6 Things Startups Should Do To Win At Outsourcing

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Win At Outsourcing

Information Technology Blog:- Remember all those scenes from “Catch Me If You Can” where a young Frank Abagnale sweet talked his way into getting loans from banks, flying jetliners and standing in as a prosecutor in court?

Many product startups seem to think outsourcing companies are Frank Abagnales: smooth talking confidence tricksters who would either bungle up the project or steal their money and intellectual property.

But is outsourcing really that bad? Sure, there are horror stories but then there are also stories like Skype whose initial development was driven by an Estonia based outsourced team.

Win At Outsourcing

Outsourcing helps startups

  • Access world class talent on limited budgets
  • Develop a MVP (Minimum Viable Product) without spending an arm and a leg
  • Scale up and down rapidly without getting involved in long drawn hiring processes and keeping resource costs variable
  • Instantly deploy skills that would typically take a long time to hire or master in-house

But there’s many a slip between cup and the lip. Outsourcing is a complex process involving multiple human and technical variables. Get one of them wrong and you can end up sinking money, time and energy into a black hole.

Without getting into arguments about specific locations or industries here are some of the things startups should follow to get the maximum benefits out of outsourcing.

1. Thoroughly vet your partners- Don’t begin without details like the reputation of your outsourcing partner, their portfolio, their technical qualifications and client testimonials.

However, don’t just hire just based on third party recommendations, no matter how glowing. Every project is a unique beast.

Rather, audition prospective vendors for the job. Give them a pilot project to work on and find out how responsive they are in terms of communication. Get a feel for the chemistry like between you two and determine how quickly they can implement feature requests. Only hire once you are satisfied.

Use sources like LinkedIn profile pages, GitHub profile, blogs or Twitter accounts to know more about your vendor.

2. Create iron clad contracts- One of the biggest and justified fears of a product startup is IP (intellectual property) theft. This is especially problematic when you are outsourcing to a country where laws around IP violations may not be strictly enforced. But even in countries where there is robust protection most startups can’t afford to take legal recourse.

So how do you prevent yourself from getting ripped off? Your best safeguard is by being thorough during the due diligence phase. If you have done your homework you will be able to select a reputable vendor who has as much to lose as you from IP theft allegations.

Some other aspects that the contract should address are confidentiality and non disclosure, ownership of code and payment terms.

3. Maintain regular communication channels- Even more than technical skills communication, or lack of it can make or break an outsourcing project. Deadlines might be frequently missed because of time zone differences or cultural gaps. You can prevent cost and time overruns by keeping in regular touch with your remote team members and clearly communicating your requirements

Mature outsourcing partners will have a part/ full time project manager who will be your single point of contact and manage the project. Absence of this critical resource is a red flag and clearly outs the vendor as a novice or a non serious player.

You can use tools like Skype, Google Hangouts, Basecamp, GitHub or Pivotal Tracker to manage your remote team members.

4. Draw up detailed specifications- Don’t even consider outsourcing until you know what you want your partner to do. This calls for advanced planning and well thought out specs.

How do you decide the scope of work or determine what features should go into a MVP? How do you create detailed wireframes, mockups or an overview document? Talk to prospects. Look at the competition. While an experienced vendor can guide you with the details you will have to give them something to start with.

Once you have done multiple projects with a company or have established a long standing relationship with them the level of documentation can come down gradually and a high level scope document will also work.

5. Don’t be Uncle Scrooge- While one of the draws of outsourcing is lower costs you can’t get expect to get very far with $5/hr developers. Pick developers or a development team who charge above average rates and have a track record- you will end up saving money in the long run.

Another model that ensures good performance hinges around giving a deeper stake to your vendor above and beyond a flat fee. This can be anything from an offer to hire the developer as a permanent employee or releasing a bonus if the product meets certain goals (like number of users) are met.

6. Measure and evaluate continuously- All teams need to know what the delivery benchmarks are. This means that you have to set certain Key Performance Indicators (KPIs) in the contract and tie payment to their completion. Some of these KPIs can be delivery dates, modules designed and lines of code


You know you have a good outsourcing partner when they ask questions about the why and what of the product.

You know your outsourcing partner is the real deal when they say no, even if there is a risk that they won’t get your business.

And last but not the least your outsourcing experience will be fruitful when your budget matches your expectations.

Nothing is what it seems: even Frank Abagnale turned over to a new leaf and ended up consulting with the FBI to prevent financial fraud.

Don’t write off outsourcing as something to avoid. There are thousands of startups who have used outsourcing for everything right from their concept stage to prototyping, product development, support and QA.

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