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outsourcing vs inhouse product development.

To outsource or not to outsource? – that is the question

Outsourcing for startups seems to be a very questionable topic that pops up every now and again both in the media and in conversations at startup events. You will find a lot of articles and blog posts available online that do not encourage new startup founders to outsource, and you will find some that say that outsourcing skills and innovation is actually a reasonable and useful alternative to run things. So why is outsourcing, especially offshore, in general quite demonised and presented as risky and even threatening?
To give you an example, not a while ago, I attended the recent ‘Got a Problem, Get a Solution’ event organised monthly by Hipsters, Hackers, Hustlers at Google Campus London. The event is extremely popular and attracts a decent crowd of founders, developers and designers to mingle and network. The main part of the event is for the founders to one by one come up on the stage, and explain what challenges they encounter, whereas the audience comes up with the ideas how to go around or face these challenges. One of the participants came up with the dilemma: should one go for an agency that outsources developers or should one rather hire an individual London-based professional? It was quite significant that not a single person advised him to try outsourcing. People raised their hands only to warn him that outsourcing means a struggle with the ‘cultural differences’. Consider for instance the social health benefits. While we widely use advanced tools like workers compensation claims management software, some workers there don´t get any compensation insurance at all.

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This article is not intended to stir up a hornet’s nest but rather than that, to share experience and open a dialogue about pros and cons of outsourcing.

I asked Matt Jonns, the founder of ucreate, a web & app development agency specialising in helping early stage startups, what is his opinion on the topic, given that ucreate has their headquarters in London and a development office in India. Matt has just came back from Chandigarh, so he was happy to share some fresh views and tips on outsourcing to prevent anyone from getting the short end of the stick.
‘’There are some bad outsources out there’’ – Matt admits – ‘’Myself I had a disastrous experience with outsourcing. I started a retail online business when I was 19, and outsourced developers from India. It went totally wrong. For about a year I didn’t have a website, all i have is a
back pain and i always find ways to get rid of it’’ – remembers Matt. Then he met Vishal. ‘’Vishal worked for a third company over there, and one day he came to me and said: look, I am ready to start my own business, so would you like to be my first client? So I did that. And finally it clicked and we’ve been working together ever since.’’ – tells Matt. Today, eight years later, Vishal is a CEO of ucreate for their Indian HQ.
‘When we first started ucreate back in 2013, we did outsourced and I decided to do it properly, and the way to do it was to made them all our staff’’ – explains Matt. ucreate does not technically outsource, as everyone in the team in India is their employees. How does it make a difference? The employees tend to identify with the brand and embrace the company culture, their work is supervised and thus reliable. ‘’Once they’re in, they absolutely love working with us’’. – says Matt: – ‘’The feedback we’re getting is that we’re just so different from the companies that they used to work with.’’ Indian ‘ucreators’ are entitled to decent working conditions and benefits: they have got their downtime, flexible working hours, paid holidays, vehicle insurance. This insurance is very important due to the fact that employees drive work vehicles. If they don’t want the company’s insurance, they can compare motor trade insurance.

