Here is everything you need to know about hiring a dedicated offshore software development team for your early-stage startup, including why and where to look.
Imagine. You are currently enrolled in the Y Combinator startup program. You've been hard at work on your product idea for a few months, but you've recently realized that you need to pivot.
You're certain you'll need to create this game-changing product or feature to show that your concept is worth investing in. Now you only have one month to create something completely new and present it to venture capitalists at demo day.
However, you require assistance because you lack technical expertise for this particular feature or product.
Should you skip in-house hiring for outsourcing?
Yes, is our response. But, before we reveal all the secrets of successful overseas hiring, you must consider the following critical factors in order to survive and succeed in a startup's dynamic environment:
- Conflicts between co-founders should be avoided at all costs, as they can derail your startup from the start. According to Harvard Business School professor Noam Wasserman, 65 percent of startups fail because of this.
- Get everything done as soon as possible. The startup benefits from a product that enters the market quickly.
- Pay a reasonable amount of money. Investors typically fund startups after seeing an MVP (Minimum Viable Product) that validates your business model. As a result, it's critical to stay within the budget (which is usually not very large) when creating the MVP.
- Maintain a high level of quality. You must strike a balance between the speed, price, and quality of your MVP.
- To save money, take advantage of remote work (especially since everyone is working remotely during the COVID-19 pandemic).
- Sounds difficult, right? Yes, it is. If you hire offshore developers, on the other hand, you can take advantage of all of the above issues and create an MVP to impress investors.
What Are the Benefits of Hiring Offshore Developers for Your Startup?
The following are the reasons why companies prefer software development outsourcing to in-house development:
- It's a low-cost approach to product development. According to Quartz, 37 percent of startups fail due to a lack of funds. If you hire offshore developers, however, this problem is unlikely to arise. Overhead costs such as office rent, payroll, insurance benefits, vacations, recruitment fees, and so on will not be covered by your funds. Instead, you'll direct funds to the most compelling domain, resulting in an MVP. Furthermore, because of the lower cost of living in offshore countries, developers' rates are typically much lower than those in the United States and Western Europe. Hiring a dedicated development team from Eastern Europe, India, or Latin America can be two to three times less expensive than hiring one in the United States.
- Increased productivity and time savings. A team of offshore developers can save you time and money by not only lowering costs but also speeding up the development process. As you may be aware, time is critical for any startup, as each one is born in a competitive environment. Furthermore, with a dedicated development team, you won't have to waste time training new employees because each outsourced developer already has the necessary skills. Finally, you won't have to worry about project management or HR tasks like employee retention because a vendor development company will take care of everything. As a result, you will be solely focused on your work.
- More talent than you'd expect to find on the job. IT outsourcing allows you to tap into a larger pool of talent than you would be able to find on-site. The tech giants, for example, employ the majority of developers in California. They earn a lot of money, have a lot of perks, and feel relatively safe and comfortable with their current employers, whereas startups are risky, so hiring developers for a startup in the United States is much more difficult. Offshore countries in Asia and Eastern Europe, on the other hand, are brimming with skilled developers who would happily join your startup.
- Flexibility. Scaling your in-house team or changing the technology stack to fit the project's stage and scope will be difficult. However, because such changes are common in startup environments, flexibility is essential. The good news is that outsourcing developers are adaptable, and you can move them between projects quickly, especially if you work with them through a dev shop.
- Fewer conflicts. Personal relationships between co-founders are commonin startups, and these relationships eventually turn into business relationships. Because business interactions differ from personal interactions, this can lead to misunderstandings and conflicts. For example, a guy you've known for a long time might reveal a dark side of his personality in the workplace.
As you can see, hiring offshore developers can help your startup run more smoothly. After all, it was outsourced teams that created Skype, Slack, Github, and other apps.
Where Should You Begin When Hiring Outsourcing Developers?
Check the following items off the list before hiring developers for your startup:
- Define your company's objectives and be prepared to communicate them. First, figure out what problem you're trying to solve with your initial MVP, as you'll need to explain this to the developers you hire. Determine the primary goal of your product that must be met, then break it down into smaller, measurable milestones and set approximate deadlines for each.
- Determine the project's skill set. To begin, identify which technology stack(s), expertise, and skills you'll require for your project. After that, decide which roles you'll require for the project. Do you only require developers, project managers, quality assurance analysts, or business analysts, for example?
