Outsourcing.. Smart or Stupid?

 

Outsource? Smart or Stupid?

Outsourcing? Smart or Stupid?

 

Conventionally, the domain of tech start-ups has been seen as the playground of computer science graduate. You’d rather be able to write raw code yourself, to be in complete know of what you’re doing. However, you can’t code shouldn’t mean you can’t do a web startup. Of course, it just becomes a LOT more challenging.

I for one, have for a long time, worked on an outsourcing model. When that ‘outsourcing’ relationship became a rather close knit relationship between the people on two sides and the companies – can’t be specifically pointed out. So, much as I have great faith in the competence and commitment in my tech partners, there are quite a few situations where I’d felt really handicapped, simply because I didn’t have complete control over the development, as much as I desired.

 

Obviously, you can’t expect your partner’s employees to be too loyal, or stay excited about doing something world class. For them it’s just another project. They have to leave office at a particular time; they have to take weekends off. And if Mamta calls a bandh, they really don’t mind not coming to work. And if it’s Durga Puja in Calcutta, (where my team happens to be), the staff will want time off. The commitment or dedication of an individual or two, shall keep you hopeful, but at the end of the day, people working directly with you on a dream, versus people working on a contractual project, is a different game altogether.

A few thoughts on the merits and demerits of outsourcing, assuming that you’re not a techie yourself and don’t even have a techie co-founder.

The PRO: As a startupper, if you’re to build your own team, it includes a lot of visible and invisible work areas. Set up an office, get the infrastructure in place. Find people though head hunters or references, get them to join you, make sure they work well and don’t leave, if they leave, be ready with replacements. If you’re not a technology person yourself, it’s just about impossible to monitor and track their work/performance.

Simply put, too much of a job to start with. If you’re prepared to do all of this from day one of thinking of your business, I salute you! I was still doing my MBA when I’d started off, and thought I was better off focusing on the product/market and features I wanted, rather than get caught in the variety of administrative issues that start coming in morning, evening day and night!

 The PRO: It might seem expensive to start with, but along with the visible and invisible work areas, there are also several visible and invisible costs, that you may or may not see instantly. But it sure is going to cost you more ‘cash’. You might or might not see value in your time/effort saved, to be willing to shell out the cash. I’d think if shelling some cash saves a lot of headache, it’s worth it, assuming you’re doing something worthwhile with the time saved!

The CON: That’s for a start. Next, for any product development cycle, communication and job specification become extremely critical. There’s a world of difference between being able to sit in the office and explain to your techie what you precisely want, vis-a-vis trying to put it on a document and let him work on it.

For anything related to design or the look and feel, the iterations end up taking 4 times longer over an internet communication, than if you were sitting in the office and doing it together.

 The CON: Importantly enough, at a really early stage of your idea, you might think once that your product plan is ready and there won’t be any more changes. Impossible. Unless you’ve been the product manager and seen the lifecycles at a Yahoo or Google or started up before :). So changes are unavoidable – in priorities on what goes first, a specific feature that would now be built differently, and a whole lot of new features that would get introduced and some of them would be taken off and so on…

If your outsourcing partner chooses to play nasty, he’ll make all this evolution/changes/iterations extremely expensive. On one side, he’ll make you plan every move very carefully, so you won’t want quickfire changes. On the other side, there are no perfect answers and there’s always scope for improvement.. and you might want to keep the options open!

In my case, thankfully, my guys were sane and sweet enough to accommodate and understand the evolution of the product along with the surrounding market… so was saved.

The PRO: In a contractual outsourcing work scenario, you can decide the terms of payment, partly advance, partly after end of the project and you don’t tie any fixed monthly bleeds with yourself. If your job’s over in a certain period of time, there are no people on your payrolls that need to be paid salaries month on month.

The CON: The transition from an outsourced project done to an in house team managing it, is not a very convenient thing. But if you are to run a business, you’re eventually going to have to do this.

The PRO side to it is, you’d perhaps have matured a bit more by then, the product would be out in the market and more people would be willing to join you!

Again, in my case, I’m likely to absorb people from my outsourcing partner company itself into my company, so this would be smoother than any other scenario.

Overall, when you’re just starting and you don’t have a CTO co-founder, an outsourcing model might work better. However sooner or later you will end up having to move into an in-house model. The sooner you can find a techie you can bank on, the better.

 

Shall write separately on the goods and bads of playing with elances and scriplances to buy cheap scripts off the shelf!

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