Why Outsourcing Product Development Makes Even More Sense For Startups Now

If you're building a startup, you most likely already know a new boss is in town. It is called efficiency. The approaching economic downturn can be felt in the air; some of the biggest scale-ups are laying off hundreds of their employees, funding rounds are getting tighter, and already-made investments are even more closely scrutinized by investors. Startup founders are forced to optimize their budgets, but the challenge of developing their product fast remains unchanged. We've been providing remote teams for our clients since 2018, and we see an upsurge in demand for outsourcing talent daily. With remote work mode blurring the geographical borders, outsourcing is the new black, and it might also be the only way out for fresh out of the oven or Series A-B startups. So, let's see what exactly it is that an outsourcing product development team can offer startups in these tumultuous times.

Saves You Time

With so many layoffs from some of the giants, startup culture is becoming less and less cool-sounding for top talent, slowly becoming associated with uncertainty and instability. Add that to an already significant discrepancy between the supply and demand in the tech talent market, and you get hours on hours of your recruiter's time spent searching for suitable candidates, screening, interviews, tech assignments, and, if successful, onboarding.

With an outsourcing company, you get access to a vast talent pool of already vetted professionals who have gone through the process you would have to embark on yourself. Typically, you meet several candidates and see which one fits your culture and needs the best. But, most importantly, it happens very quickly. Cutting out that time means that your time to market skyrockets. You free up time and headspace to focus on other vital issues such as talking with customers, investor relations, marketing, and business development.

Saves You $$

Hiring a tech team costs a lot, both pre-hiring and post-hiring; we are a team of more than 170 - been there, done that. The significant problem startups face right now is that with tech talent demand increasing at lightspeed and the supply failing to catch up, and well, global inflation, those existing professionals come with obscene hourly rates and long-term commitments. With outsourcing, the contract with your partner company is usually much more flexible and results in a nearly 30-40% reduction in what would have otherwise cost you to keep everything in-house. Add office space, equipment, health insurance, paid sick days, and vacation to the already higher hourly rates, and you see a very tangible price arbitrage between hiring the team internally and outsourcing, where all those expenses are already covered.

One critical point is that, in most cases, outsourcing gives you access to the caliber of talent that would be out of your league financially. Eastern Europe has been cooking up a robust tech hub for a while, primarily due to some giant enterprises entering these markets and the systematic stimulation of the startup ecosystem. So, with the talent shortage in the Western markets, these regions became the go-to destination for outsourcing, ultimately stimulating exponential talent growth and maturity.

Reduces Managerial Pain

Navigating funding and product development as a non-tech founder or a fresh, out-of-the-gate startup was always a pain. But with more conservative funding rounds, startups need to get on their A-game fast because very few investors proceed with deals without real, tangible traction.

To get closer to product-market fit and show some traction, founders need to iterate over the product quickly and effectively. However, it's excruciatingly hard to simultaneously build your team and product, talk with users, do marketing and sales, secure funding and streamline the processes to be efficient at all of those.

Needless to say, the speed at which you can roll out new features to users is often the decisive factor for a startup to take off. So, while a product might require 20 iterations to get you closer to product-market fit, whether one iteration spreads over one month or is wrapped up in two weeks can make a difference whether your runway is enough to get you there or not. Ultimately, an experienced team can significantly decrease the time to traction.

With outsourcing, you get a team that already has efficient processes in place for streamlining the development process and achieving the needed velocity for effectively iterating on the product. We have helped dozens of startups with that. Our dedicated agile teams allow you to focus on talking to users and product ownership while you get efficient execution from the outsourced team.

Final thoughts

In the current climate, more than ever, startups need to maximize their runway, and the most oversized item in the budget is usually product development. Outsourcing product development can shrink it by as much as 30-40%. In addition, it allows companies the flexibility to choose the suitable engagement model that works for them, whether it's staff augmentation with a few professionals or an entire dedicated team.

If you are researching outsourcing options, in our humble opinion, Eastern Europe is the paradise you've been looking for. You can also check out our services and engagement models here.