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Vatsal Kanakiya
Principal & CTO,100X.VC
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Jun 15, 2019
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Technology Development: Inhouse or outsource?

When Jack Ma wanted to start Alibaba, he did not know how to code. China had just gotten the internet and there were very few who understood what it was, let alone building for it. To build Alibaba, he decided to do something unusual - he hired an offshore team in the USA to develop on their behalf. The rest is history.



Not all businesses are tech-based, but all of them have a tech aspect today. Every company today has at least a basic website or mobile application. Given this, every founder has to think about how they plan to go about setting the tech of the company.

In the early days, outsourcing tech can be a good option for most startups - it is economical, fast, and you can get the right SMEs to work on what you don’t know. But there are some things you have to keep in mind before you do so. Here are some tips on outsourcing the tech for your early-stage startup.



When outsourcing, founders usually have two options: using Bespoke consultancy firms that offer all services under one roof or hiring a separate team of remote freelancers/individuals with specific skills. It is valuable to hire a bespoke consultancy firm when the tech is not critical to your business. These consultancy firms take away a lot of hassles and provide speed and efficiency. However, when tech is core to your business and you intend on integrating a tech team sooner rather than later, it is better to hire a separate team of individual freelancers. Why? So that when you receive the funds, you can onboard a team of handpicked talented individuals that fit your requirements.

The next issue that comes is in communication. It is not easy for a non-technical founder to communicate requirements with a freelancer or with a consultancy firm. If it’s a team of freelancers, coordinating between them can be an even bigger hassle. In such cases, it is better for the founder to induct at least one co-founder from a technical background as a CTO or in another role. By delegating the coordination of technical outsourcing to a trusted individual with the technical know-how, not only does the work get done faster, but the founder can focus on their core competencies.

One last thing to keep in mind is IP and self-protection. It is important to go to trusted consultancies and partners for development. Make sure to do a background check and ensure they have the skills to complete what needs to be done. When signing off, it is important to make sure that you’ve gone through all terms of the engagement, including the term that rights to all IP created lies with the company. A few hours in this will help potentially save many hours later on.

Tech is going to be indispensable to you. Make sure you invest the right time and money into the right tech resources - whether outsourced or internal. In the end, in today’s day and age, tech can make or break any business.

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