Randy RayessRemote work, software dev & outsourcing

Cofounder VenturePact.com. Passionate about software, marketplace startups, outsourcing & remote work. Previously @Ampush, SilverLake, @Wharton

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Hourly rates vary a lot depending on the quality of the developer so its hard to say how good a developer is just from a range of experience. The second component is that offshore developers will have different costs of living depending on which city you outsource to.

The first thing I would do is vet the developer to make sure they are really great at what they do. Then based on location and experience talented offshore developers will charge from as low as $40 per hour up to around $100 per hour.

But again I would focus first on vetting the developers to ensure that they are really great beyond just the '3-5 years of experience' as that does not actually say how good they are. You will find some developers that have coded for 2 years full time and have really dedicated themselves to it to be better than other developers that claim that they have 5 years of experience. # of years of experience alone is not sufficient to make a decision regarding whether or not the developer is really good.

Here is a good read on the topic - http://blog.venturepact.com/blog/why-doesnt-fab-com-use-us-based-engineers

There are many firms that have successfully built companies by outsourcing the development including:

Warby parker
One Kings lane

So it is clearly possible to outsource tech, the main things you need to think about are:

1. What differentiates my company from the others in the market? If your company is not building a new technology or new algorithm then outsourcing software to get you started will work. Of course your core algorithm or core differentiator should not be outsourced.

2. Who you choose to outsource to? Are they a good fit for your needs and do they have the right technical skills?

3. How will you manage and work with the outsourced team?

Depending on your funding position and the type of company you have you might find that there are things that are core to your company that you would like to keep in house and hire a small development team to focus on that and outsource the part that is not core to your business.

With regard to buyout option the main question the buyer will have is on your key differentiating factor so if technology is just an enabler then it will not be as much of a focus in a buyout discussion. However if the buyer if you are innovating in technology and a lot of the IP is in the technology then the buyer will be more reluctant to buy the firm if all your tech is outsourced.

So do not outsource parts that are core but non core parts can be outsourced.

There is a lot of growth in data analytics, data visualization, data science and machine learning.

The main driver of this is that companies are starting to track a lot of data now that they have the technology available and the ability to gather it. This results in a huge increase in data science work.

One of the main challenges companies face is that they are not sure how great a data science firm is. So I would recommend:

1. Make sure to get reviews from your existing clients and introduce your prospects to past clients to give them a better understanding of your work.

2. Check out Kaggle.com and try completing a few projects there as that will help you gain credibility and access clients

3. Check out VenturePact.com and try signing up there are as getting a third party to vet your firm will help increase your credibility. Also VenturePact will help you connect with clients.

The key 2 parts to when you should raise money comes down to:

1. Do you need to raise money now? If your business is revenue generating from the early days then you might not have to raise money right at the beginning?

2. Are you ready to raise? Most investors want to see a launched product with traction and some growth numbers. For early rounds you want to prove that people are using it and its working out well. If you have the numbers to show that you are growing well and that users enjoy using your product then you are much more likely to raise.

With regard to your second point, its very hard to raise without having a full time team as investors will see that you are afraid to take the risk of dedicating yourself full time to a company so they will usually pass on the idea.

You want to show that you are dedicated to the business and that your team is. With all the requirements of running a startup its more than a Full time job so its going to be difficult to convince investors that you can compete in the market when you are not fully committed.

The common thoughts that occur when starting a company is that you made the wrong decision. You will identify all the challenges that you are facing and see all the gaps in the idea early on that make you question the decision. Meanwhile you will start to see all the positives in your previous job, the consistent paycheck the lack of stress etc and forget the negatives, which actually caused you to make the jump.

In reality, everything that you do has ups and downs, advantages and disadvantages so its not productive to spend your whole time comparing your current role to every other job you had. It is best to focus on the key assumptions that have to be true for your startup to grow and test those out.

All startups go through challenges, all startups make mistakes so do not feel that just because you made a mistake or that you are facing a problem that your startup will definitely fail or that you are incompetent. Its part of the startup journey!

This is a great question and one that a lot of firms find challenging. The main problem in the development landscape is that all development firms say they are good so its hard for a customer to know how to differentiate between firms and figure out which firms are actually great versus an average development team.

We have been in this space for a while and found that there are a few things that can be done to help alleviate the problem-

1. Focus on your clients - do great work for your clients and have their stories speak for themselves. Instead of just saying we are great have your prospects speak with your clients about their experience working with you. This will help companies get a better sense of the quality of your work.

2. 3rd party verification - We launched VenturePact.com to help companies find the best development firms, and to help development firms validate that they are approved and trusted by an independent third party.

3. Show them what you have done. Instead of simply stating that you are great, show them what you have built and why you are great or different from everyone else. This will give them a better way to validate your higher price point.

I hope this helps!

Delegation of work is necessary and important. The key factors that hold people back are their need for control and their sense that no one else can do what they do as well as they do it. In reality, we have to give up control as delegation is crucial for the success of any venture. There are no large companies today with less than 10 employees because as companies scale they hire people and allocate responsibility to their team.

A tech startup can fully outsource technology if it is not their differentiating factor. A fashion tech startup can outsource their development requirements whereas a new computer vision company cannot as technology is their core differentiator.

That said, companies should have a head of product in-house, who can drive the vision for the product and manage the development team. It’s important that this person have technical experience as this will help her better assess the quality of the work done, the speed at which work is done and she can help resolve challenges as they arise.

You can find the best value by outsourcing to areas like Eastern Europe, South America and South East Asia, which all have a low cost of living and large supply of technical talent. Companies in the US like to work with firms in South America because they are in the same time zone. Companies in Europe prefer working with outsourcers in Eastern Europe or South East Asia also because of proximity.

If you have the right selection process you can find great value in any of these three main geographies as they all have high quality talent. The key though is to be careful when assessing quality as within each geography you will find a wide distribution of talent so if you pick at random or if you optimize purely on price you will probably not find the right person. Usually its best to look for a highly talented person and focus on quality first.

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