I am often asked by entrepreneurs if they should outsource the development of their initial prototype. Outsourcing is pretty sexy as it can be a relatively inexpensive and fast way to create a product. While the cost savings can be real, however, so is the level of risk. In bad scenarios, entrepreneurs can find themselves with a product that needs to be rebuilt, often from scratch. The cost and time savings can turn out to be an illusion.  I do, however, know many entrepreneurs that successfully outsourced development.

So how do you know whether or not you should consider outsourcing the early development of your technology?

While there is no simple answer, there are a few considerations that I will highlight which could help you make that decision. If your technology is an original technology or depends on complicated logic or algorithms you may want to avoid outsourcing at least that portion of the project. The vision for the product is always partially lost in translation when a business team tries to communicate with a tech team. This dynamic, however, is further amplified when describing the product via video chat and even more challenging when there is a middle man or a development team with a limited mastery of your native tongue. While these challenges can be mitigated by robust product specifications and wireframes, an already challenging process is even more challenging.

This isn’t to say, however, that you can’t get a great product from an outsourced shop. You can. The key is to outsource elements or even entire projects that are more limited in their logic or algorithmic complexity, to over-communicate your specifications, and to practice careful, diligent project management.

Your sensitivity to this risk should be heightened if you don’t have a technical lead inside your company. If you consider your outsourced provider to be your CTO, you’ll have a difficult time vetting the progress of their work and may find that they’re off course too late in the development cycle. Furthermore, evaluating the product will likely be challenging without an engineer on your side, making it even riskier to completely handoff the development of complex logic.

In sum, if you’re aiming to build a very simple technology, outsourced providers can standalone as a great strategy. If you’re looking to develop a more rigorous technology you may be better off building it in-house or having an in-house technical lead oversee the outsourced work.