Outsourcing App Development: The Good, the Bad, and the Ugly

August 2, 2016 - 10 minutes read
The grass is always greener: looking across the ocean from San Francisco towards cheaper tech ecosystems.

The grass is always greener: looking across the ocean from San Francisco toward cheaper tech ecosystems.

“Go ahead and outsource.”

People are always surprised when we tell them this.

We get dozens of questions about offshoring every week, and the people asking always expect us to steer them away from it. After all, we’re an LA-based app development company — why would we encourage someone not to work with us?

The truth is simple: most successful apps are developed by US startups and companies. If your app will do better with a US development partner, that’s what we’ll recommend. However, there are some situations where offshoring makes sense.

This post covers all the most common questions we get about offshoring.

Reasons to outsource

What draws US startups abroad? Usually, finances.

What draws US startups abroad? Usually, finances.

Startups asking us about outsourcing fall into two camps:

  1. Founders with no money, trying to save resources.
  2. Founders who outsourced an app unsuccessfully, looking for someone to take over and “save the project.”

Offshoring gets a bad rap because, honestly, most startups that try to get a company in India to build their app idea wind up in the second camp: stuck with a broken app that never gets traction.

Before you risk getting burned, look seriously at your product and decide if offshoring is worth the gamble:

When outsourcing makes sense

Outsourcing makes sense in two cases:

1. Apps with extremely low budget

Let’s be honest — if you’re offshoring, it’s probably about money.

Maybe your idea is too risky for investors, or maybe you want to avoid sharing equity for some reason.

Either way, with proper management, it’s possible to get a servicable app — or at least a decent prototype — if you’re smart about who you hire and how you communicate. We’d reccomend you consider alternatives first, though. (See below.)

2. Apps with non-US audiences

redBus, an app that streamlines transit in India, is an example of a startup successfully targeting consumers in developing countries.

redBus, an app that streamlines transit in India, is an example of a startup successfully targeting consumers in developing countries.

The most popular apps in any given country are generally developed by startups in that particular country. (Surprise, surprise.)

If your app idea is a service targeting an Estonian audience, go work with a team in Estonia. Sharing economy apps targeting emerging markets in South America would do well to partner with teams in South America. It’s all about context.

However, be warned: you get what you pay for, so pick your development company based on previous work and reputation for quality — not because they’re the cheapest.

3. Apps that are clones of existing apps

Cloning apps is morally dubious, so if that’s your goal, reputable domestic developers are unlikely to jump on board.

Also note that Google and Apple check for cloned code and assets when they review app submissions.

Be warned, however, that “Snapchat with a twist” ideas don’t have a great track record of success.

Offshoring vs Bootstrapping

If you truly can't afford life in San Francisco, bootstrap from somewhere cheaper like Berlin's Silicon Allee rather than hastily offshoring.

If you truly can’t afford life in San Francisco, bootstrap from somewhere cheaper like Berlin’s Silicon Allee rather than hastily offshoring.

Offshoring has a bad connotation because it’s associated with laziness and cheapness. There’s a better word for saving money in the development process: bootstrapping.

If your goal is to save money without going the rock-bottom third-world approach, here are some smart ways to cut costs:

Start with a prototype

No one should pay for a full-featured app until they’ve tested at least one prototype. Rather than spending $5000 on a “completed app” from a sketchy firm on Upwork, spend $5000 on a proof-of-concept prototype from a top-tier US studio. Then, use that prototype to pitch investors and get the resources you need to build out the real thing.

Move your team to Berlin (or a similar city)

If you have an existing team capable of building your app in-house, considering relocating somewhere with both a thriving tech ecosystem and a cheap cost of living.

We’ve spent time in Berlin and can recommend it from personal experience.

Even within the US, moving from Silicon Valley to a smaller tech hub like Chattanooga could cut your overall costs by a third.

Offshore where you’re from

Poor communication and patchworked teams are the biggest issue with the “rescue projects” that wash up at our studio from time to time.

Founders with family connections in India, Taiwan, or somewhere else with low-cost tech ecosystems have a huge advantage if they want to outsource some or all of the development process. Speaking the language and understanding the tech culture will cut out the big stumbling blocks that trip up those who outsource purely based on cost.

The big problem: the native look

UX matters to today's mobile users more than ever before. Don't cut corners.

UX matters to today’s mobile users more than ever before. Don’t cut corners.

The app ecosystem has matured dramatically in the past five years, and an app that’s “good enough” no longer cuts it.

Every conceivable app is going to have competition. In a highly competitive environment, looks matter — users value UX above all else, even if they don’t know what it is.

The UX norms are different outside the US, and offshore projects lose an enormous competitive advantage without domestic designers who understand the tiny details that separate apps that work and apps that people actually want to use.

What to watch out for if you offshore development

disclaimer: i’ve never outsourced. It’s not worth the risk to me or my team. However, I know people in the industry who have, and here are their top tips for keeping on track:

Communication is central to any development project, both within the team, between the team and management, and between management and founders. If it weren’t for language and cultural barriers, offshoring would be easy. Concentrate on communication from day one, be prepared to spend 10X the effort on specification, and budget plenty of extra time for re-dos.

Time Zone
SCRUM and agile methodologies get tricky when the team is split between two or more time zones. Try to have at least a couple hours of the work day that overlap, or be prepared to relocate yourself during the development process.

The laws around who owns a codebase can become a huge time sink if you don’t get everything in writing up front.

Consider this cautionary tale: in a report at Financial Post, entrepreneur Ethan Benson reported that an Indian company that initially seemed perfect wound up holding code hostage, delivering sub-par modules, and and even using their remote access credentials to attempt to hack his computer.

Make sure it’s clear that any code you’re paying for belongs to you, and won’t be sold off-the-shelf to your competitors. The temptation to double-dip is strong for struggling companies in developing nations. If it’s possible to re-purpose parts of a project for extra profit, many of them will.

You get what you pay for


…It’s a cliche, but it’s true. When you’re hiring a mobile development studio to build a product with you, price shouldn’t be the first consideration.

Look for past success stories, glowing references from trusted sources, and a portfolio of projects that demonstrate experience in your industry. Competitive pricing is good. Pricing that’s “too good to be true” probably is.

So pick your partners wisely — the success of your app idea is quite literally in their hands.

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