Key drivers that influence a Tech Startup’s Software Outsourcing Decision

1. Mindfire Solutions is a 20+ years old, 650+ people software development and testing services company with a global clientele. We offer custom web and mobile solutions for companies across all major industries.

2. For any Startup, challenges are plenty — from developing a robust business plan with the available capital, followed by setting up a software development team that has the necessary expertise, and subsequently marketing it fast and good enough to beat the competition. But if the entire edifice is heavily dependent on software, either as a pillar or an enabler, possessing the right capabilities holds the key to everything else. And if the choice is made to outsource, enough focus and importance have to be then given towards making the right decision. The Grant Thornton International Business Report on Outsourcing, states that the demand for Outsourcing amongst mid-sized businesses and Startups remains very strong and is growing. According to the survey, the key drivers for Outsourcing are ‘Increased Efficiency ‘and ‘Reduce Cost’ which allow businesses to focus on their core business strategies.

3. The frantic pace of digitalization and globalization are rapidly changing the customer’s expectations, giving a fillip to the Outsourcing industry. Outsourcing has reshaped the way businesses operate and has emerged as the best bet for business setups to stay relevant. As per reports, the global IT Outsourcing industry was valued at $3.18 bn in 2020 and is only expected to grow significantly in the coming future. Given that Outsourcing is the new norm, for a Startup, choosing the right IT Outsourcing partner is of critical important as it has the potential to make or break a business. In this article we address some of the key drivers that influence a Startup’s outsourcing decisions: Will the software partner select the right technology? IT technology and expertise play a critical role in gaining the necessary efficiency and speed in delivering a top-notch product. It is therefore prudent to do a get first-hand information about the IT Outsource partner and what they bring to the table.

4. Check with the IT outsourcing partner about the tools and technologies they intend to use for the project and how are going to handle the outsourcing needs requirements. Will I get a fast-enough release? In a world where speed, quality, flexibility, and cost are more important than demography, the time required for developing the product is paramount. In this age of changing business scenarios to be able to make the cut, the turnaround time has to be really quick. Needless to say, if the IT outsourcing partner fails to meet the deadlines, it can lead to major bottlenecks. Startups need to ensure that their IT Outsourcing partner adheres to the agreed-upon quality and timelines. One of the ways to ensure this is by having a well-defined Product Scope and a comprehensive Service Level Agreement, where each point is well thought out and each point is discussed threadbare with the IT Outsourcing partner.

5. What is the risk of IPR infringement? In pursuit of efficiency, cost-effectiveness, and being competitive, Startups shouldn’t ignore the risks involved in their Intellectual Property Rights and take the necessary steps to protect them. Starts Up’s should clearly define the importance of their IPR and the supporting legal framework to their IT Outsourcing partner. The startup can approach the IT Outsourcing partner with some key questions, like: - Protecting the confidentiality of information? A reliable IT Outsourcing partner will always offer to sign a Non- Disclosure Agreement before brainstorming sessions with the client. For a Startup, it’s important to take note of the agreement period, pinpoint the categories of information that are covered and excluded, and if the partners subject to the agreement are properly stated and represented.

6. - Data Protection Determine if the IT Outsourcing partner has the means and capacity to safeguard the IP from unauthorized use, loss, or theft and guarantee secure connections. Can they set up two-factor authentication, a robust password policy and password updates policy, a well-f VPN tunnel, firewalls, and disc encryption? Can they safeguard home routers for remote work? How often do they check for system updates and what antivirus do they use? - Process of effective IPR transfer? Startups must enquire about how the IT Outsourcing partner approaches the collaboration and the ownership of the resulting product. This will help Startups avoid dealing with a company that wants to create its own products at its expense. - How do I manage an outsourced development team? First and foremost is to find an IT outsourcing partner who is reliable and trustworthy. One way

7. of doing it, is to check the client reviews of the perspective IT partner, the client base, and the projects executed. Apart from that, the infrastructure, back-ups for downtime, safeguards, and the availability of the team will give a fair idea about the reliability of the IT partner. Communication between Startup and the IT Outsourcing teams play a key role when developing a software product. The differences in time zone, culture, and language are other factors that need to be considered before managing IT Outsourcing development teams. The IT outsourcing partner should be competent enough to understand the requirements clearly so that there are no delays in the completion of the project. How do I accommodate the volatile changes in the market? In today’s day and age, the most critical component for companies to survive is to initiate and respond to change in a manner that creates advantage, minimizes risk, and sustains performance. Since the environment in Startups is more volatile, the challenge therefore in balancing advantage, risk, and performance, is more critical than say in bigger companies.

8. - Respond to Change It is critical therefore to proactively scan the environment for risks and opportunities while keeping a tab on whether the IT Outsourcing partner is doing the same. This singular focus is imperative for innovation and survival — the right product at the right time. - Agility How effectively does the team identify and respond to the change? Through effective communication, leadership skills, trust, and teamwork, this mindset can be ingrained to appropriately analyze problems, risks, and take responsibility to respond to problem-dictated and market-dictated changes, while maintaining the day-to-day business activities. This is known as Management of Unplanned Changes — basically how well the Startup reacts to the crises. - Flexible Attitude Is the IT Outsourcing partner and the team capable of handling the changes? Do they have the creativity and the ingenuity to address the issues of change that may require digressing from the work cut out? Are they glued to enhancing the customer service? The more flexible the team is to adapt and focus on customer needs, the faster it will adapt to the changing environment positively thereby providing the desired result for the Startup.

9. Can the software partner ramp the team up and down fast? During the course of a project, it may happen that the scope either grows or reduces during the course of product development. In such a scenario, the IT Outsourcing partner should be able to ramp up or ramp down and respond to the situation positively. A reliable IT Outsourcing partner will enable a Startup to think and act “big” by utilizing the available economies of scale, efficiency, and expertise that large enterprises enjoy. To conclude, it should be noted that Outsourcing is not just passing some tasks to an external team but A Strategic Collaboration with a firm having deep and specialized knowledge. As the requirements constantly evolve, the industry continues to build support with both established and new solutions. For an Outsourcing partnership to be successful, the client should be prepared to invest and the IT Outsourcing partner should be willing to embrace change. In the near future outsourcing will be a significant factor in providing short-term resilience and long-term growth for Startups.

10. If you need assistance in software development and testing, Mindfire Solutions can be your partner of choice. We have gained significant experience over the years working with a diverse global clientele. With a team of 650+ highly skilled and certified software professionals, we have developed many custom solutions and software products for them over the years. Click here to know more about us and our portfolio of services across industries.

11. Content Source: Medium Contented by: Mindfire Solutions