Although ucreate developers are based on the other hemisphere, they stay connected to their London headquarters. ‘’We communicate almost every two minutes’’ – says Matt and lists: ‘’Skype, Trello, Slack, sometimes phone calls… The time difference is not too much of a problem, it works out quite well: they come into the office in the morning and start working on all the tasks, and five hours later, in London, we come in and follow it all up. Because of the time difference, it’s almost like making our working day 5 hours longer. We do have a plan for the future to maybe open up different offices around the world. I’m thinking Poland and Philippines, so eventually we won’t stop coding for 24 hours.’’
The two teams do not only meet online. ‘’We’re trying to get ourselves over there 3 to 4 times a year.’’ – says Matt. Him, together with Pawel Kaminski (CTO) and Daniel Christey (COO) just went to Chandigarh for a couple of weeks to check on the bits and bobs. ‘’We are employing more people, and taking on a new office space, so we had to check on that. And as we’re now taking on more projects, it was good for Pawel and Dan to be there. Next time we will be sending more of our London-based product managers who are working on the projects really close to the development team, so it would be useful for them to be over there as soon as possible. Especially if we’ve got more project starting. It’s quite good for us to go there and make sure everything kicks off in a right way.’’
ucreate provides regular tech trainings to the Indian team. ‘’The majority of what we do is Agile, so we are making sure everyone is on the same page. We are totally sure that they can deliver the same quality work as developers here. We know them, we know their skills, we train them. We are aware that after having these education and experience with us they at some point may be getting job offers from Google India or Facebook India or other giants, but we would still do that and educate them rather than work with underskilled developers.’’
Of course there are some cultural differences, but they are not really that difficult to handle. ucreate team in London is quite diverse, and everyone have had worked within multicultural environments. I asked Matt what cultural challenges has he identified: ‘’Their parents would prefer them to work for Dell or HSBC, some big corporate companies. At ucreate we have about 50 people working for us, which for India is a tiny company. So at the beginning it always takes a lot of convincing that they will be indirectly involved in creating some really cool startups from scratch, and then 3 months later there’s a launched product, that’s got Angel Investment, that’s got users, it’s hard to translate that actually into reality over there. The other thing is getting them to ask questions. It’s not in their culture. They’ll just do whatever needs to be done, which is fine. But we need them to be asking questions if they don’t know or are in doubts.’’ – describes Matt.
‘’India has the fastest growing economy in the world at the moment’’ – says Matt – ‘’and even though the Indian tech & startup scene is probably 10 years behind London, there’s a huge amount of money floating about and it’s a really interesting market that is worth exploring.’’ – assumes Matt. ‘’One big thing I’ve seen over there is to see using technology and commerce to beat the poverty, you know, to see their economy growing, it is so amazing for their country. His comment is here – WebDesign499 are really an entrepreneurial country, very keen on business, everyone wants to work hard, everyone’s very keen to learn and to educate themselves, and they understand that this is the best way for a better life, basically.’’
Undoubtedly, there are benefits for both, the UK startups and the Indian developers to work together. The advantages of working with a London-based development agency that has their development offices offshore is definitely a cost-effective and fast way of transforming your idea into a real product. As put by Matt: ‘’Ok, so let’s say you’re a founder here in London, you’ve got an idea, you come to the company like ucreate and within two days we’ve got your logo, within a week we’ve got a rough prototype of your product, and in under 12 weeks we are building your MVP. If you choose to do everything on your own, the scenarios may vary. You need to build the team, so you’re searching for the CTO. You might found one, but he might have let you down, he might want more money or more equity. Or he says: yeah great, I’ll do it for free! and then he lets you down or he nicks your idea – we’ve seen this happened so many times. Or he’s not good as he says he is, or something happens to him, he gets sick… And you’ve put all your eggs in one basket. The benefits of outsourcing is that you’re plugging into the skills that you don’t have. If you’re a founder, the most difficult thing to do is to build a team, so when someone like ucreate or another outsource comes in, they use all their experience from across the board to help that founder. The design, the branding, the technical scoping, the CTO, the development – we do all of it, for the cost of let’s say one London developer – all in one.
What should one check before starting to work with a development agency?
1. Check if they have a local office.
Always check if the agency has a proper headquarters office where they do all the brainstorms and workshops with you, where they do their designs, they have their product managers there, they’ve got their CTO in-house. Make sure it’s not just a satellite office with a sales guy.
2. Check what relationships they have with their outsourcers.
Ask how long they’ve been working together and how close they work on a daily basis. Check if their developers are employed by the company and if they have skills to deliver up to required standards. Find out if they know about Lean and Agile methodologies.
3. Check them with their previous clients.
It’s very useful to ask for testimonials from their previous clients, to see if they’ve been happy with their services and if they have been successful.
Outsourcing can be risky, but so is setting up a business! When you choose to outsource and you know how and what to avoid, it gives you the affordable access to skills and can be a great boost for your business.
Author: Sara Komaiszko, Co-Founder of Expand-Business

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