When you outsource something, then your company is not doing this anymore 😮

So many people ignore the impact that early decisions can have on the future of your business.

Last month a very senior acquaintance asked me if I could help him find an outsourcing company in Ukraine to help him develop his product. Turns out his business is about building a SaaS for SMEs, and he was thinking of outsourcing the most critical part of product (the software development bits).

He quickly turned around and understood the strategic mistakes behind this kind of decisions, but there are probably many companies making this sort of mistake which penalise them heavily down the line.

Ultimately in the short term, the arguments seemed favourable:

  • It's a lot cheaper
  • He can get instant access to the relevant skills
  • A B2B contractual engagement sorts of "protects him"

If you consider the long term by-products of this decisions though it's a terrible decision:

  • Product development is not aligned with his commercial objectives (yes, cause it's a different company and he's now the customer)
  • The dev team is far away (not from a physical perspective, but from an "understanding" perspective) from the user. So they can't drive innovation at all, so they value is infinitely lower than an in-house dev.
  • He is now fully dependent on another business in order to succeed.

What does IH think? I did a podcast episode where I discuss the impact of those decisions more profoundly.

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