How to outsource IT startups the right way

For successful partnership with startups, it is important to think as a startup and be on the same page with them. What does it mean? Let’s take a look at three different scenarios.

1. Startup with an idea

For example, the customer is an entrepreneur who comes to us with an idea and would like to start a project from scratch. He doesn’t have any previous experience in agile software development or lean startup methodologies. He has private funding and cannot afford to hire a dedicated team. The idea is not clear, business assumptions haven’t been tested, and the project scope cannot be defined at this point. The majority of outsourcing companies refuse to work with such customers.

We are not the majority.

We do our best to fully understand the idea and to establish a partnership. If the idea is clear, we help the customer to compass the software development lifecycle, and together we plan how to test the assumptions they have, within their limited budget. Sometimes the most effective way is just to built a UI/UX concept or MVP and try to validate the assumptions with potential clients and elicit feedback. Sometimes it is even possible to make the first sales of the future product.

So step by step we go through different stages, helping the customer to reach success. The most appropriate contract type here is fixed cost and equity sharing.

2. Startup with experience

Another category of the customers are startups with experience in technical area, with a knowledge of the lean startup methodology and software development lifecycle, and with a clear vision of what precisely they want to develop. They are funded by angel investors or perhaps work in an incubator.

This case requires the full understanding of the startup’s roadmap. It’s very important to know the goals and deadlines for the next 6 months. Knowing the plans of a startup will enable us to fine-tune the whole development process to cater to these plans.

The appropriate contract types here are dedicated developers.

3. Startup with funding

Startups which already have venture capital funding, great startup experience, excellent technical and business knowledge are the third group of the customers.

The only possible way for an outsourcing company to work with such a startup is to have the same mindset and the same great knowledge and technical skills. Avoid unsolicited ‘teaching’ or ‘counselling’. The only thing which counts is being able to deliver valuable increment every sprint with relevant quality and on time.

The appropriate contract type would be dedicated team on an hourly rate basis.

Thus, becoming a part of customer’s team in the business is the best solution in all cases.

Maximum responsibility for the success of the customer’s product is the best value an outsourcing company can bring.

Alexander Karabasov, business development in SoftMediaLab