- Make a budget. Budgeting is a common pitfall for any startup, so make sure you plan everything down to the last penny. Define your initial capital as well as the areas where you can save money, focusing on the most important. Find the investors to whom you will present your MVP ahead of time.
- Gather data on offshore locations. There are many offshore countries to choose from, each with its own set of benefits and drawbacks. Shortlist the countries that are closest to you in terms of time zone and culture, and consider the best price/quality ratio for offshore development.
How to Find a Developer for Your Startup
It's time to move on to the next stage and hire development teams now that you've completed all of the necessary prerequisites.
The following resources can help you find a dedicated development team for your startup:
- Referrals (recommendations) from people you know.
- Networking at conferences, hackathons, and community gatherings.
- Using freelance portals to find developers or teams.
- Using tech talent marketplaces to find developers.
- Using social media or LinkedIn to find offshore developers or teams.
- Using the services of offshore software development firms.
The Challenges of Offshore Software Development
Outsourcing offshore developers are undoubtedly beneficial to your startup, but you should be aware of the following challenges when searching for candidates:
Differences in Time Zones
Latin America (Argentina, Chile, Brazil, Colombia, Mexico, Costa Rica, Uruguay, and so on), Eastern Europe (Ukraine, Belarus, Poland, Czech Republic, Serbia, Hungary, Bulgaria, Romania, Armenia, and so on), and Southeast Asia (Bulgaria, Romania, Armenia, and so on) are the most popular IT outsourcing destinations (especially India).
It may be difficult to synchronize the time when both the in-house and offshore development teams are online if your offshore development team is located in a different time zone.
You can, however, use this challenge to your advantage by selecting the correct time zone.
For example, if you are in New York and hire a dedicated development team in Ukraine, the time difference will be only 7 hours.
Furthermore, because Ukrainian time is ahead of New York time, Ukrainian software engineers may already be eating lunch when you wake up.
The good news is that they finished some work before lunch and it's ready for you to look over.
Hiring an offshore team of developers from India, on the other hand, will result in a time difference of more than 10 hours and, more importantly, in the opposite direction.
It means that when you start your working day, your offshore team members will still be sleeping, potentially disrupting your workflow. Regardless of which country you choose, modern timezone management tools can assist you in overcoming this challenge.
Lack of Face-to-Face Communication
"Offshore" means "located in another country," so there will undoubtedly be a distinct barrier between in-house startup founders and remote developers.
There is, however, a solution: you can go to the offshore team's location from time to time, meet your remote colleagues in person, spend some time with them, and break the ice.
Believe it or not, such trips would be less expensive than a startup failure due to poor hiring decisions.
Another option is to hold regular video conferences and begin them with small talk about what's going on in your lives, rather than with work-related questions.
Too many vendors to pick from
On the offshore market, there are a plethora of software development vendors, which can provide both benefits and confusion. It's difficult to pick among the thousands of agencies that offer you the opportunity to hire offshore developers and build a relationship with them.
You could spend a lot of time on platforms vetting outsourcing agencies and still make the wrong decision.
Differences in Culture
When working with offshore development teams, it's important to know the difference between low-context and high-context cultures.
The following is the shared context culture:
- Particular to the United States and Europe, including Eastern Europe
- Is based on words and facts
- Open to new ideas
- Using the agile methodology as a guide
The high context culture is:
- Devoted to China, India, the Philippines, and other Asian nations
- Is based on emotion and trust
- Not focused on meeting the deadline
- Unwilling to change
- Using the waterfall methodology as a guide
If at all possible, we suggest hiring offshore developers with a similar culture to yours. As a result, you won't have to spend as much time learning about and adapting to the new culture.
You could also hire a few dedicated software developers from the same country or region to speed up the process and improve communication.
How to Find and Hire Offshore Developers for Your Startup
So, how should your hiring process go, and what are the telltale signs of a great offshore development team?
Here's a step-by-step guide to hiring developers for your startup:
- Make a detailed job description. Make sure you've listed the project's functionality as well as all of the necessary skills for a developer to do the job.
- Check to see if the developer or outsourced team has a track record of success. Look up their ranking on sites like Clutch, see if they have a LinkedIn profile, and see which clients they've already worked with. Ask their previous clients if they can recommend this remote team or developer if at all possible. If you're a non-technical founder, make sure your technical co-founder (if you have one) is enthusiastic about helping with the selection process. If you don't have a technical co-founder, hire an IT consultant (a knowledgeable technologist) to assist you in making the best decision possible.
