6 Most Common Challenges Start-ups Face Working With Outsourced Teams And Their Solutions

A lot of start-ups and young tech companies choose to outsource work, and for good reason too. An outsourced team can provide expertise in certain areas that a young start-up lacks, and can help develop software and solutions at a much quicker pace than it takes to recruit for and hire an in-house development team.

But outsourcing any significant work can bring its own set of challenges to the table. If you’re not careful, you can quickly become overwhelmed with the practicalities of working with an overseas, third-party team. And if you have tight deadlines and high expectations of what you want delivered, and feel as though your outsourced team isn’t providing what they promised, things can turn sour pretty quickly.

So, we thought we’d talk about some of the most common challenges that start-ups face working with outsourced teams, and suggest some solutions you can use to mitigate these problems. So you can sustain a great on-going relationship with your outsourced team and get the results that you want.

1 - Which agency is right for me?

There are a lot of options for agencies out there, even more so now that COVID has brought remote working and the use of remote teams into the mainstream. Even so, you might find it difficult to find a vendor that suits your specific needs exactly. Choosing a small outsourcing agency may mean better prices, but won’t leave you with a lot of room for growth as they won’t be able to scale with you easily. On the other hand, a much bigger outsourcing agency may charge you high prices for your project and feel less invested in your project and your company.

It can also be hard to tell which vendors are trustworthy and who will deliver you great results. There are many agencies out there who will cut corners and deliver projects as cheaply as possible, and it can be a nightmare to pick a vendor and only realise this later on in your relationship when the contracts have been signed and dotted.

Solution: Spend time doing proper research on agencies and assessing your company’s position.

Before you pick an agency, it’s absolutely vital that you spend time doing proper research on agencies and assessing all of your options. Check reliable review websites online like TopDevelopers, DesignRush, Goodfirms and Clutch, and of course check your potential agency’s website to read about their clients. If needed, don’t be afraid to reach out to a former client and email them to ask about their experiences with their agency.

You also need to spend time assessing your company and being honest about your needs and your projected growth. If you’re still in a startup phase, don’t choose a large agency and risk running out of money quickly. Instead, look at smaller agencies and perhaps consider hiring an in-house specialist depending on the work that needs to be done. But you should also be careful not to choose the cheapest option on the market, as there’s a high risk of getting bad results. We know it’s a fine line to walk, but after doing the proper research and objectively assessing your company, only you can make that decision at the end of the day.

2 - Fear of losing control over the process

It takes a lot of courage to start your own business. Having a vision for a product or a solution means that you know exactly what you want, and you can see exactly how it will look and feel in your mind. One of the biggest challenges of outsourcing work is losing control over the development process and getting presented with a solution that may not match the exact vision you had in your head.

Solution: Find a reliable partner, let go of some control and establish iron-clad project management tools.

When you outsource your development team or any other work in your company, you need to be ready to let go of some control. Having an in-house team allows you to check on their progress as much as you want, but having an outsourced team means you need to place trust in your agency and their work, and let go of some micromanagement urges. That’s why it’s so important, as we mentioned in our previous challenge, to diligently do your research before hiring a vendor so that you can find a reliable partner to work and grow with.

It's very important at the start of your relationship to establish how much you will be involved with your outsourced team and how you will be updated about the progress of your projects. Establish which project management tools you and your outsourced team will use so that you can track their progress – having task trackers, detailed job reports, regular meetings and direct access to source code management systems will help you understand just how fast your team is progressing and how productive their performance is.

3 - Running out of money

You’ve probably chosen to outsource work to save money, but without proper planning, many startups can run out of money for their outsourced projects. And there’s no worse nightmare than having a project halfway complete and then running out of money with no chance of funding in the mix or any other solution on the table.

Solution: Know your project requirements, establish your timeline clearly and estimate your costs accurately.

It’s crucial to set clear project requirements and timelines at the start of your relationship to accurately estimate your costs and ensure that your projects have enough budget to go all the way. If you’re having trouble yourself defining the exact set of requirements for a project, then you can reach out to an individual firm or a freelancer to go through the project discovery phase and help you define your requirements. When you consult with an outsourcing agency, it’s important that you set your budget limitations very clearly and talk about all the pricing models available.

Before you sign any contract, you need to make sure that both sides have clear expectations of what work is expected and the budget available, so that you can go into a relationship with your outsourcing vendor confident and happy.

4 - Transfer of knowledge between teams is harder than expected

So, your outsourced team have finished a project and have handed over everything you’ve asked for. They’ve said their goodbyes, and now their support and knowledge are no longer available. But wait… your own in-house team have a lot of questions about this project and the code involved with it. And now, none of those questions can be answered easily, or without massive post-project service costs.

A transfer of knowledge between an outsourced team and your own company is an inevitable part of the outsourcing process. But if you’re not careful, you can be left with a delivered project that none of your own team knows how to sustainably manage.

Solution: Establish how the knowledge transfer will happen before the project begins and ask your outsourced team to document everything.

As ever, the solution lies in good communication and clearly defining the documentation you expect from your outsourced team and how the knowledge transfer will happen. Ask your outsourced team to document everything including details on code, processes, flowcharts, and anything else your team needs. And if you need several meetings at the end of a project for a detailed handover process, then make sure you outline these expectations to your outsourced team at the very beginning of your relationship.

5 - Time zone differences

Outsourcing work to a team outside of your country will mean working in different time zones. While your own company is starting up for the day, your outsourced team across the globe could be shutting down and getting ready for dinner. It can be a tricky thing to handle, especially if you don’t have a lot of experience working with outsourced teams, and can lead to delays in communication and a lot of frustration.

Solution: Outline your communication expectations with your outsourced team clearly.

If you’re working with an experienced outsourcing vendor, then they’ll probably have processes in place to get around the time zone differences. Nonetheless, you should outline your communication expectations clearly to your outsourced team – establish times where you’re both available for video meetings, times where you can message or contact each other via email, and times which are definitely off limit to both of your teams. As I’m sure you’re noticing, the key to a successful relationship with an outsourced team is communication, and putting in the work on both sides will give you great results.

6 - Legal processes and contracts

Outsourcing any significant work to a third-party team will come with its own legal issues like data protection, liability, intellectual property rights and confidentiality. Legal processes can also look very different from country to country, which can insert even more uncertainty into the mix.

Solution: Read your contract thoroughly, make sure your agreements are well documented and conduct legal research when needed.

You need to make sure that you read your contract inside and out. Double check that everything is covered and all agreements are documented such as payment terms, intellectual rights transfer, security, data and confidentiality. If you need to, spend the money and hire a financier to help you look over your contract so that you can be confident that everything is in order. And of course, make that sure you know how your own country’s laws are different from your outsourced team’s country laws if they’re based overseas.

In Conclusion

As a start-up or young tech company, choosing to outsource work can come with its own set of challenges. But we hope we’ve shown you that with the right amount of research before picking an outsourcing agency, and great communication between you and your outsourced team, you both can achieve some amazing results.

If you ever need any help choosing an appropriate outsourcing agency for your business, or think you might benefit from external advice on your strategy or a guiding hand on your projects, then you can always talk to one of the Scryla team.

We offer services as a consultant CTO and strategy advisor, and help a lot of start-ups and young tech businesses with the challenges they face.

So, if you think you might benefit from having a technological expert on hand, then get in touch with us. We’d be happy to help.