For everything you don’t enjoy doing or simply can't do, there is someone who get paid to do it. This is pretty much the idea behind outsourcing work to build your product or company.
For the past decade, startups and software companies in the developed countries have been hiring software developers from all around the world to fill the talent shortage gap at home. Hiring software engineers remotely from developing countries like Ukraine gave birth to a global outsourcing industry which totted up to 92.5 billion U.S. dollars in 2019.
Before we dive deep to discuss some of the successful companies that were built by outsourcing software and various organizational responsibilities, let’s get familiar with some stats.
It goes without saying that the advantages of using outsourced software developers are rather vivid and that’s why companies like Google, Slack, Microsoft, Alibaba, and GitHub trust the outsourcing process. Some of the highlighted benefits include
With more than 12 million daily active users, Slack is the most widely used communication channel for startups and small companies. While we love Slack for its simplicity, neat design and trendy logo, most of us aren’t aware that the company outsourced a great deal of its design. Slack outsourced their logo creation, the marketing website design, and chunks of software needed to build the web and mobile apps. All this work to an agency based in Canada. The outsourcing journey traces back to 2012 when Butterfield brought Slack’s prototype to user interface specialists MetaLab and the company build the app from the ground up.
Slack’s strategic decision to hire a company offshore is proof of how outsourcing even at the initial stage and for the most crucial steps in product development can turn out in your favour. Starting with only a prototype, the company built an entire strategy for establishing and refining the essential components of an organization through outsourcing. Would they be the unicorn they are today without it? Who knows.
All around the world, WhatsApp is the first choice for many users looking to stay in touch with friends, family and now businesses as well. Needless to mention, it is one of the most successful companies ever built. To eliminate a threatening competitor to their Messenger app , Facebook acquired Whatsapp for 19 billion.
Before Facebook got WhatsApp under its wing, the company relied heavily on outsourced talent. WhatsApp hired development teams in Eastern Europe which resulted in breaking the top rankings list on Google Play, App Store and other platforms - almost to bury the original SMS technology as an afterthought.
The company also outsourced its iPhone app development to software engineer, Igor Solomennikov, who later was hired as a full-time employee.
According to Bloomberg, 2018 was the year when contractors working at/for Google outnumbered the full-time direct employees in the company. Google’s outsourcing journey started in the year 2011 with 1,000 AdWords support jobs sent to call centres located all over the world. Later in 2014, the company announced an outsourcing partnership with Latin America-based technology services provider, Globant. The partnership led to the successful development of Project Ara and related software.
As of now, Google’s advertising service, AdWords, which has the highest number of contractors, is still the cash cow for the company with over 116.3 billion dollars generated in revenue for 2018.
Google’s outsourcing strategy illustrates that even the world’s largest team of 89,000 developers need the perspectives that come from outside talent to truly advance and innovate.
However Google outsourcing work to talented developers offshore isn't really because they're lacking this expertise in-house. It still boils down to money and the significant cost reductions that come with hiring offshore.
Lowering costs keeps investors happy and the in house team has more time to focus on their core work.
Also thousands of brilliant developers get to say they work for Google. Pretty cool.
Ali baba, the eBay of the Chinese market, which crossed the 54.5 billion USD mark in 2019, also would not have grown to such a behemoth without outsourcing its initial website design and development work to a U.S. based company.
However, outsourcing in Alibaba’s case was done because of the scarcity of talented developers in china. Not because going with a U.S. company enabled them to cut costs.
In 2014, Alibaba’s $25B initial public offering (IPO) became the largest IPO in history. In his autobiographical novel, Alibaba: The Inside Story Behind Jack Ma and the Creation of the World’s Biggest Online Marketplace, JackMa has also discussed why the company decided to outsource website design and development in the early days. One of the reasons he mentioned was the appeal to a bilingual audience. The company wanted to localize its site for both Chinese and English speaking visitors.
By following the outsourcing model, the company was able to catch the attention of both local and foreign audiences. This worked because the company they outsourced to in the States, were native English speakers so there was product/market fit and communication alignment with the target audience they were building for.
The open-source coding site, loved for its collaborative platform and community of 23+ million needed help with website design but had little to no money to hire an in-house team.
The company looked outside of its own talent pool and hired Chacon to write the backend of the website as a freelance consultant.
Yes, Github's backend, which hosts over 64 million projects right now, was laid down by an outsourced developer - now GitHub’s Chief Information Officer.
By outsourcing back-end work to a freelance consultant Scott, GitHub laid down the foundation of the most important feature on the site and acquired the most talented person to do it. When a company lacks budget, resources or needed skills, outsourcing becomes a valuable method for getting the task done while maintaining the highest standards of quality.
While outsourcing may not seem like an easy task, it is worth getting comfortable with. In 2020, this is a business decision that can make or break your project.
Once you understand the benefits of outsourcing and how it can help you kickstart your idea with less cost, more flexibility, better skillset and returns, the hunt to find a top-notch agency to outsource will be simple. If these 5 companies built their early product on an outsourced foundation, trust that you can successfully do it too.
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