Why do outsourced software agencies more often than not stuff up the projects that they undertake for non-technology founders?
Most founders when they need to develop their v1 products/MVPs will need to use an outsourcing agency to do this. They usually quickly become aware that there is a big difference in cost between commissioning an agency in the UK, and engaging a company overseas, typically one in Asia or Eastern Europe.
One of the HIDDEN SECRETS about outsourcing is that these agencies struggle to deliver projects for startup businesses where the founder or founders are non-technology people, to the extent that a lot of these projects fail, and fail without fanfare.
It’s very common that a founder will go out there and find £50k to bootstrap their business, engage an agency, have that project fail, and then end up going back to their old job. One of my missions in life is to help founders not get burnt in this way – i.e. you should be able to take your £50k and get your idea and your business off of the ground.
If we dig into the challenges here – the first problem you have is that agencies do not know that they don’t do a good job of looking after non-technology founders. To them, you look like a normal client, but you’re not. Being unaware of problems will exclusively result running into problems, as the same way that running into a minefield wearing a blindfold is never going to give you a good result.
The normal client that agencies deal with are ESTABLISHED BUSINESSES, and this is where the model of using them to support a STARTUP comes off the rails.
First and foremost, established businesses know what their business model is. They know who their customers are, what pain points they have, and what products and services are needed to soothe that pain and make them happy. This is described as PRODUCT-MARKET FIT – established businesses have PRODUCT-MARKET FIT, where as startup business are working in full on experimentation mode in order to find this.
When an established business approaches an agency with a project, that project tends to be well-defined and have clear outcomes. The agency is then able to quote against that project, get that contract signed, then the solution is delivered, and it usually delivers what the business feels its customers want.
An established business also has a bit of cash in its back pocket to spend its way out of problems that might come along the way as well.
When a startup approaches an agency, the final product – that final piece of PRODUCT-MARKET FIT will only be discovered as the software is delivered – i.e. the product cannot be described ahead of time.
This is the biggest mismatch from the agency’s perspective between the two clients – being able to define up front what the project’s objectives are, as opposed to striking out the direction where the project objective’s MAY or PROBABLY do lie.
The third issue that agencies have is that they work best when the technical leadership is shared between their staff and the client. In a startup business where the founder or founders are non-technology people, this can’t happen, and the startup is OVERLY RELIANT on the leadership of the agency.
In reality, complex software projects need to be overseen by both the customer and the supplier with in a shared, “collaborative responsibility” mode. This is no shade against the ability of the supplier – it just provides better management of complex projects. The advantage of having a “project board” where customer, supplier, and all the stakeholders meet is accepted best practice for any type of project, technology-based or not.
The fourth issue is that qualifying an agency as being the best supplier for you is really difficult. It’s a very undifferentiated industry, and it’s very opaque in how it operates. It is much easier to qualify a UK-based agency compared to an overseas agency, because of compatibilities around culture and also employment law, and domestic laws. It’s not usually to talk to an overseas agency who’ll tell you they have 120 staff, only to find they only have five actual employees and the rest are associates.
So what’s the summary. How do you do this? In a three minute video, I’m looking to create AWARENESS that there is a problem, as most people don’t know there is. But I post a lot of content about this – so feel free to binge the content that I post on my socials.
You can also join my V.I.F. or Very Important Founder programme, which if you follow the link in my bio you can sign up for, and when you’ll do you get access to tons of FREE resources designed to help non-technology founders start-up and scale-up their business. Thanks for watching, and I’ll catch you next time.