Entrepreneurship, CTO Insights

Outsourcing Tech Projects: Thoughts from our CTOs

December 18, 2020

For many companies who are just starting up or trying to scale, outsourcing can be the most cost effective way to find technical resources to build tech solutions. However, outsourcing a project successfully on the first attempt is not easy, especially for those with no technology background.

 Outsourcing development to offshore tech companies (“offshoring”) has been a popular tactic for many companies over the years due to the differences in the cost of labour in those countries compared to their own. However, many companies learn that the initial savings on cost are outweighed by additional problems from having these workers be so far away.

 Consequently, “nearshoring” is becoming a more popular alternative for those who would rather work with teams that are perhaps more expensive than offshore resources but have similar business cultures, as well as time zones. For example, a company in London may decide to nearshore to another European country such as Portugal or Poland rather than off-shore to an Asian country such as Vietnam or India where the cultural differences are wider and language, in certain countries, can be a barrier.

The key to successful outsourcing is to structure the relationship between your company and your technology partner clearly so that all parties are clear as to their roles and responsibilities. Regardless of whether you decide to hand over development of your project to a company that is near to you or further away, it is crucial that you have this clear structure as well as points of contact within your team who understand the business and can efficiently communicate with the outsourced team to transfer the knowledge the need to become useful resources.

Outsourcing tech development is a big step, it’ll consume a significant part of your budget and you are going to be reliant on the team you choose for a long period of time so it is important to think of this as a partnership and spend the time researching companies, talking to references and others that you know that may have outsourced work to the same country. 

A team that understands your current challenges and future needs will help you to avoid potential hidden costs that will arise from the need to handhold or train the team. Successful outsourcing relationships are ones where both parties take a long term approach to the engagement. Those experienced in the industry know that works often ebbs and flows and for start-ups especially there may be periods where tech needs to be delivered at a fast pace to meet customer needs or new opportunities that might arise. Finding a tech partner that can help you through these periods is crucial as your company’s ability to respond to a new opportunity may make or break it.

When looking to engage an outsourcing tech partner, think of it as any other hiring process: know the skill set you are looking for, come with a defined set of requirements that need to be fulfilled and have a robust mechanism in place that allows you visibility into the way that your potential partner will work and have the ability to influence how the work is performed. It is also important to get to know the people behind the company; the company may have an excellent marketing scheme that tells you they have worked for some tier 1 clients but what did they actually do for that client and how deeps is their knowledge and practical experience in the technologies you wish to deploy?  

As with any hiring process get references and speak to them. By asking the right questions to the right people you may discover that developers have listed that they have worked with technology that they only have a cursory knowledge of or may have worked for a world famous clients in a fringe capacity. Also ensure that you talk to the people that will actually be working on your project. Many companies will put their best staff in front of you to win a sale but when the true work begins they may be bringing in the B-team. To that end always make sure you have a designated point of contact within the company you hire and that you have clear lines of communication to that person.

At Atom CTO we have been working with nearshore and offshore teams for the past 20 years and have built and run teams across the globe. We work with companies such as yours to derisk outsourced projects and can act as the bridge between your business and your technology partner so that you can concentrate on generating leads and driving sales.

If you want to hear from our CTOs directly on this topic then listen to this podcast by myself and Sam Noble, where we share our experiences with both nearshoring and offshoring