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How Not to Wreck Your Startup with Offshore Software Development Services

Author Olena Herasymchuk
Posted Oct 09, 2017
Offshore Team

Hiring a remote team is a surefire way to tackle the tech talent shortage many startups face these days. But you’ll have to put in time and effort to make sure your offshore development team becomes a valuable addition to your business. To help you out, we decided to collect tried and tested insights on remote cooperation from experienced business owners and present them in this article. Learn how not to wreck your startup with software outsourcing and enjoy its multiple benefits instead. 


Do Your Homework Before You Hire an Offshore Development Team

Here are the three main aspects to consider before starting a remote cooperation:

  1. Learn about the available remote cooperation modelsThe most widespread ones are project outsourcing, dedicated team, and extended team. It’s crucial to analyze the cost structure and the quality-price ratio of each model to be able to choose the most appropriate one for your business. Talented software engineers are costly everywhere, but don’t get hooked on the stereotype “the more you pay—the better quality you get.” Some cooperation models will actually have you pay for the time developers had spent on the vendor’s bench before joining your project, “idle” time, and the services of project managers and business analysts. 
  2. Consider various types of contracts. The most common ones are Time and Material, Fixed Price, Rate Card, and Cost+ contracts. Here’s some advice that will guide you in the selection process:
    • If your project is small and its requirements are predetermined, the Fixed Price contract might be a good option. It’s the most predictable out of all cooperation models in terms of budget and timing. And yet it may turn out to be the most expensive one. Vendors are aware that development can require more resources than initially planned, so they increase the fixed price on purpose to cover the possible risks. 
    • The Time and Material (T&M) contract will work for you if you expect your project requirements to change over the course of the development process. Its biggest drawback is that the budgeting control it provides is very low—you never know exactly how much you’ll end up paying at the end of the month. 
    • If you have a long-term project that will include multiple changes in requirements, but still want a high level of budgeting control, cooperate with a tech partner that provides the Rate Card or the Cost+ contracts. With these, you pay your developers’ monthly salaries and a fixed fee for the vendor’s services.
  3. Get an in-house technical expert. If you as the founder don’t have enough technical knowledge or time to communicate with the tech partner and the remote development team on a daily basis, you’ll need to hire a technical specialist to act as Team Lead and/or Product Manager. They will be responsible for documenting the product’s technical requirements and communicating with the offshore team.

Establish a Well-Organized Development Process

A structured software development process gets you halfway to the anticipated results. Here are the steps you need to take to get ready for cooperation with an offshore development team: 

  1. Prepare the requirements to your remote team. Make sure to clearly lay out the tasks that your offshore developers will be working on during their first month. Two weeks is the very minimum, but aim for more.
  2. Define and document the product roadmap and give all team members access to it. This way, everyone on the team will know what changes happen to the product, and will work in line with your objectives.
  3. Choose the product owner, the person responsible for communication with customers and stakeholders. Product owner connects your customers’ needs with the development process, which is why they need to possess in-depth knowledge of your business.
  4. Prepare the tools to communicate with your offshore development team: 
    • instant messaging and video conferencing programs (Slack, Skype, Hipchat, Google Hangouts, etc.)
    • collaboration and task tracking services (Trello, Asana, Jira, InVision, Yammer, G Suite)
  5. Choose a software development methodology. Agile is a good option:
    • If your business requires rapid reactions to modifications 
    • Because it allows the product owner to keep up-to-date with the development team via standard meetings and artifacts.

If you choose to follow a different methodology, you’ll still need to schedule meetings for planning and reviewing work. 
To learn more about best practices for offshore team management, read this article.

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Want to learn more about setting up an extended development team with us?

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Make Your Offshore Team Feel Equal to Your Local One

You need to be ready to compensate for the distance to make both your local and remote developers operate as one integral team. These tips will help:

  1. Build a challenging environment where each developer is continuously learning and improving.  
  2. Hire “cultural fit” candidates to support the environment you’ve built.
  3. Apply the same rules to both local and remote developers—it will help your remote team feel as valued and important as your local team.
  4. Apart from organizing team building events as frequently as you can, ensure your developers have a space to communicate on everyday topics. 

