I’m A Startup. Should I Hire An In-house Development Team Or Use Outsourcing?
And the answer is pretty obvious - well, it depends.
It depends on what kind of product you are working on right now, what is your funding at this stage, what milestones you need to reach to pass next investments round, do you personally have development skills or not.
We at AMS were working with a number of startups, and one common feature I saw is that sometimes people are just sitting in the offices and working fully on the product totally forgetting about sales & marketing, and when the time comes it’s already too late to try to change something - and they fail.
Look, I’m not saying you should just outsource everything and don’t worry about development at all - at the end of the day, the product is the most important point, the quality of it, how it works & feels. The product is what establishes great retention number for you, incoming users & happy partners & investors.
But it’s an old-aged statement that no one is going to care about your product if you don’t have sales & marketing on a decent level.
So where I’m leading to?
If you have development skills by yourself, it’s great, because you can work on the product from your side & manage any team - both in-house & offshore. In this case, I would have an offshore team and manage it since you have enough development skills and nothing can go wrong.
On the other hand, if you are pure marketing & sales side, it’s better to hire someone who you trust and who can work with you on the startup, maybe even give a part of your company to this person, so he can make sure the development is going smoothly, with day-to-day updates and you are all set on your product deadline.
Then we can speak about in-house and offshore team.
Both cases have advantages and disadvantages, let’s dive deep into it:
With an in-house team, you have full control over development, people work with you in one office and you know what they are doing in each point of time, you have no communication issue due to time zones difference.
Why then all these Silicon Valley startups love so much to outsource development fully to Eastern European country?
It’s all about the money, product quality & investors expectations.
As a startup, you have deadlines to meet and you need to manage wisely the resources to have in order to reach the next development milestone and pass through next investment round to be able to continue on development & marketing.
When things go wrong, investors can move into place and transfer your awesome startup journey to very stressful & tiring process, not understanding your ideas & thinking they know what you need to do better - and the thing is, in most cases they have more experience than you speaking about business part, so most likely they are right.
Team of 10 developers can cost yearly more than $1.5 million, a team of 10 developers offshore can cost you half as much or even less.
That means that you can have more people or work more time to reach your product target.
You can save more money, develop better software, do better marketing, produce a better product.
But what are the advantages of the offshore team except for cost benefit?
Experience & proficiency. Developers in Eastern Europe are well known for the quality of work they are doing to the state that it feels like a no-brainer - you are getting the same or better quality for less money, why not go with the offshore team right away?
Well, there are some important points you have to think about.
It also depends on the team you are working with - the time difference can be a problem sometimes and you should work with someone who has experience delivering startups products for the clients from your region since these guys will already have processes for communication & collaboration with you and you won’t need to change anything.
Sometimes you don’t even need to hire a CTO from your side if the offshore team has a good team leader that can communicate both you and the team, establishing development processes, working closely with you to reach your startup next milestone.
There are clear advantages and disadvantages from working with in-house or offshore teams, someone who had a bad experience with an offshore team would tell you not to do it, someone who lost all the money when paying in-house developers and closed the startup would tell you another to do the opposite, it’s up to you - every situation is unique and we are entrepreneurs because we can find the best outcome for everyone and leverage resources we have currently.
Another point I wanted to speak about is how to hire good offshore team since on-boarding right people can boost you & your startup to the moon, as well as working with someone who’s not a good fit can crush you and lead to a disaster.
But this one for later. Stay tuned.