Entrepreneurs are busy. Building a company from the ground, while battling a mountain of adversaries is a humbling and tiring task. Gaining adequate funding, press, clients, and growing a brand in a market already overflowing with companies is a difficult task that encompasses dozens of difficult tasks.
The numbers are there to prove it. Less than 7% of startups succeed long term, with even fewer getting acquired or going through IPO. There are oppositions and struggles that pose hurdles to entrepreneurs from every angle, and it requires perseverance and intelligence to come out the other end successfully. Many startups die out because of lack of funding. Others fail because they cannot achieve product market fit, or uniquely and distinctly establish themselves in a niche market. Others collapse internally, lacking the structure and organization of a more developed company.
Among the many challenges that entrepreneurs go through, facilitating a timely, effective, and high quality development process is one that often consumes much of the entrepreneurs resources and impacts the development of the business during its initial stages. A company's ability or inability to effectively orchestrate, manage, and produce a cohesive and competent development team will have large implications on the company's success or failure over time. Thus, miscalculated actions or mistakes in outsourcing that entrepreneurs make can have lasting consequences on the growth of the business.
On the flip side, one of a startup's strongest assets is a fantastic outsourced development team. In fact, many successful companies have built their products using outsourced development teams. Companies like Slack, Skype, Github, and Mindspark are a few of the many companies that gained their success from an initial outsourced development team. If done correctly, this can save limitless hours and resources that you can then reinvest into your business.
Some companies never even consider outsourcing because they are worried about it ruining the business. However, by avoiding mistakes, an entrepreneur can have a fruitful experience employing an outsourced team. Here are a few of the worst outsourcing mistakes that entrepreneurs make that you should be sure to avoid.
1. Going cheap
Many people fail to understand the true costs of offshoring your product development. Many small business that lack sufficient funding or profits will be quick to look overseas when finding a development team. Unfortunately for these companies, in the long run in can do more harm then good. While it is true that a merit of outsourcing is that it should help you save money in comparison with employing a full-time employee, this doesn't mean you should be cheap. The lowest rates often come with a high cost--poor quality. In other words, you get what you pay for. Create a reasonable budget and stick to it. Never compromise quality to save a few dollars.
2. Neglecting the importance of location
Failing to grasp the culture differences in your development team will put your business at risk of having an outdated product. Culture standards for development and design vary across areas. The learning curve of your team can cost your business thousands of dollars. While it might be cheaper to outsource your development, this might not be the most beneficial move for your business. Before hiring someone in a different country, consider the culture and time difference that will impact your relationship and communication with the worker. Make sure that you are fully aware of the impacts that the location of the outsourced team will have.
3. Failing to properly manage the team
Without an experienced product manager or in-house IT professional, directing an outsourced team will be difficult. Despite the talents of the outsourced team, it is still necessary to manage them directly. Whoever you hire, regardless of their level of competency and skill, they will need guidance and instruction. As a manager, you need to check in on their projects, the progress of their work, and be able to articulate feedback. Your communication should be frequent and should stress projects that you want completed while making sure that assigned tasks get finished in a timely manner
4. Misunderstanding the cost
Outsourcing isn't always the cheapest way to go. Sometimes, given the efforts and resources taken to make sure the outsourced team is on track and performing effectively, it actually costs more to hire employees from abroad rather than employing in-house workers. Tasks that require attention to detail, account management, or tasks that can be completed in-house should be completed in-house.
5. Believing that an outsourced team comes fully prepared
Lots of entrepreneurs think that their outsourced team comes equipped with all of the skills and knowledge necessary to complete the task. However, even those who have all the skills may still require training specific to your exact needs for the project. Regardless of who you employ, there will be training that is necessary. Effectively onboarding and communicating with your outsourced will be key for their success. The App Solutions, popular app developers, stated "quality development is critical to a company's success. Investing in your development means investing in your business."
Communicating with an in-house development team is hard enough. Sending this information to someone in a different continent makes you vulnerable to miscommunication and error. Software and hardware development is an extremely intricate, involved process that involves social interaction and the frequent exchanging of non-objective concepts that often require in-depth communication.
Going overseas for development work puts you at risk of data loss and security threats. In fact, companies are 31% more likely to have security hacks if they outsource their development.
8. Observing external features without looking internally
If an app seems to work, many project managers will assume that it is quality work. Even if the app looks perfect and works perfectly at first try, the code may be configured poorly. If the code is programmed poorly on the backend, your entire app may be worthless. You need a technical expert overseeing the process.