What do Slack, GitHub, WhatsApp, and Alibaba have in common? Aside from being startups that ended up being valued in the billions of dollars, that is.
The answer: they outsourced their initial product development to build the best, most cost-effective product they could.
Outsourcing is a valuable option for many startups, who may lack the capital, core technical competencies, or the time necessary to engage in full-on product development.
In this article, we explore these types of challenges that startups may encounter on the road to launching their products, and see how other successful companies have overcome them by outsourcing product development.
What You Need to Consider to Get Product Development Started
Product development is one of the most important and difficult things for a new startup to get right. If you want to end up with an addictive solution that has product-market fit and can gain massive traction amongst your target audience, there’s a whole host of things you have to consider.
From UI/UX design to prototyping and user testing, building your final product will take a lot of time and resources. For many startups, this phase is where lack of funding or technical know-how can prevent an idea from ever going to market.
If you want to set yourself up for success with your product development and avoid these common pitfalls, there’s three basic things you need to consider first:
You should always have a firm idea of your product development cost before you begin. You need to balance this cost against your available capital and forecasted revenue, or else you may end up with a half-built product that you don’t have enough budget left to complete.
Core Technical Knowledge
You also need to understand your team’s core technical knowledge and how it aligns with what your product development needs.
Whether you need front-end or back-end devs, network engineers, or deep learning experts, you have to take stock of your team’s abilities and where your deficiencies are, especially if you’re on a startup budget and lack significant manpower. Startup employees often wear several hats at once, but product development isn’t something one dev can do alone.
Finally, it’s important to determine if the product’s planned scope and scale are actually possible to achieve with your current team.
Even if you can afford the cost and your team has the right skills, you could still end up with a project that’s too big to effectively manage or build within your target timeline.
The Benefits of Outsourcing Product Development
These challenges are all part and parcel of working with a limited budget and workforce.
That’s why startups like Uber and WhatsApp have commonly turned to outsourcing to make product development cheaper and faster, allowing them to bring a more full-featured product to market, even with a small team size and a startup’s budget.
Here are just some of the other benefits of outsourcing your startup’s product development:
Reducing Risk Due To Regular Checks and Feedback
Smaller development teams tend to be pressed on time, so they struggle to check their work, as well as gather and implement user feedback.
By outsourcing your work, you can have a larger portion of your in-house team assigned to testing and evaluating the product’s progress, reducing the chances of major errors.
In-Depth Technical Knowledge And Experience
If your product requires a technical competency that you lack, recruiting and training a new developer might be too costly.
Instead, you can outsource the relevant work to a freelancer or agency who already has the skills you require. This ensures you get a higher-quality product than you’d have by trying to build a solution beyond your team’s capabilities.
The costs of outsourcing may fluctuate widely depending on which country you outsource to, as well as whether you take on a solo freelancer or a development agency.
This flexibility of choice, however, is what allows you to reduce your product development expenses and select the right team at the right price. WhatsApp, for example, went with a top development company in Russia to build the first version of their app, paying far less than they would have spent on a US-based team.
Walking Down the Outsourcing Road
For some startup founders, outsourcing product development might seem antithetical to the whole startup “thing.” After all, aren’t you “supposed” to be doing all the hard work for your idea, since your team knows how best to approach it?
However, outsourcing isn’t a crutch! Proper management of outsourcing still requires you to do a lot of R&D, and you need to sit down with your outsourcing partners to ensure that they’re on the same page as you are.
And more than that, outsourcing allows you to recenter your team’s efforts on growing your business and making strategic decisions. So, with the right combination of in-house skills and a strong outsourcing partner, you can make a robust product that’ll make waves in your target market, all within your budget.
Don’t just take our word for it – just look at Uber and Alibaba. Product development outsourcing certainly worked for them.