Anyone starting a company must decide whether to invest resources in creating their product or to outsource software development to an external company. In my project at Hitch, a Talent Tech SaaS, we decided to develop our own artificial intelligence software. Here I explain why.
On the one hand, we all know that time is money and that you can’t spend too much time creating one Minimum Viable Product (MVP). As they say in these times Grow Fast or Die YoungThis suggests that hiring outside experts to achieve this product is the fastest and cheapest option as they dominate this type of development and therefore we would avoid the pain of recruiting an in-house team. But shouldn’t your own technology be the central quality of a startup?
Both approaches have advantages and disadvantages and the decision is not an easy one. The answer depends on commercial and cultural factors, the type of product being built, and most importantly, the vision of the founding team.
At Hitch, it was clear that technology is part of the product’s core value proposition, not a means of solving a business need.
A key benefit of having an in-house technology team is that employees can become more aligned with the company culture and become much more committed to what is being done and how the company works.
The downside we found is how complex it is to find good specialized developers, it takes time to find them, finding a good fit, and it’s also a more expensive solution. The platform we developed tries exactly to address this problem, but at the time, Hitch wasn’t a reality.
On the other hand, through outsourcing we were able to find specialists faster and initially be cheaper. However, the teams may not be 100% committed to the project, the agency may be running other projects and this makes it difficult to align with the startup’s product and culture. Copyright negotiations for completed development can also be an issue, and contracts need to be well written to protect us as a company.
We had to wonder, after all, if Hitch needed a technological “secret recipe” that would make us unique.
The Hitch platform is aimed at HR specialists, not technology specialists. However, the underlying technology and its implementation must be unique to add value. So the answer is yes.
In summary, I do not think that outsourcing software development is advisable if:
- The company has technology as a primary concern.
- The technology is unique in its implementation and a non-replicable model is sought.
- Organizational culture is the key to product development.
Michael Seibel, Partner at Accelerator and Venture Capital Y Combinator, says: “When reading startup applications for YC, I see too many founders raising a little start-up capital and outsourcing engineering to cut costs. This is a common misconception that is a big red flag for future investors and is often much more expensive in the long run than a tech co-founder. “This statement reinforces the ideology we have for building a robust internal technology model.
Agency programmers traditionally operate in a “known problem, known solution” environment (e.g., a clothing store that needs a website presents a situation where both the problem and the solution are known). While tech startups operate in an “unknown problem, unknown solution” environment (no one knows if the solution is appropriate until the new product is used). The idea at Hitch when developing your own SaaS is also to be able to iterate and improve in this way. It’s definitely not the easy way to go, but we believe it will be the most profitable for us in the long run. Not all companies are created equal, but it’s important to ask yourself these questions at the beginning.