How Not to Wreck Your Startup with Offshore Software Development Services

Oct 09, 2017


Offshore software development services can kickstart your new IT startup business, helping you cut through the competition. Yet if things go wrong, your startup may well become just another failure on the digital scrapheap: poor code, stolen ideas, and all sorts of problems that unlucky IT startups can face when they outsource their development needs. How do you prevent this from happening and outsource software development the right way?

Offshore Development for Startups: Doing It Right

Developers Recruited Exclusively for Your Startup

Do Your Homework Before You Hire an Offshore Development Team

Outsourcing is not just a way to reduce software development costs. Today, most companies view outsourcing as a strategic decision that facilitates rapid scaling, access to a wide talent pool, and fuel for innovation. In addition to evaluating offshore developer rates, you should consider a number of other aspects that would make you a good outsourcing provider. These include knowing the model of your chosen outsourcing company model, ensuring code quality, brushing up on local labor laws, guaranteeing internet access and speed, and taking cultural differences into account.

Make sure that you invest enough time into research. Gather background information about your potential outsourcing providers, ask for references and advice from someone who has experience working with offshore teams, delve into research on related forums and discussions, and check B2B review platforms like During the negotiation stage with a potential provider, you can even ask for the provider’s client list, allowing you to consult their customers first hand. 

You should also research different outsourcing models and find the one that suits you best. For example, with the Daxx model, you get to select and interview developers personally, meaning that you can hire a developer with the background and experience that match your requirements. However, in this model you work with the developer directly, without an intermediary in the form of a project manager. This means that if you don’t have someone with the technical expertise on your side to manage the offshore software developers, this particular model won’t work for you.

Outline Requirements

Before you pick an offshore development company for your startup, you should also prepare a thorough specification that sets out your requirements. Not only will this help you during the development process, it will also allow you to evaluate the team as they progress. 

Make sure there are no hidden requirements or business-related information that you haven’t shared with your team. Put every important detail in writing, visualize requirements, or discuss them together with your team to make sure you don’t miss anything important. By doing this, you will make sure the business objectives and product requirements are 100% clear and understood by every team member.

Set and Maintain Quality Standards

Having established your architecture and coding standards, you should be able to keep the quality of your end product in check. Keep your own rules and standards properly documented in a form of an internal Wiki, which should then be shared with your offshore development team.

Regular code reviews and architecture audits can help you avoid a situation where you need to rewrite a large amount of source code to fix a single bug or to implement more features.

Moreover, this practice will be worth its weight in gold if you decide to change or grow your team: With solid code standards and best practices in place, any developer worth their salt will be able to understand and work further with the source code available.

Another vitally important aspect you should keep an eye on is quality assurance. Make sure you have established QA processes in place before outsourcing. Moreover, QA should be conducted regularly, at all stages of the development, not just at the end. A benefit of Agile methodologies is that you get to test various parts of your product early on in the process, which helps identify the areas for improvement. 

Make Sure You Can Manage the Project Effectively

Even if you manage to hire the best development company around, poor management can still lead to poor outcomes. Project management is difficult, and with a team that is located hundreds of kilometers away and speaks a different language, things can unravel quickly if they aren’t properly maintained. 

It is impossible to deny the value of professional project management for outsourced projects. A research even shows that 80% of “high-performing” projects are led by certified project managers.

A good manager knows how to write clear professional specifications, understands the coding side of the work that needs to be done, and has experience with risk management and planning budgets. 

Keep a Close Eye on the Project

In an ideal world, you could delegate all sorts of work to your offshore software development center and wait until they get back to you with a perfect end product. Unfortunately, this simply is not going to happen. Moreover, even a professional project manager won’t be able to do all the work running a project alone. With the destiny of your startup at stake, you have to give the development process fanatic personal attention. 

Research suggests that almost one third (33%) of software development projects fail because of a lack of senior management involvement in the development process. Similarly, an IBM study shows that top management sponsorship is a key factor for a successful change in project management.