- Make sure you have the most up-to-date code. Unfortunately, due to potential personal conflicts, the developer may refuse to release the code. As a result, we recommend that access to the source code be one of the project's requirements. You should also be the owner or administrator of all related accounts on Github, TFS, clouds, and other platforms.
- Ask for information about the outsourcing development company's workflow. Investigate how they deal with clients and assign developers to projects. Inquire about their flexibility, such as whether they can add more developers during the course of a project. It's possible that the development company's workflow will not meet your requirements; therefore, you should be aware of this before hiring a remote team and signing a contract. Remember the NDA (non-disclosure agreement); you have the option of requesting the NDA signature even before the development team begins working, for example, during the interviews.
- Reject the lowest-priced quotes. Concentrate on cost-effective solutions. You may end up paying more at the end of the project if you get cheap quotes because someone else will have to rewrite the poorly written code. Again, never be embarrassed to request Stack Overflow or GitHub profiles of developers to check the code quality.
- Check to see if the remote team agrees with everything you're saying or if they'd rather argue. It's a red flag if the developer or software development company claims to be able to meet all of your requirements. It means they haven't thoroughly examined your requirements to see if they can be met with their skill sets.
- Be proactive in your approach. One of the most important soft skills for a startup founder is proactiveness, especially when working with an offshore development team. If your remote team members are awake and working while you are sleeping, try to be one step ahead of the next day's tasks. As a result, when you wake up, you'll be confident that everything is still on track.
- Make it a point to deploy regularly. Request that your offshore developers show you the MVP demo at the end of each sprint, which should be done on a weekly or bi-weekly basis.
Finally, make certain that your team complies with the following guidelines:
- Follows your instructions and completes your assignments. People in some cultures are afraid of admitting they don't understand something. It's your job to let them know it's fine to ask questions. It's better to deal with all of the problems now rather than later when it's too late. Bring up this issue if you believe they are only saying what you want to hear.
- Understands your industry and has completed at least one similar project.
- Has prior experience working with startups.
Choosing an offshore development team for a startup frequently asked questions
What are the primary benefits of hiring offshore developers for your startup?
Budget constraints are one of the most common reasons for startup failure. Hiring offshore developers will be able to meet business needs while not depleting the company's funds by eliminating overhead payments such as payroll, office rent, and so on. As a result, you'll have more money to spend on the things that really matter. Furthermore, you will be able to hire some of the world's best and most talented developers, who will be an excellent addition to your in-house development team.
What are the top offshore locations in 2023 for hiring software engineers?
Eastern European and Latin American countries have the best price-quality ratio in 2023.
When working with offshore developers, what collaboration tools are required?
Managing a remote development team is difficult for any CTO, VP of Engineering, or founder, but collaboration tools make it much easier. Of course, whether it's remote pair programming tools or code collaboration tools, it's also critical to use them correctly. It is recommended to learn about the eight collaboration tools you'll need to stay in touch with your remote development team and collaborate effectively.
Should you hire a freelancer or an outsourcing agency?
Both options could work, but if you (or your investors) require more trust and security, we recommend hiring a dev shop rather than using freelancers from Upwork. The reason for this is that when you work with a dev shop, you can rest assured that the process will be transparent, that communication will be smooth (as per the previous agreement you had in your documents), and that developers will meet deadlines. Because you have less control over the process, a freelance programmer is a less reliable option. Using a dev shop to hire developers can be more expensive. Nonetheless, you'll have access to client reviews, thorough documentation, and, in some cases, a project manager to oversee the process from afar.
Where can you find the best developers?
It is preferable to look for and hire the best offshore developers in Eastern Europe and Latin America.
Hiring an offshore development team is the best option for a tech startup. Startup founders will save money and time while receiving a high-quality MVP in this manner.
Before hiring a startup developer, however, you must clearly define your requirements, determine the required skill set, plan your budget, and begin looking for offshore locations.
Furthermore, be aware of the difficulties you may face when hiring offshore developers, including time zone differences, a lack of personal communication, and cultural differences.
Consider the following factors as well:
- A track record of success
- The most recent code is available
- The untrustworthiness of the cheapest quotes
- Time and materials payment model vs. fixed price model
- Not allowing the rest of the team to agree with everything you say
- Tool for project management that works
- Extensive deployment
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