Startups are defined by the new product or service they bring to the market. As such, product development is at the core of their reason for existing.

Thus one of the critical questions that startup founders encounter early on is: should you develop your product internally or outsource it to an external team?  

The question seems to resist a simple yes-or-no answer. In this brief post, we aim to answer why IT outsourcing is important for your startup product development.

It helps to look at the reasons why most companies choose to outsource. The 2016 European IT Outsourcing Study by Whitelane Research cites the following reasons behind outsourcing:

  • Cost reduction: 64%
  • Focus on core business:  57%
  • Improvement of service quality 47%  
  • Access to resources: 45%  
  • Business transformation: 38%  

Some of the reasons cited above correspond almost to a point with some of the major challenges startups face when it comes to product development:

Outsourcing benefits

Startup challenges

Cost reduction

Limited funding

Access to resources

Right technical talent

Focus on core business

Time to market


When it comes to product development, what appears to be the most crucial skill for a startup is the ability to differentiate itself on the market. This depends on how you and your team understand the market and your target customer so that it translates to your product, your product description, and your technical requirements to build the product.

The risk then is not so much the technical side of product development, but the risk of whether the startup has the right product-market fit.

This echoes the perspective of Dr Jim Walsh, CTO of GlobalLogic - a digital product engineering services firm to the world’s top brands, in his recent insight piece:

“Founders should, in my view, focus with laser-like precision on their customers and on their market— including guiding and directing the development effort technically and feature-wise. They should not take on the distraction of re-inventing the wheel on the mechanics of software delivery any longer than they have to, unless “DIY” presents some compelling advantage to them. And it rarely does.”

Throughout the piece he highlights the point that “outsourcing eliminates the risk of staffing and product delivery”. This idea encapsulates why IT outsourcing is important for an early-stage startup’s product development. It takes away the heavy risks of technical execution and product delivery so you can focus on knowing whether you have the right product, adapt it to your customer needs, and beat your competitors to the market.


 

Want to learn how Cloud Employee can help your startup with product development? Learn how Cloud Employee works, see our Developer Pricing Guide, or talk to us. You can hire dedicated offshore developers with us across many technologies.