4 Reasons Startups Should Outsource Software Development

Software outsourcing can be difficult to get right. In the past, people have normally associated the general term "outsourcing" with negative adjectives and negative emotions.

However, all of that began to shift a few years ago with the advent of new technology and people coming to realize that outsourcing is viable not only for big companies, but also for startups.

As we enter into the 2020s, software outsourcing is becoming easier and more accessible than ever before. Below are 4 reasons why I think all startups should begin to outsource their software development in the new decade.

1. Big tech companies are leveraging software outsourcing

That's right. You didn't misread. Big companies all take advantage of outsourcing. I was also shocked to learn this fact after my co-founder (who interned at Google) told me that Google outsources a significant portion of their software development to India.

After doing some research on my own, I realized that many other successful tech startups like Slack, WhatApp, and Skype all took advantage of outsourcing to help them get to where they are today.  Here's a cool article I found that talks a bit more in detail about how those companies did it.

If big tech companies are using outsourcing to their advantage, then why can't small tech startups do the same?

2. Cost efficiency of software outsourcing

It goes without saying that one of the main reasons people outsource their software development is to save costs and operate their startup more efficiently. Most startups in the US can't afford to innovate freely due to the high cost of software human capital. Based on Glassdoor, the average software engineering salary in the US is around $107,000/yr (not including benefits like Healthcare, 401k, and PTO).

The cost of hiring a full-time dedicated developer (160 hours/month) from the Aloa Partner Network is only $5000/month or $60,000/year. This cost not only includes a full-time developer, but also QA and project management.

All Aloa clients also receive full access to the Aloa Platform and a dedicated Aloa Outsourcing Strategist to help with effective outsourcing strategy.

A lot of investors across the country have also warmed up to the idea of software outsourcing. If you're a startup founder trying to raise investment capital, telling investors that you've built your product using highly vetted overseas developers is not only impressive, but also shows that you will be prudent with their money.  

3. Newly available technology makes software outsourcing more viable

Part of the reason why outsourcing has had a bad rep in the past is due to a lack of technology that can facilitate the outsourcing experience. Over the past 4-5 years, new software technology has made software outsourcing more effective.

Can you imagine communicating with your outsourcing team via email? Or even worse, managing a software project using Microsoft Excel? It would be an absolute nightmare!

Luckily with tools like Slack, Asana, and TransferWise, anyone is now able to communicate, manage, and pay their outsourcing team with ease. On top of that, all of these platforms have available APIs you can integrate with, making the software development process more transparent for clients.

Our own product, the Aloa Platform, is a vertically integrated platform that allows for anyone to find, manage, and pay outsourced teams all in one place.

4. Software outsourcing helps you scale by freeing up your in-house team

As Aloa Strategist, I've worked with many in-house development teams in helping them expand their software development bandwidth. Many CTO's and Head of Products I work with choose to leverage software outsourcing not only to take advantage of the low cost, but also to avoid burning out their in-house developers.    

If you have an in-house development team and are on-the-fence about software outsourcing, here are a few tips that could help:

  1. Keep your core technology in-house. This could mean core functionalities, algorithms, and even UI/UX design.  
  2. Keep your in-house development team lean. This means having a CTO, a lead engineer, and maybe a few developers in-house.  
  3. Outsource all secondary and non-core tasks to your overseas team.

If you follow these tips, you could scale your product a lot faster but at a fraction of the cost of expanding your in-house team.

Concluding thoughts

By now, you definitely got my point. Outsourcing is the future and you definitely want to take advantage of it as a startup. I'm sure you have a lot of questions, and I'd be more than glad to answer them!

Feel free to hit me up anytime through my email: dawei@aloa.co

P.S. If you'd like to learn more about software outsourcing and how to outsource effectively, we have a ton of other resources on effective outsourcing. You can find them here.

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