With entrepreneurship on the rise, startups continue to emerge. In the United States alone, the number of technology startups grew by 47% in the last ten years.
Open-source software, improved financial services, new ways to leverage data, numerous boot camps, and hackathons facilitate the launch of innovative startups all over the world. However, as Statista shows, as many as 23% of startups admit failure due to their inability to assemble the right software engineering/product development team.
What prevents startups from building the right team? Here’s an inside look at three prominent factors:
High costs associated with local talent acquisition
For a startup in the US or UK, hiring and sustaining local employees can be too expensive. Therefore, it becomes quite difficult for a startup to ensure long-term success. Thus, it may lead to failure.
A growing talent shortage
According to a recent Tech Nation Report, one in three London-based startups is struggling to find and hire quality tech talent locally. The market is overcrowded with legacy-bound software engineers who’ve been stuck behind just one stack for ages and don’t want to pursue any career changes. To innovate, a flexible and versatile workforce that is ready to take on new challenges, learn new skills and stacks, and think outside of the box to solve complex issues creatively, is needed.
Pressure from investors to reduce IT budget or overhead
With venture capital rare to come by, those who provide it might require a strict set of conditions, which could include cutting your IT budget or minimizing overhead. For this reason, it can be quite challenging to achieve profitability and sustainability before the money runs out.
Team extension: A smart way to hire the right software development team
Many people are skeptical about traditional software project outsourcing. Since we live in a world hardwired with billions of data points, data becomes the new currency, and “the one who owns the data owns this world.”
In traditional outsourcing, clients typically offload their entire project or some of its standalone elements to a third-party vendor who’s responsible for delivery, product quality, and meeting the budget. This model implies that you transfer certain data to a vendor, which can result in data loss, compromised data, or even the possibility of your data being sold to a competitor.
Startups embrace software team extension model
Software team extension is an innovative model that lets clients retain 100% team and project management control without having to deal with infrastructure or administrative hassle. Your tech partner acts like a mini technology park that provides you with team resources, workstations, and tools required for product development.
The software team extension helps retain and monitor your extended team performance and scale your team when required. However, it’s you who takes care of team management and responsibility for milestones and deliveries. This difference can make or break your software engineering project!
It’s like owning an in-house team, but remotely.
To be effective, you need to invest time and resources. View your vendor as a tech partner rather than merely an outsourced service provider.
Consultancies that specialize in building client-tailored extended teams or extended R&D centres offer CTO-as-a-Service for startups that lack internal managerial resources (i.e., an interim CTO who can help immerse the team into the client’s corporate culture and brand identity).
6 key benefits of team extension solutions
Here’s a look at key benefits of leveraging a software team extension to access skilled software developers for your project.
1. Access to larger and untapped talent pools
Across the US, there are more software developer job openings than professionals to fill them. Almost a quarter-million opportunities for skilled IT experts in the US remain unfilled.
By hiring dedicated developers overseas, startups can gain access to a new pool of highly-qualified IT personnel without spending time and money hiring or training additional staff in-house.
According to Forbes, Ukraine––one of the top destinations for software team extension in Europe––boasts over 150,000 software developers readily available to join international project teams. That explains why so many world-famous brands are rushing to establish their extended R&D teams in Ukraine. Among them are Google, Amazon, Samsung, Rakuten, Oracle, HP, and many others.
2. Faster time to market (and hire)
Time is invaluable in the startup environment. When it comes to hiring, time is easily wasted advertising available positions, reviewing applications, screening applicants, and onboarding.
However, by working with extended teams, startups can access readily-available talent 2-3 times faster. In comparison, the average time to hire tech talent in North America and the UK exceeds 60 days, while the average hiring time in Ukraine is 30-35 days.
3. Faster time to proof of concept
An extended team model is a proven solution to accelerate the time to build a minimum viable product (MVP) and gain additional funding. For instance, one of our clients––a UK-based fintech startup––built an MVP of a highly-complex rebates management platform in a mere eight months, which allowed them to raise £1 million in funding for the full-fledged product development and go to market.
4. Focus on core product development
As a startup scales, in-house employees may have to take on an array of technical roles outside of their original duties. In turn, this can make it increasingly difficult to focus on primary product development processes.
By partnering with an extended team to manage emerging IT responsibilities such as QA, DevOps, and data science, startups can access relevant offshore expertise and knowledge of cutting-edge tech trends. As a result, startups can focus firmly on core product development processes and other mission-critical functions.
5. Expertise in-sourcing through regular knowledge sharing
The extended team model implies that the client has total control over the activities undertaken by the vendor. It includes the sharing of knowledge and expertise between the extended and core, in-house teams.
Under this arrangement, a business is free to offer a directive that calls for regular sharing of information or make it mandatory for code to be committed to a software repository for continuous integration and deployment (CI/CD), whether it is daily or weekly. Today, tools such as Slack, Skype, JIRA, Basecamp, and other ones, have made this type of seamless collaboration on projects possible.
6. Dramatic cost savings
Working with an extended development team can help a startup save on software engineering expenses since startups get to minimize operational costs, conserve capital funding, and significantly cut IT expenditure.
All startups are bound to face challenges along the way as IT responsibilities evolve beyond their original scope. Luckily, many of these issues can be avoided or addressed by hiring an extended team overseas.
Philippe Peron is a Chief Delivery Officer at Evolve, a UK-based award-winning software house with an R&D Center in Ukraine specialized in building client-tailored extended teams and providing bespoke software to other businesses.
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