7 Advantages of Outsourcing IT Department for Tech Startups in the Early Stages of Development

Paving the way to success for new tech businesses is an exciting yet challenging endeavor. As a startup founder or executive, you must wear many hats and combine multiple responsibilities to keep your business afloat and remain successful. However, managing every aspect of your business can be overwhelming, particularly when it comes to producing software or technology products. That’s where outsourcing IT department comes in.  

Offshore IT outsourcing has become a popular strategy for tech startups to access a global talent pool and specialized resources without “breaking the bank.” However, there are more promising opportunities than meets the eye, especially if you outsource your project early.

In this blog post, we’ve put our real-life experience and knowledge to demonstrate why it’s essential to go the outsourcing route in the early development stage. We’ll also list common pitfalls to avoid and offer actionable solutions from our team.

The Power of Outsourcing IT Department in the Early Development Stage

For early-stage startups to stay on track, allocating resources and efforts wisely is paramount to avoid overruns before the actual development begins. A recent study by CB Insights found that 29% of 101 startups ran out of product development budgets. That emphasizes the need for a mature, well-polished startup approach to product development to avoid wasting resources and business failure early.

By partnering with an outsourcing provider, startups can access best industry practices from experts with experience developing similar products or services. Hence, cooperation with a reliable partner shortens the development lifecycle while letting businesses achieve faster time-to-market and outperform competitors as well.

IT outsourcing benefits bring plentiful opportunities from many perspectives if professionals are involved in time and the development process is organized correctly. The only rule here is to partner with a reputable software outsourcing provider who already knows the ins and outs of startup product development and has a proven portfolio of successful cases behind.

Why Outsourcing IT Department is Crucial for Tech Startups in Early Stages

According to Statista, the global outsourcing market volume is projected to reach US$145.70bn by 2027. These numbers result from the ongoing demand for outsourced IT departments to address growing businesses' challenges. So, why outsource IT services?

Let's highlight with our team what reasons push technology startups to outsource in the early stages.

Focus on core business activities

If you really want to grow as an entrepreneur, you've got to learn to delegate.

Delegating is your way to outsource non-core functions to expert agencies, from product ideation to post-release maintenance, while creating ample space for the activities that generate the most value for a business, such as product development, sales, and marketing. In other words, as long as you let the experts do their job, you can focus on promoting your company, building partnerships and connections, and strategic planning.

Lower costs and greater cost predictability

By comparing in-house IT vs. outsourcing, startups may find that outsourcing IT services is more cost-effective than hiring in-house specialists, as they only pay for the services they actually need. This can help companies improve cash flow management and cost predictability, which is critical in the early stages of development.

Moreover, lower costs don’t mean sacrificing quality. If you choose offshore IT outsourcing and hand over your software project to companies located in Eastern Europe, you receive quality service with field-related experience and a well-established development process.

Related reading: How to Hire an Offshore Software Development Team: The Full Guide for Startup Founders

Faster time to market

By outsourcing IT projects to tech-savvy and experienced specialists, you gain dedicated attention, needed resources, and expertise for your project. Reputable outsourcing providers have experience developing similar products or services. Thus, they can help startups navigate the challenges and complexities of product development more efficiently. The cohesive, goal-oriented, and painstaking work of professionals reduces delivery times, resulting in a faster product launch to the market.

More flexibility & scalability on demand

In a rapidly changing technology-driven environment, keeping up with ever-changing technology requirements, business priorities, and scaling needs is critical. Businesses can handle these fluctuations by hiring a reliable outsourced development team without sacrificing quality, timelines, or available budget. As a result, startups can respond more effectively to changes in demand without investing in expensive infrastructure or hiring additional staff.

Reduced operational costs

Using the resources offered by outsourcing partners, entrepreneurs can reduce their operating costs by outsourcing IT departments. For example, outsourcing providers can provide access to specialized equipment or technology without requiring startups to invest in these resources. As a result, startups can avoid the cost of recruiting, training, taxes, and other employment-related contractual perks, as well as the high overhead costs of maintaining their in-house development team.

Reduced risk management

As a startup trying to win your niche in the overcrowded market, you risk encountering numerous pitfalls in the early stages of development, which can lead to failure later on. Hence, the next reason tech startups outsource in the early product development stages is reduced risk management. Outsourcing IT department providers have experience managing risks and ensuring compliance, which can help startups reduce their overall risk profile. Data privacy, cybersecurity, and regulatory compliance are just a few examples of such cases, which can be difficult for businesses to handle independently.

Best industry practices from experts

To ensure results-oriented and seamless collaboration with your outsourcing partner, it’s not enough for developers to simply write the code. The outsourced development team you choose to work with must be highly qualified, familiar with industry best practices, and have a proven track record of working on projects of a similar nature. In turn, this can help startups stay up-to-date with the latest trends and innovations in their industry and ensure that they use the most effective strategies and tools to grow their business.

From Pitfall to Progress: Avoid These Outsourcing Mistakes

This is familiar to everyone involved in the business environment: any small mistake can cost a business a fortune. Therefore, it’s imperative to stay away from them from the start. That’s why we have compiled a list of typical problems often associated with outsourcing and recommended mitigation practices from our in-house experts.

Misaligned expectations: The trap of unrealistic goals

Problem: Misaligned expectations between startups and outsourcing providers can cause delays, misunderstandings, and other issues that could compromise the project's success. Startups often may have unrealistic demands in terms of project timeframes, price, or quality of work, while outsourcing providers may overpromise to win the project.

Solution: To avoid such a scenario, the ElifTech team conducts thorough scoping sessions and sets clear expectations and goals for the project. In such a way, all project stakeholders have a single vision of the project goals, the scope of work, the timeline, the budget, and the deliverables. Following Agile-based product development, our team performs changes on the go and provides regular updates to ensure the project is on track.

