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Edward Moe Client Manager 11.08.2014

Outsourcing Software Development for Startups: Lessons from Berlin


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During my trip to Berlin I had the opportunity to meet with everyone from entrepreneurs and founders, to venture capitalists, and early adopters of the startup community in Berlin and Zurich. I attended meetups where aspiring entrepreneurs shared their ideas, tech gatherings where founders and developers discussed the trends they saw in industry, and I participated in a presentation about how outsourcing development can work for the startup industry.

While it was cool seeing how members of the community attempted to address the issue of finding developers, it seems like some of the typical questions appeared again and again. The purpose of this post is to provide a perspective on some of the most common ones, and hopefully help direct your thinking if you're considering outsourcing for the first time.

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Knowing your project.

Before going further, I want to point out that some of the assumptions in this article are based on the idea that if you're looking for development you need more than just a simple one-off project. This is targeted more towards those startup idea is built around a technical software platform that needs to be developed and improved to meet the demands of users on a regular basis. It's these people with more frequent development needs for whom the question of finding developers is constant.

If you are coming at this from a non-technical side, it is absolutely critical to involve someone you trust in the decision-making process. As you hopefully know already, turning business requirements into software is notoriously difficult, and is somewhat hopeless for the unskilled.

Ideally, you already have software team which has been creating the early iterations, but if not, consider hiring a local project manager or consultant to help you make the decision.

How Can I Hire Developers for my Startup?

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Anyone involved with software work knows that finding good developers is really hard. Even if you can find the people you need, building a team that has both necessary technical abilities and programmers you can work with may require you to swallow a pretty strong hit of sticker-shock.

Moreover, finding developers requires a blend of networking, job posting, and interviewing, all things that may take you away from doing what you actually care about.

If you don't want to settle for the resources available locally, you have a few other options:

I won't go too much into the details comparing the different options, since it basically comes down to the simple necessities of know your project.

Odesk/Elance/Freelancer.com

If you can write out exquisitely detailed technical specs, and your projects is not too complicated, something like Odesk could allow you to minimize costs, and get something mostly-usable. Generally both the cheapest and the riskiest solution, with the most potential variation in results.

Local consultants

If you have more complex short-term requirements, and can afford to pay, hiring an expert local contractor could allow you to build something great. A local expert could also help you write specifications for project outsourcing, or serve as a project manager or consultant with your external team. The most expensive option, but sometimes a necessity.

Project contracting with development company

If your background is non-technical, or you have a fixed, short-term project, reaching out to development companies who offer full project management might be a good option. Still, it’s hard to fully endorse this strategy if there is not a tech lead on your side to evaluate the software coming out. An option somewhere in the middle, as long as you can figure out a way to make sure that your partner is trustworthy and committed, this could be effective for small and midsize projects.

Recruiting abroad

A relatively new option, it could also be possible to recruit abroad and bring the developer onshore. This does seem to hold have a lot of the same problems as trying to find developers locally, with the added headache of foreignness. Still, the quality of developers available in Eastern Europe for example makes this a potentially interesting option if you have the time to look into it. See also the later question about CTOs.

Building a dedicated development team abroad

For obvious reasons, I’m biased towards the last option 🙂 For those of you in the enviable position of having a technical lead capable of making business decisions about needed functionality, and stable enough to count on the need for long term development, building a dedicated team is essentially the same as expanding your own team locally, but without most of the hassle and with all of the cost and availability benefits of working outside of Western Europe.

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Do I want to do fixed-price, project outsourcing, or dedicated development?

No clue. Each of the models has its own strengths and weaknesses, and the effectiveness will depend completely on the specifics of your requirements.

Where should I outsource?

Obviously the big regional question of Eastern Europe or India/Asia has to do with a number of different factors. I have spoken to people who have had great results with development companies out of India or Asia, and I've also heard some flabbergasting, crazy stories. Typically, Eastern Europe is more consistent – the rapid growth in the outsourcing industry there demonstrates the very high quality level of software developers in the region.

Still, there's no question that outsourcing to Asia is cheaper on a per developer/per hour basis. If you can somehow effectively vet your development team, control the process, and stay secure against shenanigans, such a team could deliver an awesome return on investment.

The pitch for Europe though, is that with better time zones, similar culture, and consistent developers, the level of uncertainty is lower, and the ability for long-term cooperation may be higher.

Can I outsource my CTO/technical cofounder?

This was a fun one that I got asked a lot while traveling – I don't really know. Typically people tend to value stability more in the East, and so the prospect of changing countries and seeking opportunity may be less appealing. You also run into the question of how to recruit with such an amorphous job description. On the other hand, if you have a little bit of funding to help with the move and cushion the blow, it could be very exciting for someone.

It's certainly possible, give it a try. Hell, send me a desired resume, and I'll ask around myself.

Does outsourcing work for startups?

As shown in the above explanations, the obvious answer is a highly qualified yes.

Outsourcing can be a fantastic resource, helping you get the team or project results that you need, but it's not a magic bullet. Choosing the wrong company or team, failing to be prepared, misunderstanding the process, all of these things can lead to issues down the road.

Basically, outsourcing answers a simple need: it can allow you to get great developers working on your project. It's up to you to figure out what that project is, how it answers your business requirements, and how much of the responsibility you are willing to give up to your partner.

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