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Is offshoring for start-ups possible? – 5 tips for start-ups that want to offshore

Michał Piątkowski 0

You know how the story goes, right? Several fresh grads, a garage, living off pizza and beer and creating a groundbreaking product that conquers the world. The reality in most cases is much less idyllic. And one of the challenges you will need to face is how to grow your technical team. Good engineers are both expensive and difficult to find. And it is only getting more challenging.

So can offshoring be a solution? I am convinced that offshoring R&D works and can solve hiring challenges. How to do it, though?

A stigma or a godsend?

Offshoring for start-ups seems crazy for some. How can you delegate the creation of your precious product to some random team in a remote location? They will deliver some crappy code that doesn’t work, build not what you wanted, or disappear with all the money and ideas you gave them.

Others consider it to be a miraculous solution to all the hiring challenges. For half the price you get developers from a lower-cost country who, within weeks, build your perfect software product.

None of these perspectives reflect reality. With proper organization and leadership in place you can have amazing results, but without them there’s a huge risk of failure, disappointment and wasted money.

So here are 5 tips for start-ups that want to offshore:

1. Hire the right people

This might seem obvious, but surprisingly this is where many companies fail. So first, and foremost, you need to make sure you build the right team. People that have the skills, motivation and capacity to deliver what is expected of them. Not a temporary group that hops on and off a train.

This in most cases means hiring a dedicated team. Experience says that hiring an agency to co-create your product isn’t really the best idea because what you don’t want to have is a contractor mindset. Even if your funding is limited, hire as if you would be hiring back home.

There are exceptions like outsourcing of an isolated module of the product that requires a very specific skill set that you don’t have in-house. But these are exceptions. Your goal should be to ultimately have an offshore office for your offshore team. Period.

2. Build the local leadership

The quality of the code and ultimately the quality of the product you’ll get depend to a large extent on the technical competency of the team. This means you need to hire a team of people with skills at least on par with the skills you expect to get in HQ.

Initially, you will be involved in the interviews, but what you really need to do is have a strong lead engineer in your remote location that will be coming from the top 20% in terms of his capabilities. Someone who you can trust and who can assure the competency of the people hired now and in the future and obviously the quality of the code and solution delivered. By the way, locations like Poland have amazing technical engineers (there is a long tradition of engineering schools in Poland).

If you choose to do all hiring and control from HQ, you will end up working some odd hours, struggling with communication and still not getting what you need. Remember, you are scaling up which means giving away the control and putting talented people in charge.

Ultimately, you will also need to find a general manager for your remote office who will have had solid international exposure and who you will get on with easily.  Rely on someone you trust, maybe someone who is referred to you.

He will be someone who will motivate your remote team, make sure they understand what they are doing, and why they are doing it. As a leader he will be proactive and will not be afraid of raising difficult points if needed. He will be your “remote control” to make sure the results are there.

This person will be crucial to assure success of your offshore model. As much as the lead engineer assures the technical part is taken care of, the GM will assure that your offshore group works well as part of your entire organization.

3. Make the offshore team a part of your team

So let’s assume that you are creating a dedicated offshore team that will be recruited specifically for you and will become your permanent group. Ideally you would set up your own office and make them part of your organization. Or at least make it a part of your organization roadmap.

Anyway, whatever setup you choose, make sure you treat them exactly as you would treat your own team. There is really no reason why you would treat your offshore team differently than your HQ team. If you give stock to your developers in HQ, give stock to the offshore developers. If you set up a fancy office back home, do the same thing for the remote team. The same tools you use to keep your engineers on board in HQ will work for your offshore location. And by the way, quoting a TechCrunch blog, giving your engineers stock is a sign of trust and appreciation. I would also say it is a sign that you promote equality in your organization.

Finally, build a relation between the engineers in different locations. Have people visit each other’s offices at least once a year to foster the relation, trust and understanding.

4. The grease: organization and processes

After assembling your perfect team, the second key element of success of offshoring is the right organization and right processes. Once you have that, everything else will be significantly easier.

The right organization relies on tools, processes and best practices for remote collaboration. You want to make sure people work in the same way in all locations and they have tools to communicate seamlessly. They need to be trained on all of these.

For an early stage company this might seem like an overhead. And certainly it is, as working in the same office requires much less structure. But remember, your goal here is to scale up which means growing in size which will require a structure anyway. In other words, you will need organization and processes anyway.

How to succeed here? Find someone (on your HQ team? on the offshore team?) who can advise you on the proper organization and processes. A person who will define and implement initial processes to minimize the overhead and get the benefits quickly.

5. Be realistic in your expectations and assumptions

Like with every business venture there is a risk and effort involved. Expecting quick and perfect results is not realistic. What is realistic is expecting that some parts will be hard and properly preparing for that. By the way, this means that building your MVP with an offshore team is more difficult than involving offshore once an MVP is out and your funding is secured.

Once you have your team, be aware of cultural differences. And the more subtle they are the more difficult it might be to spot them, hence the more difficult they might end up being. Travel, meet and understand the people from the remote location. Invest in communication so that there is a good flow of information both ways and a good understanding between both sides.

Also, In our recent blog post we explain how tribalism works in multinational organizations. Tribalism is a mechanism that tells your brain that your group is better than another group. Don’t let it control you. Treat your remote team as you treat your local team. Keep them happy as you do with your team in HQ.

In conclusion, offshoring for start-ups is a growing trend and it can be incredibly successful. However, it will work only if your start-up is ready to face additional overhead and adapt to a new situation. Once you have people in your remote location who you can trust and the relation and processes are there, it can work more or less like your second office across the street.


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