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Outsourcing -- an inevitable road to failure or a way to optimize the burn rate?

gorovenko profile image Aleksey Gorovenko Originally published at nix-united.com ・1 min read

Outsourcing firms might be savvy and helpful about both technology and industry expertise for inexperienced and confiding startup founders. This is how consulting companies gain trust and even dominance in negotiations and future business.

In my experience, every collaboration, when a buyer is in the submissive position end up with frustration and regrets for both parties. This happens because outsourcing partner will never replace inhouse personnel.

However, IT giants (Google, Microsoft, IBM...) are hiring more outsourcing firms and continue to expand remote teams. Seem like they knew something everybody else hadn't learned yet and chances are, most of the startups won't find out ever.

Moreover, for many reasons [wfh, quarantine, covid] hiring outsourcing agencies became more desirable and extremely popular in 2020.

I submitted some of my thoughts on this matter to the article How To Outsource App Development -- it is a good starting point for those who haven't ever tried to outsource engineering but already considered.

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mitchpommers profile image
Mitch Pomery (he/him)

Outsourcing is great if you have distinct, well defined pieces that are only loosely coupled to what you do and aren't your main business. Think about small utilities or marketing apps/websites. They are distinct pieces that you could give to an agency and be confident that they can deliver of them.

But as soon as you try to outsource a core part of your business or something that differentiates your business you increase the likelihood of a subpar result or failure. You could have issues with integration, lose knowledge once the contract ends, or end up with someone who doesn't care about your users as much as you do.

Similarly when hiring contractors and consultants you are doing a form of outsourcing. While they may be in your office while doing the work, the knowledge and experience they gain will leave with them. If you aren't getting them in for a specific skill set that you only need temporarily or making sure you learn everything you can from them, you will have a hard time when they leave.