Nicholas Daniel-Richards,
Co-founder of ShipHero

We don’t approach remote team members as resources. We expect everyone to understand, participate, and collaborate with each other just like they would in a single office.

Read full interview

Prioritize Communication

Communication is the key to your success with offshore development, and this is not an exaggeration. Here are a few tips to get your communication process on the right track:

  1. You and your offshore development team should have at least one language in common—otherwise, it will be too hard to explain technical concepts and ideas.
  2. Never give your offshore team silent treatment—sending tasks and saying nothing won’t help you build trust. Instead, communicate with your remote developers as often as possible to minimize misunderstanding. 
  3. Be available to answer the questions of your offshore employees. Make sure you have a product manager on your side if you don’t have time to manage this task yourself. 
  4. At the start of your cooperation, invite remote developers to come to your office at least for a week. If for whatever reason you can’t host them, visit them yourself.
  5. Create several chats in your messaging app and organize them according to topics and employees involved—it’ll make communication more efficient. 
  6. Get to know your employees not only as developers, but most significantly as unique personalities.

Jan Willem Bergsma,
Managing Partner at Xuntos

The main piece of advice I can give to employers is to get to know their employees not only as developers, but most significantly as unique personalities. If it’s not possible to invite remote developers to your office, make sure you communicate with them on a daily basis.

Read full interview

Add a QA Engineer to Your Offshore Team 

Many startup owners try to cut funds and don’t hire offshore QA engineers, as they believe developers can easily check their work themselves. But the truth is that only a quality assurance engineer can fully test your product and even make the development process more efficient. Here’s why: 

  • Without QA engineers, you’ll never know how buggy your software really is. Very few developers are fit to test code the way a dedicated QA engineer does.
  • The longer you go without having a QA engineer test your product, the more technical debt you accumulate. And the bigger the debt, the more time and expenses will go into fixing bugs when the product is finished. 
  • The physical presence of a quality assurance engineer in the offshore development team can improve the quality of your cooperation with developers. This is possible because the QA engineer can discuss your requirements with the developers using the same language.

Lee Parry,
CEO at Enigma Digital

Expertise must be at the highest level as it decides whether you succeed or fail. When there’s a lack of technical abilities in your team and you decide to downturn the scope of your product, it could very well lead to failure.

Read full interview

Never Stop Learning

Building an offshore development team isn’t about following a manual. To keep your cooperation with the remote team successful, you’ll have to change and adapt your business processes based on the results you receive. In addition to that, reading professional literature can also be extremely helpful. Here are the books we recommend: 

  1. To get the most out of the Agile methodology, stay innovative, and learn how to target your audience:
    • “The Lean Startup” by Eric Ries
    • “The Lean Product Playbook: How to Innovate with Minimum Viable Products” by Dan Olsen
    • “Agile Contracts: Creating and Managing Successful Projects with Scrum” by Andreas Opelt, Boris Gloger, and Wolfgang Pfarl
    • “Kanban and Scrum: Making the Most of Both” by Henrik Kniberg and Mattias Skarin
  2. To get practical insight from successful business owners: 
    • “Theory of Constraints” by Eliyahu M. Goldratt
    • “Founders at Work: Stories of Startups’ Early Days” by Jessica Livingston.

About Daxx

Daxx is a technical partner that builds extended development teams and provides process and technical consulting.
Since 1999, we’ve helped more than 300 companies set up, manage, and retain their offshore development teams in Ukraine. Extend your technical expertise through a simple and transparent process:

  1. You specify your business needs and the skills you’re looking for. 
  2. Our recruiters get back to you with candidates that are a perfect match for your requirements. 
  3. You personally interview candidates and select the best ones to become members of your offshore software development team.
  4. We place your engineers in one of our offices in Kyiv, Kharkiv, Dnipro, and Lviv (Ukraine’s largest tech cities).
  5. You go on to manage your offshore development team directly while we take care of HR, team retention, payroll, taxes, and every other aspect related to maintaining a dedicated development center.

If you’re ready to start your development team in Ukraine, contact us using the form below. 

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Olena Herasymchuk

Digital Content Creator

Olena Herasymchuk is a tech-driven Digital Content Creator at Daxx. She is eager to discover latest trends of the IT world and share valuable insights with the readers of the Daxx blog.

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