One of the biggest questions people have about outsourcing is usually: “Will it work for my project?” The answer of course is… It depends.

There are lots of situations where outsourcing can be extremely advantageous, and it would be impossible to go through them all in these blog posts. However, what we can do is show you some of the more common situations to illustrate the kind of problems outsourcing can solve for you.

The following are three common examples of when and why outsourcing can be a good option. You’ll also see an illustration of the common mistakes people make when choosing a vendor. Each is followed by a real Case Study from one of our clients at Dedicated Developers.

The Secret of Startup-land: a tale of bootstraps, sleepless nights and desperate measures

The Story

You wake up with a start, feeling woozy and confused. Your head hurts, partly from the banging headache, but mainly because you fell asleep at your keyboard and your forehead has been firmly resting somewhere between the G and U keys for the last hour.

It’s no longer dark outside; there’s sunlight creeping in the window. “My wife is NOT going to be happy,” you say to yourself as you haul yourself out of your chair and try to find your keys…

“Another wasted all-nighter, how the heck am I going to get this thing off the ground?”

For the last 6 months you’ve been trying to build a new B2B web and mobile app, but it hasn’t exactly been smooth sailing.

For a start, you know nothing about programming; so your first thought was to talk to some friends from work. It didn’t take you long to find someone willing to help. Of course, it was barely five minutes before your ‘friend’ got bored, became unresponsive and eventually left you stranded.

It wasn’t too bad at this stage because you hadn’t yet spent any money, and you could hardly blame your friend; he already works a 40-hour week without your extra project on top.

Keen to make sure you didn’t lose your momentum, you decided to take the leap and try one of those freelancing websites everyone’s always talking about.

It was a lot easier than you expected; almost too easy! Pretty much from the moment you posted a job explaining your requirements, you started getting applications from developers.

All sorts of people applied: from freelancers in Asia and Eastern Europe, to seemingly big software development companies, and even engineers from, of all places, Silicon Valley, who were charging even more per hour than you get in your good sales job.

Choosing just one provider was difficult; they all seemed so very similar. In an effort to be diligent, you picked the three best looking candidates and offered them all a phone interview.

The first guy, a freelancer from Eastern Europe, missed his interview, rescheduled, and then found himself unable to answer your questions due to a language barrier. You promptly crossed him off the list.

Next up was a Chinese firm who sent you a clearly copy-and-pasted proposal BUT seemed to have a professional attitude and good reviews. After speaking with them you became a little more confident they would be able to do the job, and the price was cheaper than you expected. However, they seem to be used to simpler projects and weren’t keen or able to arrange a time for you to speak to the actual engineers who would be building your product.

Finally, you set up an interview with an American firm; you figure they’ll at least be able to talk to you. Surely, they’ll be good as well, right? I mean… they’re American.

After just a short chat you’re excited, REALLY excited. They seem to know exactly what they’re talking about, they understand you AND they’ve invited you to come and meet their engineers and go through your specs so they can price it up.

A week later, you’re walking out of their plush office having signed a contract and forked over a small fortune as a “commencement fee.” Even so, you’re excited… you’re app is finally going to get made.

Fast-forward a few months… You’ve deemed it the “death spiral,” because it seems that’s what happens when you hire a developer.

After an initially impressive start with development progressing faster than you could have hoped for, you begin noticing “red flags.” Your team started taking longer to respond to emails; sending you build updates once a week rather than twice, and well, the thing didn’t really seem to be working.

You’ve been paying out money left, right, and center for new features, “unexpected expenses,” and who knows what else. The total is getting close to 5 figures, and you’re afraid to tell your wife.

Eventually, you get a call from your vendor: “We can no longer work on your project because of blah, blah, blah.” You zoned out at that point because it has happened again; back to the drawing board. You put the phone down…

It was at this point, overwhelmed by stress and exhaustion, that you fell asleep at your keyboard.

Here’s the thing: this is not an uncommon experience for startup entrepreneurs. In fact, you could argue it’s pretty normal.

