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Startup Should Be Outsourcing Software Development Company?

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Reading Time: 8 minutes

If you have been running a business since a decade, maybe outsourcing would be a new word for you. However, in today’s changed business landscape, businesses spend around $731 billion on outsourcing.

We all know that running a business is hard. But it is much harder for startups in their early five years. Like most people, if you think every startup opened in Silicon Valley turns into Microsoft, Uber, and Facebook, you need a reality check.

10% of startups fail in their first year, and the remaining 70% do during years two to five.

So, what can you do to maintain sustained growth and make your startup successful?

Take away image for outsourcing software development services

The number one reason for startup failure, around 42%, is negligence in understanding the market condition. The second most significant reason is that 29% of startups fail due to insufficient money.

Top reasons why startups fail statistics

So, running a startup takes more than just a passion, an idea, and… a bit more passion.

Passion without flexibility and far-sightedness becomes a noose for a startup that ends everything.

That’s why when it becomes difficult to juggle different jobs and starts choking your system, it is better to extend your arm and take the help of experts with a workforce that knows its work.

It is better to outsource your critical business processes to spend time doing something better than keeping an eye on your SDLC (Software Development Life Cycle) and doing team management.

What is Outsourcing?

The dictionary meanings of outsourcing pretty much explain the scenario:

Meaning of outsource

So, you can say that:

“Outsourcing is the process of taking the services of outsource companies, or third-party companies, to accomplish a task that your workforce can’t achieve due to incapability or insufficient resources.”

That’s what can become a turning point for a startup.

The moment when you are trapped in the world of ‘Do it All Yourself,’ figuring out how processes work, dealing with various management hurdles, and raising funds for the startup – is the right time when an outsourced software development company can help you.

So, no wonder that 66% of businesses in the US outsource outsourcing companies for one of their needs.

Outsourcing statistics in the US
Data Source: Zippia

Similarly, if startups feel that complex processes have become a hurdle in their progress, they can leverage the help of an outsourced company.

Life becomes a lot easier – PHEW!

What is an Outsourcing Company?

An outsourced company provides third-party services to another company helping:

  • Complete tasks
  • Run operations
  • Deliver services
We offer customized talent on demand services

However, unlike the popular perception, an outsourced company isn’t always residing in another country.

There are four types of outsourcing:

  • Offshore outsourcing
  • Onshore outsourcing
  • Nearshore outsourcing
  • Backsourcing

Based on these types of outsourcing, here are a few kinds of outsourcing companies:

1.     Offshore Company Outsourcing

An outsourcing company in another country that provides services or products to companies in other countries.

2.     Onshore Company Outsourcing

This type of company offers services and products to companies in the same country.

3.     Nearshore Company Outsourcing

Nearshore outsourcing company gives services to other businesses in neighboring countries.

Check out the pros and cons of hiring outsourced companies, then choose them based on what suits you the best.


Did you say why you should outsource software companies when you can build your own company? Well, here is your answer.

Why Should Startups be Outsourcing Software Development Companies?

Why a company should outsource services


  1. Cut the cost and avoid going bankrupt
  2. Hire experienced individuals
  3. Get high-quality products & services
  4. Save time for other essential works
  5. Satisfy customers with what they want

IT and accounting are the most outsourced works among small businesses.

Most commonly outsourced tasks
Data Source: Zippia

Let’s admit that building a team is a headache alongside a burden on your pocket.

Hiring, maintaining, and keeping an eye on the team takes work, significantly when you are trapped in many other things. It can also be a significant blow to your pocket.

However, this cost (and a headache!) cuts to half when you hire people on demand from a software development outsourcing company because:

  • They already have a team of fully-vetted engineers
  • Experience is their fort because they have been doing it for years
  • You have to hire outsourcing company, not pay them individually

That’s why the cost is the number one reason startups outsource services.

How many small businesses outsource a business process
Data Source: Exploding Topics

It helps them get some grip on overflowing cash flow that is always ready to run out of their hands due to the following reasons:

  • Poor budgeting plan
  • Making lousy investment decisions
  • Inability to raise funds
  • Inadequate financial undertakings
  • Not having a robust marketing plan

These are just a few reasons that shake the cash flow of startups. So, outsourcing is the answer if you don’t know what to do with your startup’s critical process.

#2: Reduce Employee Hiring Headache

Getting into the race of running a startup means you are fighting for a piece of the pie that many others are craving. It is a do-and-die situation, and on top of that, your employees are slipping because of the turbulent condition. What will you do in this situation?

“Rates are rising, and money is no longer free, which has massive implications for valuations and fundraising.”

Sequoia Capital’s dire “Adapting to Endure” slide presentation

You have two solutions in this situation:

  • Keep hiring one after the other (and get trapped in this vicious cycle!).
  • Outsource talent on demand to focus on other essential things.