Source - IBM

Be sure to follow the bug tracker, respond to your developers’ requests and questions as soon as possible, and test every new release yourself. This may require a lot of time, but it'll be well worth it in the end.

Make sure to provide timely feedback on every detail, be it in the form of positive comments or corrections. Make sure your team understands your point: provide context, talk about what’s wrong, and suggest ways to improve it. Don’t put too much pressure on your team, because it’s natural to make mistakes. Try to understand what went wrong and how to avoid similar situations in the future.

Prioritize Communication

Most challenges that startups face when working with an outsourced software development team are the result of a lack of communication. Some 57% of project failures are due to inefficient communication between the parties involved.


Source - IT Cortex

While weekly or even daily reports from a project manager can be a good way to keep up with the team’s progress, an efficient two-way communication requires much more effort than that.

There are many tools you can use for internal communication and collaboration, from instant messaging and video conferencing programs (Slack, Skype, Hipchat, Google Hangouts, etc.) to dedicated collaboration and task management platforms such as InVision, Yammer, G Suite, Trello, or Asana.

Of course, it is best to communicate with your team in person, at least at the early stages of development. Therefore, if you choose to work with IT outstaffing model, we recommend visiting your offshore teams. Alternatively, you can invite the team to your office and provide initial training and onboarding on-site. Remember, an airfare is cheaper than the cost of a failed software development project. 

Make Sure You Are Protected

Having your team members sign NDAs or Non-compete agreements is a common practice. In most cases, IP rights and confidentiality terms are included into the standard agreement. Moreover, this makes sure that every professional developer is aware of the principles of IP ownership and Work for Hire. 

If you still don’t feel safe enough, you can set up a private repository to store your code on a cloud platform, like GitHub, BitBucket, or GitLab. You will have total control over which people have the rights to access your source code. This will also help you keep your assets safe even in case of a force majeure.

Invest in Proper Onboarding and Training

If you decide to hire offshore developers using the outstaffing model, make sure to make them feel like a part of your core team. A proper onboarding setup can play a vital role in the future success of your cooperation.

Add your new team members to the communication and collaboration networks you already have in place, agree on which tools you will be using for project management, code management, and the like. If possible, organize a company meeting to introduce your new employees to the rest of your staff, and make sure to clarify the areas of responsibility and the main points of contact in your core team.

Some projects might require additional training or multiple briefings. While most business owners are hesitant when it comes to team building and training expenses, recent research shows that by having a proper on-boarding process in place, you can increase your new hire’s productivity by up to 50%.

Invest in Proper HR and Retention

Another potential reason for startup failure is the fact that developers have the tendency to move around a lot. As mentioned above, every employee needs a certain amount of time and training to become productive. If your team has high turnover rates, this can significantly slow down the development process and lead to poor quality products.

The Daxx model is successful because we take care of all HR-related operations and employee retention processes. During the recruitment stage, we also try to find a perfect match between the developer and the client to ensure a successful long-term cooperation.

Work with a Trusted Technology Partner

Daxx has already helped over 85 clients, both established businesses as well as startups, to set up their outsourced software development teams in Ukraine. We offer a flexible, transparent and risk-free cooperation model that allows you to access Europe’s largest tech talent pool and save on labor costs, while also enjoying the stability full-time employees.

Here’s how it works

First, you specify your business needs and the skills you’re looking for. Then, our recruiters get back to you with candidates that are a perfect match for your requirements. 

You will then personally interview those on the shortlist, after which you can select the best candidates to become members of your offshore software development team.

We will place your engineers in one of our offices, which are located in Kyiv, Kharkiv, or Dnipro (Ukraine’s largest tech cities), and you will then go on to manage them directly while we take care of HR, team retention, payroll, taxes, and every other aspect related to maintaining a dedicated development center.How Not to Wreck Your Startup with Offshore Software Development Services, hire software developers in Ukraine


Read also:

How to Handle Time Zone Differences When Working With Offshore Software Development Teams

What’s It Like to Work with Ukrainian Developers?

A Look at Holland’s Startup Scene | Where Can Dutch Employers Hire Top Programmers?

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