Build your tech product in house or outsource it to a software development company
Are you a founder or entrepreneur that has:
a) Raised a little bit of money or is self-funding your startup
b) You’re in the early stages and you’re looking to build your first tech product also known as a minimum viable product (MVP).
c) You’re looking to build the tech product that you want to take to the market
d) You’re smart, driven and a high achiever but don’t necessarily have experience in building tech products
e) You’re in a space where you’ve come up with a good business concept, validated the idea and you’re sure you want to build the tech
If you tick at least one of these boxes then more than likely you’re asking yourself:
Should I outsource the development of my tech product or should I build an in-house tech team?
The answer to that question depends on what type of tech product you’re planning to build and what’s your business.
You’ve got two options in front of you:
1- Build an in-house tech team and go through the process of recruiting, interviewing, reference checking and vetting software developers to make sure that you’ve got the right team.
2- Outsource the work of building your tech product to a software development company like Alidasoft.
In order to find the best option for you first, we’ve got to clarify the following:
Are you building a tech business or are you building a tech enabled business?
A tech enabled business is a business that uses tech to unlock the value proposition of your business.
If your business uses tech to unlock the value proposition of the business or to solve a business problem such as most of the consumer apps then you’re building a tech enabled business.
This is because technology is being used to solve a business problem.
You’re not building tech as the value proposition, you’re using tech to solve the problem for your customers.
If the actual value proposition of your business is the tech product, for instance, Microsoft’s spreadsheet software Excel or Google’s search algorithm or Netflix’s machine learning recommendation algorithm, then you’re absolutely a tech business.
This can be expanded to businesses that build developer tools for software developers and develop protocols or methodologies specifically aimed at software developers.
Now if you’re a tech business, this is your value proposition is the tech itself, it’s advisable for you to build an in house tech team because the core of your business is the actual tech that you’re building and you want to own and manage every single element of it.
If you’re a tech enabled business, this is the tech itself isn’t your value proposition but rather the tech is unlocking or enabling a value proposition, then it’s advisable for you to outsource the building of your tech product to a software development company such as Alidasoft because you’ll get more value out for it.
For instance you’ll save time in recruiting, interviewing and vetting prospective employees.
In summary the question to keep in mind is:
Are you building a piece of tech where the value proposition is the tech itself or are you simply using tech to enable or deliver a value proposition for your users or customers?
Another point to take into consideration is whether or not you intend to raise significant funding for your tech startup.
Let’s say you built your MVP, you launched your first product and now have traction.
You’ve reached a point in which you want to raise a seed or Series A round of funding.
At this point, most investors will want to see a good and capable in-house tech team.
Suppose at this stage you don’t have an in-house tech team and are instead outsourcing your tech work. In that case, the majority of investors will see this as a major risk to the defensibility and protection of the tech product and company.
Therefore at later stages, it’s important and advisable to have an in-house tech team.
At the same time, if you’ve been working with an outsourced partner, you want to make sure that the intellectual property has been transferred over to you.
Just because someone is building your product, it doesn’t mean that the IP doesn’t belong to you.
In summary, it’s all well and good to outsource the building of your tech product, especially in the early stages but you want to build a plan to have the ability to eventually have an in-house tech team as your business matures.
As a software development partner, we begin by building our partners a prototype, we take them through the MVP build, the product launch and traction and help them to build an in-house tech team.
Having an in-house team will increase the valuation of your tech startup and the number of investors interested.