Outsourced software development can be a turning point for founder-led startups. It gives founders the opportunity to access talent around the globe, create products faster, and reduce costs. But with every opportunity comes risk. Many startups jump into using outsourced development with so much enthusiasm and without fully understanding how outsourced development can lead to delivery delays, rising costs, and poor-quality results.
Here are five common errors startups make when outsourcing software development and how to avoid them:
1. Absence of Specifications
The issue:
Startups usually have a general idea in their mind or a conceptual idea of the product they want to develop. Without clear requirements, any outsourced teams are forced to guess what you are after, leading to inconsistent expectations, expensive rework, and delays.
How to avoid it:
- Set aside clear business objectives and user stories before you start.
- Produce wireframes, workflows, and mockups to help visualise the product.
- Organise features into early-stage products vs desirable features. The more clarity you can provide, the more successful your development partner will be at delivering.
2. Selecting the Most Affordable Choice
The issue:
Choosing the frustration is convenient, especially for entrepreneurs. But in many software development projects, you will only get what you paid for. Low rates may accompany inexperience, poor communication, or bad code.
How to avoid it:
- Focus on value and not just cost.
- Find a team with relevant experience in your same industry or technology stack.
- Review their portfolio, talk to clients, and first, run a small trial project.
- Also, invest in quality. It will save you time and money later.
3. Time zone management and communication issues
The issue:
Outsourcing usually means engaging with teams in entirely different time zones and without a well-defined communications strategy, collaboration is compromised, and misunderstanding can grow.
How to avoid it:
- Identify clear communication channels and protocols (e.g., Slack for communications, Jira for tasks, and Zoom for meetings).
- Identify overlapping hours for multiple discussions.
- Plan conferences, brief reviews, and feedback continuously.
- None of these lead to perfection. However, consistency and transparency are absolutely essential to closing the time gap.
The absence of a knowledgeable point of contact to gain influence
The issue:
Not having a technical advisor or product manager when non-technical founders are outsourcing the implementation of the project can leave a knowledge gap that makes it impossible to appear experienced enough to evaluate the work that is being done or even know what to ask for in some cases.
How to avoid it:
- Hire or contract a technical advisor, freelance Chief Technical Officer (CTO), or product manager.
- This person should act as a translator between business objectives and a technical team.
- They can help define project scope, review code, and define the minimum expectations of the delivered product.
5. Ignoring Intellectual Property Rights and Law
The issue:
Startups often don’t pay attention to the legal side of things like contracts, IP ownership, data security, etc. This may lead to serious issues later on, such as an ownership battle or keeping up with regulations.
How to avoid it:
- Execute a written contract that states all the details, including the scope, timelines, payments terms, deliverables, etc.
- Include non-disclosure and IP assignments in the contract.
- Hire companies that pay attention to data-related regulations, such as GDPR, HIPAA, etc. Legal precautions today will prevent expensive mistakes tomorrow.
Outsourcing can help your startup grow more quickly if done correctly. Remember, by avoiding these 5 common mistakes, you will create a significantly better chance for success in creating a great product that is on time and within budget.
Start small. Give your outsourcing partner a smaller scope project or an MVP to test working with them. Then you can build trust and expertise together before expanding up. If you’re thinking of outsourcing, let’s chat about how to do it the right way.
