Building Dev Teams · Building Teams

Outsourcing or equity in-house team?

Sarki Amada Serial CEO & CoFounder

August 26th, 2019

I have had previous experience outsourcing web development, app development and software development. I found that outsourcing is cheaper and the companies have most if not all the coding expertise to develop what you want. The only problem I had with outsourcing is communication, and money hungry even though they are cheap, you might end up spending more because of communication differences (Lost $15k of my hard earned money). It would also be hard to sue them if they bridge NDA or something happened to the project due to their fault. Most outsourcing companies will sign an NDA without hesitating.

The software I'm working on is quite innovative and groundbreaking that I'm afraid they can easily steal the idea even with NDA, as sometimes NDA are not enforceable, especially since they're in another country.

So, should I outsource because I'm running on low budget risking my idea being stole? or get college grads and promise them equity once they develop the software, as it would be easy to sue them if they bridge the NDA. Or is there any platform that I can get equity based developers (🤔🤔Wait, did I just give someone an idea about developing equity based developers platform. Pay me 15% once you develop it you sneaky Pete🕵️). The problem with in-house development team; It's hard to find all the developers you need, screening them is time consuming, and they might end up declining since we aren't paying, and they need to pay bills. We just need the developers for the minimum viable product so that we can get the funds and can afford experts in the field. So, please help me on deciding which to go with; Outsourcing or Equity in-house team?

David Pariseau

August 26th, 2019

I've found that it's always about the people. You have to find the right key hires to make things work. Now, perhaps if you're just looking at a MVP then perhaps you can contract that out, but a solid CTO (or equivalent) should be able to add a ton of value to whatever idea you're starting with. So, attracting that resource early could pay off significantly in the long run. I also haven't had much luck with outsourcing. It seems to me it makes sense for certain products (those that don't involve much new technology, but instead a re-arrangement or re-application of existing and commercially popular technology). If you're looking to put together a web app to do something a bit different using currently popular tools and you have a detailed spec and plan then outsourcing could certainly make sense. But, if you're developing something novel with perhaps significant flux as you go, then in my opinion, that's a recipe for some heartache...


So, I would recommend finding a solid technical lead (if you don't already have those skills in-house) and finding a way to develop the MVP with that person leading the effort. And, it might even be quite possible for them to do that without any outside resources (given the availability of sophisticated design/prototyping tools these days).


Dave.

David M

August 27th, 2019

You have well thought out concerns. I can't speak to the specifics of your deal, however, the NDA approach for an hourly employee....I mean put yourself in their shoes. Why in the world would they sign an NDA knowing they may make a few thousand dollars from your company but be limited to work with a company down the line that will pay them salary and equity? They also expose any company they would work for to litigation and that liability. The only way I would ever consider signing an NDA is if I am looking at a contract in front of me for a substantial role and equity in a company that I believe in....I see longevity...I believe in the passion, purpose, and competence of the CEO who brings me the deal.


I never like to be negative toward those who believe they have unique ideas. You may very well have one. But in working with entrepreneurs for many years now, about 95% believe they have something amazing, never before done, that everyone will want to steal....guess what...they just don't. What makes the startups great is the potential to execute a solid plan behind an idea...product...service..etc...that may have some unique element or competitive advantage...but Im still hoping to find that earth shattering never been done in any capacity idea that everyone wants to steal.


Furthermore the reality...once you tell one person...consider that everyone in the world has your idea and plans to build a company around it. You have competition the minute you share your idea...just the reality of the world and business.


Im not a huge fan of outsourcing for the very reasons you suggest. People need people...to be around and build trust and synergy with. If I were in your shoes...I would quit obsessing over who is going to steal your idea, and begin obsessing over who will support your vision and who you can support who will make you stronger and your company stronger. Use strong employment contracts. Sit down with an attorney with experience with startups.

Raluca M. Alexandra CEO IbsellNET

Last updated on August 29th, 2019


Each option has his own advantages and disadvantage.


Outsourcing

Advantages:

- you communicate with a single person (project manager)

- you don't have to worry about the employees and how to manage them

- is possible to be cheaper than in house


Disadvantages:

- you can't have full control of all team's people

- you can't be sure that that team will not use the idea (see bellow my opinion about this)


When you choose this option make sure that:

- your outsourcing team understand what you need

- that you can communicate with their project manager well and that they have a project manager or a team leader

- that estimations you receive are explained well and are close with the reality

- you must start with trust with any company or persons you'll work on this project


In HOUSE

Advantages:

- you will fell more secure that they will not steal the project idea

- you can meet the team daily if you want

- psychologically it is good to see that those people really exist and they stay in front of computers in the office



Disadvantages:

- create your internal development process

- keep the team motivated so they can be productive

- more time lost for the team than for other business strategies or other things to do

- more worries in case one of them wants to leave

- lose time to find and construct the team


Your decision depends a lot of what is more important for you and your time and how would you fell more comfortable.


I


Hope my info helped you and you'll find the best solution for your project :)


Raluca

Darya Mateychenko Operations / PMO @Corpsoft.io

Last updated on August 28th, 2019

Hello Sarki,


Another problem that I figured for our own product is that no matter if it's outsourcing or inhouse devs, to succeed with startup at low-budget you need to have people who really understand your idea. Perhaps it's some part of the communication problem you outlined for outsourced development, but I find this equally relevant for inhouse team as well.


I really wouldn't worry about idea being stolen. Apart from simple idea, your startup has you, your energy, your knowledge. Even if someone takes your idea, it will be different startup with just something in common.

Ali Jamal In idea phase for a business plan

August 27th, 2019

Hey Sarki

I think the best option would be to hire or make someone your equity partner relatively small in the same country you are willing to outsource and let him/her draw the contract for NDA to the company you are outsourcing that way it will be not possible for the developing team to steal your idea as if they would try a national would be a part of the team that sued them. There would be no way for them to do it.