Exploring the outsourcing relationship in software startups: A multiple case study

TL;DR

This study explores how software startups manage outsourcing relationships, revealing mixed experiences and proposing strategies to foster long-term partnerships for better collaboration and success.

Contribution

It provides one of the first insights into outsourcing dynamics in software startups through multiple case studies, highlighting challenges and potential solutions.

Findings

Outsourcing is feasible in early product development despite uncertainties.

Startups face challenges in managing commitments and relationships.

Long-term partnerships can be fostered through boundary spanners and mutual commitments.

Abstract

Software startups are becoming increasingly popular in software industry as well as other sectors of economy. Startups that lack necessary competences often seek for external resources from outsourcing partners. Little is known how this outsourcing relationship works and whether it makes sense to outsource the technical competence to an external party. This is among the first investigations on the outsourcing relationships in software startups. By conducting exploratory case studies at six startups, we found a mixed experience with outsourcing. The experimental nature of an early product development makes outsourcing a feasible option, although startups often suffer from its uncertainty and managing commitments from partners. Results further propose that early contract-based activities could be transformed into a long-term partnership by adopting a startup boundary spanner s role, establishing an inter-personal relationship and maintaining a mutual commitment.