Poor communication: The silent killer of outsourcing IT projects

Problem: Since outsourcing IT department entails cooperation with remote teams across the globe, you may encounter communication difficulties and cultural differences. As a result, communication gaps can lead to delays, misunderstandings, and late problem resolution. So, we identify three leading causes of miscommunication: language barriers, cultural differences, or lack of communication protocols.  

Solution: At ElifTech, we prioritize clear communication channels and protocols, including regular meetings, progress reports, and feedback sessions. ElifTech's team members have a good command of English and experience working with clients from different cultural backgrounds, ensuring smooth and effective communication.

Lack of research: The blindness to vendor quality

Problem: Poor market research when seeking the right vendor can lead to choosing the wrong partner, which can cause issues with quality, reliability, or compatibility. Startups might not be aware of the background, expertise, or reputation of the outsourcing provider, which may negatively impact the whole development process and poor product outcomes.  

Solution: ElifTech recommends performing your search based on several crucial criteria to choose the best-fit and quality vendor: tech skills, response time, the diversity of engagement models, management maturity, compliance with industry-related standards, employed security practices, portfolio, and testimonials from real clients. Reviewing all the points above makes you more likely to make informed decisions about a trusted outsourcing service provider vetted for quality, reliability, and experience.

Lack of time to research trusted vendors? Get acquainted with our Team Extension services.

Quality control: The risk of not setting standards

Problem: Without clear quality standards, outsourcing IT projects can suffer from inconsistent quality, and missed deadlines, especially when it comes to actual coding work. Proper code quality is also critical to bug-free product implementation. Startups may not have prior expertise or resources to ensure that the outsourcing provider's work meets their standards.  

Solution: At ElifTech, we set clear quality standards and protocols for the project, including regular quality checks, reviews, and testing. We have seasoned QA specialists and testers engaged in product development from early requirements elicitation to deployment to ensure agreed-upon quality standards are met. Our dedicated project manager also participates in this possess and ensures the work meets quality standards and project specifications.

Management issues: The importance of a dedicated project manager

Problem: Management blunders also become a challenge leading to mismanagement, lack of direction, or other issues that can harm the project's success. This point is significant to consider beforehand since startups often outsource projects to remote teams. Proper management keeps the project well-organized and transparent to all parties involved.  

Solution: We provide an outsourced IT department with a dedicated project manager who oversees the project from start to finish. ElifTech's project managers have experience managing outsourcing IT projects and ensuring that the project is on track, on budget, and meets the agreed-upon quality standards. We can also use project management tools such as Asana, Jira, and Trello, helping our PMs regularly monitor progress, assign tasks, set deadlines, and establish goals and milestones visually organized and clear.

Inflexible mindset: The barrier to agile collaboration

Problem: Another common pitfall in outsourcing is having an inflexible mindset, which can create a barrier to agile collaboration. Tech companies may have preconceived ideas about what they want and how it should be done, which can result in resistance to change and a lack of openness to new ideas or approaches. This could slow down the project's progress and cause delays or even project failure.

Solution: ElifTech is committed to an open and collaborative approach. Our agile and flexible teams are always ready to adapt to new technologies and changing project priorities. By embracing new ideas and providing fresh insights on product improvement and growth, we stay ahead of the curve to meet market needs.  

Want to know more about Agile software development for startups? Learn how to establish the process to achieve your business goals twice as fast. Get evidence-based insights from our latest blog post: The Complete Guide to Agile Software Development Life Cycle for Startups

Getting the Most Out of Outsourcing with ElifTech

The actual value of IT projects outsourcing to industry geniuses comes in many shapes and sizes, from reducing costs to maximizing project efficiency and reducing risk from the outset. Outsourcing IT department is a proven way to fill workforce gaps and get a personal touch on your project, where a team of seasoned experts works dedicatedly on your unique challenges and increases your chances for market success.

There are seven key reasons to go for IT project outsourcing:

1. IT project outsourcing allows tech startups to focus on their core business as they delegate development work to experts with solid experience and proven expertise.
2. Offshore IT outsourcing can lower costs compared to hiring an in-house team, particularly in terms of salaries, benefits, and office space, and provide greater cost predictability.
3. By outsourcing IT projects, tech startups can achieve faster time to market due to a team of experienced developers working quickly and efficiently and following well-established workflows.
4. Outsourcing provides greater flexibility and on-demand scalability. Startups can easily scale their development team up or down as needed without the overhead costs and administrative burdens.
5. Outsourcing can reduce operational costs by minimizing the need for office space, equipment, and other resources.
6. Among the expected IT outsourcing benefits is reduced risk management. By relying on the expertise and experience of their outsourcing partner, startups avoid common pitfalls and ensure that their projects are completed on time and within budget.
7. Outsourcing provides access to experts with experience and expertise in the latest industry practices and technologies.

ElifTech has a great variety of successful outsourcing IT projects that have helped us improve our workflows, avoid common outsourcing mistakes, and optimize our clients' projects by reducing product delivery times and costs. We provide:

• Customized solutions tailored to the specific needs of our clients;
• Solid knowledge of cutting-edge technologies and tools;
• A dedicated and creative team with project management expertise;
• Agile collaboration and flexibility'
• Quality assurance and control;
• Clear communication and regular reporting to ensure transparency throughout the project.

With a solid experience in FinTech, Healthcare, and eCommerce niches, ElifTech is ready to direct your resources and efforts right from the start. ElifTech is a trusted outsourcing partner with a market-proven track record of successful cases to help tech startups get the most out of their outsourcing initiatives.

Get in touch with your personal manager and share your needs to establish a results-driven partnership!