Offshore · Software

In which situation(s) would it make sense for a software startup to go offshore?

PlanItThx Patient visionary; honesty is number one.

May 24th, 2017

Can you cite me examples (other than Facebook) where it was worth the hassle?

Guy Brockless Head of Growth Marketing

Last updated on November 7th, 2018

If by offshore you mean employ a 3rd party to handle the development of your startups tech product then you can consider the following scenarios:

You only have an idea, no validation from target market or MVP:

  • Use 3rd parties to construct a data driven market validation process (we have a very detailed process to do this but very simply it's as follows:
    • Have wireframes and mockups built and display them on a pre-launch landing page. Run marketing campaigns to drive traffic to the page. Measure engagement, interact with early adopters to understand needs/pains. Use data to plan MVP

You know there's a market, you just need an MVP to start getting traction

  • Offshoring makes good sense here. Building an inhouse team would be costly upfront and risky (bad hires, wasted time, not able to test devs for quality before hiring)
  • Make sure you choose a company with a track record of working with startups and one which understands your business vision and end-goal. Ensure they understand and work with you to plan an MVP development roadmap (not all the tech now - it's a waste).

You have already built and tested an MVP, achieved product-market fit and proof of traction and wish to scale:

  • Do not offshore - the software is your core offering and too valuable to be handled by a 3rd party. Build an in-house team of A players to continue the development of your product.

Ernest M. Kestone CEO, Co-founder, Clear Protocol, Inc.

May 25th, 2017

Only AFTER it starts to make money and the business itself can pay for it. But BEFORE it achieves significant revenue - so that it will not be an expensive taxable event. EXAMPLE: I remember someone saying that Microsoft's costliest mistake, was not going offshore from the beginning. After they were making billions, going offshore would result in a huge tax bill. I don't know how they solved it. Moral to the story: Check with an attorney. I think she'll say, go offshore as soon as you start making money and pay the modest tax on the sale. BTW the company itself does not move. What happens is you set up an offshore entity and sell your IP to it. Then some of your US income will be paid to the offshore entity as royalties. A deductible expense here. Taxed at a much lower rate there, i.e. I think it's 1% in Ireland. I've had good results asking on - you can do that now for reference only - you still need to hire an attorney. But wait 'til your business has the income to pay for it. Good luck.

Iqbal Founder Next Generation Business Solutions, Looking for business development partners.

May 29th, 2017

These are few big names developed initially by offshore teams.

Skype was developed essentially by an offshore team in Estonia

Digg’s first version was developed on a freelance website. which successfully sold to Xing for $7.5 million was an offshore development.

Offshore development teams is a good option when you have limited budget. But finding a good offshore partner is really big problem, Most of the time offshoring fails in the terms of quality, specially when you are thousand mile away form your team. but every problem has a solution. We have a bullet proof solution for it. You will always high quality products, lower price and in time deliver.

Kate Mykhaylyak Marketing and Sales at CyberCraft Inc.

Last updated on December 4th, 2018

Hi there,

Here is a good read about the pros and cons of a startup going offshore:

Offshoring for startups - does it make sense?

Best regards,