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Why Software Development Outsourcing is Important for Startup Businesses?

Becoming a startups founder has become more challenging than ever as he or she has plethora of tasks that need to be taken care of. And with time constraint, it’s not possible to handle everything. More importantly, at the beginning stages, startups would often encounter the common problem of funding limitations and shortage of in-house staffs. These two problems often go hand in hand and usually prevent startups from achieving their fullest potential.

In order for start-ups to effectively compete in one of such competitive business conditions, their founders need to be able to strategize and prioritize their operations so that their core products or services can be developed quickly for launching, capturing the larger portion of market-share.


The failure rate of start-ups is extremely high at over 90% and one of the primary reasons leading to failure is due to poorly technical product development. Lack of in-house team resources and technical inexperience are among reasons leading to such failure.

Outsourcing the bulk of software development to other organizations can help start-ups achieve the objective of fast launching, especially when time is of essence. Overall, software outsourcing doing right is particularly helpful as it offers startups access to both short and long-term customized IT expertise, staying within budget and allowing an optimal focus of resources on other core competencies of startups.

What is Outsourcing?

Most startups are comprised of founders who are driven, intelligent, and team of enthusiastic employees. However, one or two founders cannot do and manage every single task of their organization at once. Also, as mentioned above, one common problem startup often has to face is the shortage of staffs. And budget is another issue preventing startup from hiring skilled developers or team of developers.

For example, a startup looking to raise fund would need to have their core product or an MVP (minimum viable product) developed as quickly as possible. Outsourcing the technical development of MVP allows startups to quickly complete the process, launching into the market and attract investment from venture funds.

Thus, many startups turn to outsourcing to help them solving the challenge of technical implementation. With software development outsourcing, startup founders can speedily have access to qualified IT talents and only have to pay for the work needed during the development period. Startup founders should be able to recognize the tasks that should be outsourced so they can have more time and focus on other core aspects of their business such as raising funds or scaling up.

Here are some of the benefits of software development outsourcing for startups:

1.      The Essential Time-Saving

Many trivial and repetitive tasks can be quite time-consuming and unnecessarily take up the bulk amount of time from startup founders. And it is more important for startups to focus on developing long-term strategy for growing rather than wasting time on repetitive but time-consuming tasks.

Outsourcing many time-consuming tasks such as payroll processing, accounting, IT helpdesk etc. enable startup founders to save time and focusing on other core business competencies.

Specifically, with software development, outsourcing partners will help startups throughout the various stages of hiring and selecting the most qualified engineers customized for the project requirements. As a result, startup founders can save themselves a lot of time on the hiring and interviewing process.

2.       Easier scale up

In the startups world, many new founders might not yet grasp the tremendous benefits of outsourcing. As your start-ups starting to grow and expand, the resources required for scaling is also increasing. At one point, the growth rate will outpace in-house staffs capacities. And growing is one of the important factors ensuring the success of startups. Thus, founders need to take necessary actions in advance to avoid labor shortfalls.

One of the steps can be taken is to outsource the bulk of smaller and less important tasks to other companies which will help startups save lots of efforts as well as allowing  in-house team to focus on other critical tasks. However, specifically when selecting vendors for software development outsourcing, founders need to pay attention to a particular number of factors to ensuring the best one is chosen.

Additionally, for many Fintech startups with a focus on Blockchain technology, there is a very high demand on skilled blockchain developers so hiring ones could prove to be a challenge. As a solution, founders can also consider the model of hiring dedicated offshore developers to work as an extension of their existing in-house team.

3.      Greater Competitive Edge

Generally speaking, for tech strtups, having an MVP offers them a better chance of raising funds. When outsourcing the technical implementation to a third party, startups can speed up the time-to-market of their product by leveraging the large pool of IT talents available.

And more importantly, releasing product in the market before other competitors would provide startups with a better competitive edge staying ahead of the competition.

4.      Cost Efficiency Option

In addition to shortage on human resources capacity, startups most often face the problem of budget limitation (due to lack of funding in earlier stages) and that would deter them from investing in It infrastructure and/or hiring the skilled developers developing the technical tasks.  Suppose that a newly established startups providing their core services via mobile app, such startups would need to have an extremely accomplished team of software engineers to build the app ensuring quality. The investment on such resources is long-term and can be very costly.

With outsourcing, startups only have to pay for such resources during the period needed without long-term commitments. This can be a very cost-effective solutions for those startups while still ensuring quality. Outsourcing vendors will usually charge based on different engagement models such as hourly rate or per project basis. Whichever method, outsourcing still proves to be cheaper than hiring local.

5.      Concentration Other Important Things such as Fund-raising and Networking

As a new business, startup founders feel like they have to manage and do everything themselves. However, it’s better to focus on a certain number of areas that you know and do best, and delegating by outsourcing to other people who are proved capable of doing certain tasks.

Key Takeaways

Software outsourcing is a great solution for startups who are looking to build their products quickly within budgets, without compromising quality.

TP&P Technology is a software development outsourcing company that helps startups across the globe transforming their ideas into life. Contact us today to take advantage of our customized IT expertise to helping kick-start your development project.