These are some of the most common questions asked by entrepreneurs considering Ruby on Rails outsourcing. If you have other questions or have a pertinent experience to share, please participate in the comments below!
Is outsourcing for everyone?
By no means. Outsourcing is not a magic pill, and probably will not be an ideal solution for everybody. You may benefit from outsourcing in the following cases.
- MVP development for an early-stage startup
- Side projects for SMEs
- Bulk of programming work for digital agencies
- Bulk of programming work for IT departments of larger businesses
- Bulk of programming work for established startups with internal technical core teams
What do investors say about outsourcing software development?
In our experience, VCs generally have two concerns: the startup should retain technical expertise (you could address this concern by having an in-house CTO or a technical cofounder), and the startup must own the code (a good lawyer will help you address this concern).
It’s been said that outsourcing software development is like hiring a nanny for your kid. Wouldn’t it be better if you took care of your child without involving other people? Probably, yes. Does it make you a bad parent? I don’t think so.
Although ideally, you would probably prefer to keep your software development in-house, sometimes it’s just not practical or economical. To learn more, I suggest checking this topic on Quora (https://www.quora.com/Code-outsourcing-from-a-VCs-perspective-if-a-companys-code-was-written-overseas-would-that-be-a-non-issue-mild-concern-or-major-concern-for-VCs).
Why do startups/businesses outsource?
Probably the most common reason for outsourcing is to cut development costs.
There are a few other important gains though. Some startups value flexibility (having the ability to adjust the size of the development team to their needs); others want to avoid hiring costs and do not want to wait until (and if) they can find a good developer locally, or escape hiring hassles and fees altogether.
For early-stage startups, outsourcing is often the only practical solution, regardless of whether they have a technical co-founder or not.
How much can I save?
How economical outsourcing will be for you depends on many factors, including:
- Whether you employ developers locally (as opposed to working with contractors)
- The salary of local developers (e.g. if your startup is based in Silicon Valley, you’d probably save more when compared to Berlin-based startups)
- The duration of engagement with the outsourcing partner (typically, the longer the duration, the lower rate you could get).
- The billing model you choose (dedicated team model tends to provide the biggest financial gains, when fixed cost model is typically more expensive)
Generally, outsourcing can cut the cost of development by 40%-70%, if you factor in the cost of vacations, insurance, sick days, hiring costs, administrative costs, etc.
What if the outsourcing company steals my idea?
I don’t want to say that it never happens, but I don’t think it should be a major concern. First of all, startup ideas are rarely unique. Most likely, you already have competitors working on the same or similar ideas. Additionally, remember that it’s really hard to launch an idea. It requires many skills, market knowledge, and domain expertise. While programmers are good at programming, it’s just not enough.
Nevertheless, that doesn’t mean you should neglect basic security measures. At a bare minimum, I encourage you to always use NDAs (Non-disclosure Agreements) and work only with trusted companies who have an investment in their reputation.
Should I worry about cultural barriers?
Well, you need to consider cultural barriers when selecting an outsourcing agency, as they can impact the productivity of your remote developers. A few tips for minimizing the negative impact of cultural barriers are: look for teams in culturally similar countries (e.g. if you’re based in the UK or Germany, you might want to limit your selection to providers based in Eastern Europe); interview developers before hiring; always insist on the option to replace a developer if you believe the cultural match is not good enough; and, last but not least, check references.
Is it true that remote developers are less qualified than on-site employees?
You need to compare apples to apples. Top developers in the US or Germany are not that different from top programmers in Ukraine, Bulgaria or India.
Is outsourcing only for big companies?
No. Small companies/startups, as well as individual founders requiring help with building MVPs, can benefit from outsourcing too. Just make sure you select your outsourcing partner wisely. Aside from other factors we’ve discussed, your partner should be big enough to provide a good level of service, and small enough to treat you seriously (e.g., large outsourcing companies are rarely a good match for early-stage startups).
Contact us to see if outsourcing software development might be a good strategy for your business.