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Should a cloud based company have inhouse developers or use outsourced developers?

So our minimum viable product has launched and we have paying customers. Up to this point, my cofounder and I have paid a development team as finding a CTO locally is very challenging geographically ( in Syracuse, NY ). However, we are now getting increasing interest from customers and continue to have needs to expand our product with new features.

So can we survive paying for developers or should we do so until we secure an inhouse CTO/ developer = has anyone been able to continue to grow using a firm that can build and maintain code? Again, our challenge remains finding someone in the meantime.

Thanks - any help is appreciated.

10 Replies

Michael Barnathan
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Michael Barnathan Entrepreneur • Advisor
Co-Founder of The Mountaintop Program, Google Alum
Not only can you keep growing with a firm, but it's easier in the short term. But if coding is what you are, you need to take it in house over time - and when you do, the migration will likely be more painful the more that's already built.

I'd propose this: assuming you have the budget, keep the app development going with the firm while you search for a CTO. That way the development still happens while you also make progress on developing in-house expertise.

Keep in mind that while in the beginning the CTO role might be primarily a coding one, CTOs typically handle a lot of larger architecture, recruiting, strategic, and management responsibilities down the road. Your ideal CTO now might not be your ideal CTO later.
Tim Cullen
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Tim Cullen Entrepreneur
Principal Software Engineer
9 times out of 10 you will be better off being charge of your own destiny. That's being in charge of developing the IP that your companies future depends on. Otherwise your fate in is someone else's hands.
Eric Wold
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Eric Wold Entrepreneur
CEO @ RingSeven • Web & Mobile Dev • Startups
Dear Nikhil,
It sounds like you probably have a good partner in place for now, but I urge you to bring the knowledge in-house for greater long-term security. In the past I have maintained a blend of on-shore / off-shore to leverage risk against costs.
If you have no developers in house yet then I feel you are in a risky position. I have seen large surprise price increases or sudden decreases in availability from off-shore partners. If they get a chance at a large contract... they could pull your guys and reassign them. It's happened before.
Why not hire dev on-shore in a location less costly than NY? Utah is one of the hottest growing areas for tech (and much more affordable than NY), but there are many good choices available to you.
Eric Wold
Nikhil Thakur
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Nikhil Thakur Entrepreneur
Director , ONE Spine Center at Orthopaedics Northeast
Thank you for the replies and advice.
Michael - Thank you for the advice. I completely agree with you. Our developers are US based and have done a nice job upto this point. As we scale, we would like to have people who are vested in our success rather than their weekly check that they receive. Your point about the CTO scope now vs in the future is poignant and very insightful. Thank you

Tim - I agree with you as well.

Eric - Yes , our developers are state side. We contract with them to develop our code. The inherent risks you have pointed out already occurred to us the week before deployment with our first client! Luckily we were able to navigate that successfully. I appreciate the info about Utah. I did not realize that to be a large dev hub - the usual suspects of San Fran, Boston, Nyc , Atl come to mind.

How have you found the best way to navigate a CTO search - posts on forums such as these, friends of friends , rolodex mining ?
Eric Wold
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Eric Wold Entrepreneur
CEO @ RingSeven • Web & Mobile Dev • Startups
Your question about finding a CTO is a good one. Just keep in mind that "CTO" can mean very different things. Do you just need a great dev leader, or do you need a career CTO that has managed technology risk at larger companies? Or one with specific experience in HIPPA compliance because of the medical aspects of your business?

Once you figure that out do some LinkedIn searching to see what the CTO at a "same size company in your space" looks like.
Nikhil Thakur
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Nikhil Thakur Entrepreneur
Director , ONE Spine Center at Orthopaedics Northeast
The concept of the CTO as we define it certainly changes frequently. Currently we are in the orthopaedics, spine, pain management and urology spaces but continue to expand. Also our clients can vary from a 3-5 man group to a large academic institution with potential implementation on a campus wide basis. Hence I think while we need a CTO who can code, they will have to be a hybrid who needs to be able to manage risk and deploy on larger scale. HIPPA compliance is important but that is more manageable with the rest of members of the team who have experience in this area.

Hope it's not trying to find a needle in a haystack!


Rob Gropper
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Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
Do what you need to do to keep moving the ball forward. Keep your current dev team engaged and productive while you add in-house capabilities to reduce risk and costs. I would try to maintain both in-house and outsourced dev support to minimize risk and maintain tribal knowledge.
Karl Schulmeisters
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Karl Schulmeisters Entrepreneur
CTO ClearRoadmap

What you need - and pretty desperately - is a partner or technology advisor that is dedicated to your company and at least has review oversight of the work being done by the contract house.

Your question to some extent belies your lack of understanding of the technology process. A CTO or a Chief Architect or a Technical Advisor - is someone who's job it is to

a) understand and embrace your BUSINESS goals - both short term and long term

b) properly balance - or help you at least understand the tradeoffs for you to make the call - on short term implementation tradeoffs vs. long term roadmaps. For example I suspect that your evaluation of "cloud platforms" was done largely on price and ignored the costs of scaling to what your mid-term operational architecture will need to look like

c) give you insights into technology trends and competitive offerings in the marketplace

d) help you understand and develop your Intellectual Property


No contract dev house will give you this. and without this you are at great risk. OTOH.. once you have this advisor - you really do not need inhouse development.

how to find such a technological co-founder? Incubators, entrepreneurial workshops and also just plain hiring. No it won't be cheap. Particularly if you are going to only pay with equity.

Matthew James
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Matthew James Entrepreneur
Account Manager
Nikhil,

I would suggest reading the following post on managing a distrusted team by Alex Turnbull at Groove

https://www.groovehq.com/blog/being-a-remote-team

Cheers,
Matt
Moh'd Jebrini
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Moh'd Jebrini Entrepreneur
CTO at Mashvisor
Its good to have your first clients, having an MVP is even better. You differently needs someone who are on spot in your office to handle the technical operations, with deep understanding of your technology stack.

If you have approved that you can run a remote team and you have passed multiple phases together, that means all you need is to hire someone who is more involved into the technology sector to be up to date with the developments.

Finally, resources whether they are working in your office or outside your office are the same if they can achieve there goals on time. disasters happens in-house as well; don't take it wrong!

Many companies/startups are doing that everyday (We are one of them); so its all about how you structure your self/team.
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