The trouble is, the person in this story really only has himself or herself to blame. Although it isn’t their fault that they got let down, they should have been more savvy and serious about their business decisions.

To be more specific, here are the biggest problems most startup entrepreneurs face when having their software built…

The Problem

  • Many startup entrepreneurs are not technically savvy, so it’s easy for unscrupulous vendors to take advantage of them.
  • Equally, lack of technical experience can lead entrepreneurs to have unrealistic expectations about what is possible and what things are likely to cost; so unless they find a partner or vendor who can educate them, they are setting themselves up to fail.
  • Of course, being a programming wiz is often a curse as well. If you do all the coding yourself or insist on managing the minute details, your speed to market will be much, much slower than if you learn how to delegate.
  • As a startup entrepreneur, you are often the one responsible for everything, and it can quickly become very difficult to occupy yourself with anything other than busy work.
  • When you’re on a limited budget, as most startups are, value for money is absolutely key to success. For every penny that’s wasted, you move one step closer to disaster.

The Solution

If we were to say there was a way to guarantee the success of your startup we’d be lying, because there isn’t. However, here are a few guidelines that will make you much more likely to succeed:

  • When getting your app built, realize that unless you have your own team of reliable, committed engineers, outsourcing is not only an option… it’s the ONLY option… where you can get quality and value for money. But…
  • You have to do it properly and professionally or you’ll be burned, big time. The easiest way to avoid that is to follow the process outlined in this series of blog posts.
  • Plan for the long-term; find a team that can support you while you grow, so you can avoid painful bottlenecks.
  • As far as possible, keep your costs fixed, or at least predictable, so you can budget effectively and stop the business from imploding.

In The Real World

Neil Venketramen was NOT a newbie entrepreneur when he came to ask us for help with developing the Lean Buddy mobile app for his new startup. In fact, he was already an accomplished CPA and businessman. Yet…

Even after thinking through his options carefully and doing his best to choose the right vendor, Neil found himself in a tight spot.

He’d decided to go with a firm from Chicago because they seemed to produce high-quality apps and software, and being in Chicago himself, it seemed logical to hire a local firm.

Here’s what Neil said about his experience with them after spending $10,000:

“We realized that they had provided us a half-baked scope and quotation and architecture that could not work.

They said the first milestone delivery was to be one month after the kick off.

Four months later, they stopped responding to e-mails and phone calls. They knew perfectly well that they couldn’t do the work, they needed more money and effort, and the problem is we lost a lot of time, resulting in at least $50,000 in lost revenue. We have cases pending against that company in the court to re-coup some of our investment with them.”

This experience isn’t uncommon with smaller development teams. They’re renowned for over estimating their capacity and expertise to the point where they have to bail out on projects.

Also, they will often find themselves getting a “better offer” from another client half way through a project and switching some of their resources over to it in an attempt to increase revenue without expanding their team. Obviously, this usually ends in disaster.

Regardless, the important thing is making sure you avoid having this experience yourself and the answer lies in what Neil says here:

“The mistake we made with the other company was that we did not do the full detailed scope. They gave me 3 or 4 screens, they came back with a good scope and basically what they thought the app should be and it was a disaster.

We found that with Vishal of Dedicated Developers, he took the time to prepare the scope diligently and we went through all the pieces. More importantly, they went back and put it in the documentation. We actually recorded 2 calls. Piece-by-piece they asked questions and then knew exactly what we wanted.”

You see, a detailed scope is what gives you authority and power when it comes to managing your development team. Without a proper scope, it’s easy for things to go off track and spiral out of control before you can fix them.

Without proper oversight and control, you’re going to end up wasting a lot of money.

Also, without wanting to brag, the integrity of your vendor makes a huge difference.

If they’re going to stop communicating rather than be honest about difficulties they’re having, both of you are in hot water.

If they’re going to promise things they can’t deliver, nobody is going to be happy.

Ultimately, the integrity of your vendor, their ethics and attitude are far more important than almost every other consideration.

In Part 2, you’ll meet another Businessman, and learn how he overcame his challenges.