What would you do in this situation? You might want to build a team, but the benefits of outsourcing out numbers hiring.

Top reasons why companies outsource different services
Data Source: Deloitte Global Outsourcing Survey

However, this is a two-way process. Besides employers, employees are also stepping forward to prioritize their likes and dislikes. Here are the dominating trends among employees:

The dominating trends among job candidates
Data Source: Job Street

That’s quite a turbulent situation. Nevertheless, outsourcing software development companies can cover this void by ensuring a better work environment and offering startups exceptional talent on-demand services.

#3: Get Better Quality Products

You don’t have a margin for any mistake when you have put everything at stake. With an entrepreneurial mind, you might think you are a genius and can do it all yourself. But this overconfidence can be the killer of your dreams.

Why do companies outsource

Among eight reasons why companies outsource services, three reasons somehow touch the borders of getting better quality products, including:

  • 47% to solve capability issues
  • 31% to enhance service quality
  • 28% to access to intellectual capital

All these reasons combine to help produce better quality products that capture the market and customers’ hearts.

In case you are drenched in the idea of being the one-man army and smitten by the bug of know-the-best, come out of this mindset.

Embrace flexibility and let the expert do their work to get the product of your dream without any lingering bugs.

#4: Save Your Precious Time

While living in a world where around 137,000 startups are launched every day, startups need to launch at the right time when they can get the most traction. Therefore, every second defines the fate of the startup.

Do things on time. Time is important

So, your success story doesn’t just need an idea and talent; it also requires the right time for launching the product.

This can be a shallow well for your startup if you try to run all tasks in-house because many factors can delay the process. However, the story is different when you hire an outsourcing company.

They have sources, tools, an experienced workforce, and know-how.

While your competitors may be busy finding the right fit for their job, your hired outsourcing development company will already pull the correct string to mesh a smashing product for your market dominance.

#5: Customer Satisfaction

Customer retention is the ultimate goal of all businesses. Nobody begins a startup just to kill time. The ultimate goal is to run it successfully, enter the Fortune 500 game and earn big bucks.

That’s where customer satisfaction comes in.

How outsourcing services helps business outcomes
Source: Aecus

Outsourcing plays a crucial role in customer satisfaction as well. Customer retention automatically becomes easier when you create the best quality product according to customer’s needs and offer it when they want it the most.

And when you can retain customers, which is very difficult in today’s world with so many options, customer satisfaction also comes in as a bonus because:

  • Customers get what they were looking for
  • Their expectations are fulfilled
  • They don’t get attracted to other products
  • People’s hard-earned money is spent on the right product

All these factors combine to enhance customer satisfaction and boost your business.

Frequently Asked Questions

  1. Why is outsourcing good for startups?

Running a startup is way tricky, so outsourcing gives you a lending hand. You can handle critical processes, keep your workforce busy in other growth-boosting areas, and save your money from getting down the drain.

2. What are the cons of outsourcing?

Where outsourcing is usually said to be beneficial for small companies, it is not always the case. Outsourcing has some cons, such as communication barriers, cultural differences, misalignment of time, quality control challenges, and slow response time.

3. Why is outsourcing important for your startup?

Outsourcing decisions can make or break your startup because the early-stage startup stage is very fragile, where managing operational functions, making hard decisions, and budgeting is essential. Outsourcing helps hire less headcount, saves money, and lets experts perform critical processes while you can perform other vital tasks for growth.

4. How can outsourcing stop employee turnover in startups?

Startups mostly hire a small workforce that can burn out due to the high workload. However, outsourcing processes and operations lessen the work pressure and prevent turnover, which is very common in startups due to overworking.

5. Why is outsourcing a good strategy?

Outsourcing is a good business strategy because it cuts costs, lessens the burden on the workforce, streamlines business processes, and lets businesses focus on growth essentials.

6. Who benefits from outsourcing?

Outsourcing helps all those startups and business owners who get trapped in critical business processes and overspend on the workforce. The outsourced companies allow them to come out of all these troubles and let them focus on their core competencies.

Final Words

Startups save around 66% of costs by outsourcing software development services. Saving such a considerable cost in the initial phase of the business gives you multiple benefits that start showing their results later.

If you don’t know where to begin things despite the outpouring of passion and energy, then take it as a red signal that you need the help of a third party to execute your tasks seamlessly.

You might feel reluctant because it was your dream project, and you wanted to do it all by yourself, but let the concept of one-man-army remain part of stories and dream. Be practical in reality!

Analyze your requirements and practical aspects and let the outsourcing goods wrap up your business for all the right reasons!

Our Talent on demand services turn your dream into a reality

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