Guide on outsourcing software development for startups
We have been part of the Slovak business scene for a relatively short time, however we’ve already received numerous offers for developing projects from the startup scene. Startup is a magic word that has gone mainstream in recent years and driven great changes. I’d like to share my perspective on how startups should work and cooperate with software development companies like ours.
NO TO SHARES
Project oriented software houses live from long term projects, SLA’s and relationships between partners. Even though they do work for startups as well, they are not startups, nor do they act like them. They are real business oriented companies. Their programmers are not lured in with the promise of million dollar exit strategies when the startup’s growth explodes and it can be sold. Neither do they have other paid jobs in the way that startup programmers often do. The money for software houses comes from finished projects or from bank loans.
All of this means that offering shares of a startup for software houses for low cost or even free development holds little appeal. Software house can sometimes work for production costs, or even below these costs, but believe me that this happens only in an emergency or on an incredibly promising project which, 99.99% of startups are not.
NO TO ACADEMIC MOTIVATION
Startupers frequently ask what my motivation is to work for a startup. My answer is very simple; I want my company to survive and grow. The only way to do this is paid work that delivers quality and a good product. One ensures survival, and the other, growth.
NO TO COMPLEXITY
How can we tame the price for startup projects? It’s all about the MVP, the Minimum Viable Product. Yes, the startup bible “The Lean Startup” mentions it on almost every page, but people still go big with their ideas, trying to run before they can walk.
An application should focus on and solve one problem. Try to handle that in the simplest way possible. Don’t be so demanding on graphics and visuals. They will be changed many times after release. Just look how many times Facebook, Instagram or even Microsoft changed the look and feel of their applications. If you keep it simple, the price for an MVP can be somewhere about 12.000 eur.
This price does not cover long time development, SLA, scalability of the solution, software documentation or a 100.000 user ready environment. These requirements should come right after the correct market fit is better known.
NO TO PROJECT SOFTWARE HOUSES?
Is it a good idea for startups to use outsourced development? From my point of view, definitely yes. The simple reason is that once a startup signs the contract, they can be almost 100% sure the project will be delivered. A software house will come up with solutions to make it on time, in scope and at the required quality. Another bonus, of course, is that they will use legal contracts, not just promises. If software company didn’t do that, it would quickly go out of business and end up bankrupt. Of course, if the MVP goes well, the software company can have a long term client relationship, which is exactly what these companies love to have.
You may wonder whether an internal IT team is better for such development. Arguments can be made to support either side (as you can read above), but there is no rule saying that a software company cannot become an internal development. In business nothing is impossible.
We keep our fingers crossed for every startup, whether they choose an internal development team or use one of the many good software houses to help build their dreams.