Updated: Sep 2, 2021
“Why software outsourcing might not be a good idea for tech startups?”
Software outsourcing might seem convenient for most non-tech entrepreneurs, but it will have some implications for tech startups in the long run.
Let's say your startup has gained some traction and is ready to pitch for funding, your investors are going to ask you who is the techie in the founding team or who codes the platform. But why do they ask this?
Imagine if you were the investor, would you pour a million dollars into a startup who outsourced their software development to an external software company where they do not have knowledge or control on the codes, thus the platform and the entire business.
What if things between the software company and the startup turned sour? What if the software company closed down or acquired by another company, and worse still by a competitor? The risks are evident.
Although it might not be a deal breaker when your startup has incredible traction and business model but in most cases, outsourced software will be a major consideration for most investors.
Furthermore, it is common and necessary for software companies to focus on new projects because of the high profit margin as compared to the maintenance revenue from completed projects. This will be a problem for tech startups who will require new features on a timely basis in order to pivot or capture a new vertical.
(If you are running a traditional business, the risks on using outsourced software is lower. There are also heaps of SaaS in the market that could possibly meet your needs which might be a better option due to their immediate availability, technology stability, new feature additions and third parties integrations.)
TenTract's CTO-as-a-Service, on the other hand, grows with your startup from Day 1 and understand your vision, business model, customer journey and the best technology stack to be built. With experience in startup environment, your CTO partner knows how things could rapidly change overnight and will explore new technologies to meet the ever changing market and consumer behaviors.
With the shared vision and vested interests, your CTO partner is going to help you build a continuously great product to win the market, competition and funding rounds, so as to become the next unicorn together!