with developers in another country. This means that you'll need to be flexible with communication times, which can be difficult if you're not used to it.

Miscommunication can lead to mistakes being made during the project. It could cause problems down the line when things need to be fixed or changed.

When working with a remote team, you'll have to be mindful of how these time zones affect your business hours and theirs.

4. Delays

It takes time for a startup to find the right outsourcer for their project. Once they find one, it takes even more time for them to get everything in order to begin working on your project.

There'll be delays between when you need something done and when it gets done. This can be very frustrating if you are in a hurry or have an urgent project that needs to be done immediately.

Summarizing: Advantages vs Disadvantages

While there are both advantages and disadvantages to software development outsourcing, it's evident that the advantages outweigh the disadvantages. That being said, there are certain situations where outsourcing benefits you.

Let's discuss the situations where startups can outsource software development to get better ROI.

Situations where it's better to outsource software development

1. When you find a reliable outsourcing partner

When you can find a reliable outsourcing partner, they'll be able to guide you better with their expertise in software development. You want to work with someone who will get back to you quickly and respond to queries on time. In addition, they should be able to explain things clearly, so there are no misunderstandings about what's expected of them or their role in the project.

2. When you need an expert in a specific area or domain

Outsourcing helps you find an expert who knows exactly what they're doing from day one. You can focus on other aspects of your project while this person effectively takes care of their job.

3. When you want to outsource software development for only one phase of your project

You may not have enough internal resources for all phases of your project at once—sometimes, it makes more sense to outsource certain parts of your project than others (for example, design or testing). In this case, you might want to outsource part of your team until you have enough internal resources (or until someone else in the organization becomes available).

4. When technology is used to solve a business issue

Software development can be expensive, but it can also be used as a strategic tool that helps solve business problems and improve your bottom line. Outsourcing software development may be a smart move for your company if you're looking for ways to automate processes or create new revenue streams.

5. When you need specialized expertise that isn't available internally

There are some things that only an expert can do, especially when it comes to building complex software applications that require knowledge from several different fields (such as programming languages and database management). In these cases, hiring an outside firm with the right experience can save you time and money while ensuring that everything will run smoothly when it comes time to deploy the product on your servers.

6. To save money on infrastructure costs

Outsourcing software development allows you to focus on what's most important for your organization—developing products and services. You can work without having to worry about maintaining complex infrastructure.


There are many benefits and a few risks that come with outsourcing software development for startups. It can be a good option if you assess all of them carefully before making a decision.

By coming together and addressing concerns and challenges, both parties can work more efficiently, provide better software, and satisfy their business needs.

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