Did you know how many startups are in the market? Demand Sage analysts say it’s over 150 million. The statistics also note that the average cost of starting a business is $40,000. However, only 1,361 startups have achieved unicorn status. Perhaps, that success was due to business IT outsourcing.

Every company entering the market in 2024 should have IT solutions for:

• Corporate needs.
• Commercial activities.
• Customer communication.

Those who refuse to digitize their brand might be on the fast track to nowhere. And we understand the hesitancy of adopting technology, considering the IT services cost. Today, you’ll learn how to get a functional IT solution (even in the MVP stage) and successfully debut in your target market, even with a startup budget.

Let’s start with the basics and define what sets a startup apart from other types of businesses. Spoiler: a startup doesn’t always have to be a brand-new company.

In short, a startup is characterized by an idea with a unique concept. It can belong to either a group of enthusiasts entering crowdfunding (a grassroots startup) or be under the wing of an established company, such as Google (a corporate startup).

Key differences between grassroots and corporate startups are:

• Budget: The budget of a grassroots startup is usually smaller compared to the resources provided by large corporations.
• Prejudice: Typically, new startups break stereotypes and challenge the status quo.
• Caution: For new entrepreneurs, reputation risks or competition are challenges they wish to overcome.
• Trust credit: Corporations have their audience ready to support their new venture.
• Ambition: Grassroots startups are not bound by restrictions, allowing them to raise stakes.
• Problem-solving: While enthusiastic teams can afford to make mistakes and get back up, corporations risk their reputation if a startup fails.

Both corporate and grassroots startups can implement their IT projects using their staff or with the help of external companies. Statista analysts predict that by 2028, the outsourcing segment of digital solution development will reach $129.9 billion, which indicates the demand for this type of service among business representatives.

So, why do companies outsource?

Obviously, it’s for the advantages inherent only in this type of collaboration.

Startup outsourcing is pretty much the norm these days. This model of development allows companies to grow without being distracted by processes unrelated to their core activities.

In other words, everyone should stick to what they’re good at. That is entrepreneurs should manage and scale their businesses. While developers should create digital solutions that fuel business growth.

Outsourcing aligns with this mindset. It allows dividing responsibilities, ensuring project efficiency and success.

Experts at AdvantISS have identified seven main reasons why companies outsource. They will help you understand the essence of outsourcing and determine if this collaboration model is suitable for your startup.

External contractors typically focus solely on your project. They have teams ready to take on developing a digital product as soon as possible.

Since the outsourced team is already familiar with working together, they can dive directly into the project after a brief initial planning and briefing period, which might last a week or less. In total, it will take 4-9 months to build an application from scratch.

So, quicker team assembly, reduced or no integration phase, and a focused, experienced team usually lead to a faster time to market.

Comparing in-house development with outsourcing, we have concluded that the latter option is more advantageous for startups. 

Sure, in-house development has its own benefits. It works best for companies that have complex needs that require close collaboration, constant tweaks, and deep integration with existing systems. For example, a large bank developing its mobile banking app would benefit from in-house development because of the sensitive nature of financial data and the need for tight security and compliance with financial regulations.

But startups usually need different things—they are looking for ways to launch quickly and cost-effectively. So, here’s why assembling an in-house development team proves to be an inefficient approach.

Cost 

Maintaining an in-house team isn’t cheap. The equipment alone costs tens of thousands of dollars, as well as monthly office space rental and taxes. Moreover, the annual salary of one developer is around $136,295 in the USA, and the team consists of dozens of specialists with different profiles.

So, you’ve got to ask yourself: is your budget up for handling this kind of expense over a long period? If not, then outsourcing the IT project might be the best way to go.

Efficiency

The in-house team always has an abundance of tasks: supporting IT infrastructure, providing technical support to non-technical staff, and so on. On top of that, work on the development project. It’s a lot, and honestly, it doesn’t always pay off the way you’d hope.

Even if you already have an in-house development team, you can outsource part of the project (or even all of it). This will reduce the strain on resources and allow your team to get things done faster.

Experience

Being professionals in one area is awesome. But only until the team faces a task that’s outside your team’s comfort zone. For example, the need to work with a new third-party framework. Suddenly, things slow down, or worse, you might hit a wall with your project.

With outsourcing, the situation is different. Service providers often maintain a multi-profile team ready to tackle just about anything. This means whatever your project needs, they’ve got someone who can handle it.