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Six Tips for Startups to Reduce Their Software Product Development Costs

reduce software dev costs

Starting a business is fun, although it can be tempting to go for broke because you are confident that your product will be a huge success. However, according to CBInsights, of the top 20 reasons why startups fail, cash shortages come second on the list (29%), right after the lack of market demand (42%). How do you make sure your tech startup can save money and survive? Here are six tips for startups to reduce their software product development costs.

Building software that works on a tight budget is the biggest challenge most innovative startups are facing today. On average, every sixth project runs over budget by a whopping 200%.

Speaking about the main reasons for budget overruns, high costs of local tech talent, poor planning, lack of communication within the team, technical incompetence or unrealistic requirements top the list.

Is there a way to successfully build your startup product without losing all your money? Absolutely!

Here are some tips for managing product development expenses on a shoestring budget that I’d like to share with you.

Build a cost-effective product development team.

People are the most important part of any software development project. When you have experienced and motivated people with excellent technical and communication skills, you are halfway to deliver a successful product.

It takes time and money to build a development team that will deliver above your expectations. You need to find talented people, pay for onboarding, adaptation, and training, as well as equipment, workstations, software licenses, etc.

Also, if you are building a new team from scratch, it will take a while for people to get to know your business, technology, and the product they are developing.

If you work remotely, hire wisely. If you run a distributed software development team, you need to make sure you are hiring the right people for team roles, and you’re paying a fair price for them.

Tips for building a cost-effective yet highly qualified team

1. Consider building a smaller team first

The larger the team, the more difficult it is to manage it and bring it up to speed. The rule of thumb, according to Jeff Bezos, is – if you can’t feed your team with two large pizzas in a meeting, you’re in trouble.

Having too many people on your team means more disagreement, more communication gaps and issues, higher resistance to change, and ultimately lower productivity.

It is best if you build your core team before starting the project. If you constantly shuffle people in your team throughout the development process, you will most likely reduce the productivity and delay the progress of the project.

2. Distribute your team across several locations

In the world of globalization, it makes no sense to be bound by any physical boundaries. You need to stay cost-conscious and eliminate any spending unless it’s really crucial for your project success.

If you can’t attract or afford to hire a mature solutions architect within your home country, hire one overseas and integrate them into your in-house team smoothly with the help of video conferencing, project management tools, messengers, shared dashboards and team-building activities.

One of the leading fintech startups in the UK couldn’t find and hire the right skill sets locally (due to talent shortage and high rates) and it risked delaying product delivery and losing traction.

To solve this issue, the company hired a local tech consultancy with an R&D Center in Ukraine, Europe’s leading hub for outsourced software development, and the largest tech talent pool.

The consultancy helped them build a distributed software team across three locations: the UK, Spain, and Ukraine. DevOps, business analysis, and security functions stayed in the UK, while most developer roles (.Net, AngularJS), QA, solutions architect, and scrum master were hired in Ukraine and Spain.

Because Ukrainian and Spanish resources were way cheaper than those in the UK, the startup could save significant costs and build their MVP fast enough to attract £1 million from VC funds and private investors.

Many startups begin as a “one-man show” or as a team of two or three people. But as you elaborate on your MVP and build more features, you’ll need to scale your product and, thus, hire more employees to join your team.

Consider going remote

The Covid-19 pandemic has shown that we no longer need to rent an office space to build and deliver great products. In fact, more and more organizations all over the world are choosing to work entirely remotely.

By using remote teams and collaboration tools like Skype, Slack, and Trello, you can save tons of money by ditching the brick-and-mortar office space.

One study found that if a company allowed an employee to work from home half the time, it could save an average of $11,000 per employee per month.

Going remote also allows you to move to a less expensive part of the country to save costs or even to migrate to lower-cost yet resource-rich countries like Ukraine or Portugal.

More and more startups are abandoning the hustle and bustle of metropolitan areas in favor of cheaper cities with populations between 20,000 and 100,000. As technology advances, nothing prevents you from running a successful technology company from a home office in, say, Leicester, UK (where I live and work).

Start with fewer features

Every feature you build will cost you money.

Before you release a full-fledged product, your startup won’t know what features will be important to your users. For instance, your team might spend a lot of time and money developing a feature only to find out later that your users find it useless.

The smarter choice is to build a solid MVP first with the most in-demand features only. Once your MVP is released, you can collect valuable feedback from users to find out exactly what features they like and want to see in your app. Then, as you attract more funds, you can build features that will further enhance your product.

Your goal should be to build and market a product with minimum features that can help you onboard the first paying customers and start making money or attracting new funds.

Start testing early

To avoid delivering a glitchy product to the market, you should start testing it early in the software development process. By doing regular tests throughout the development lifecycle, you will discover and fix issues before moving on to other parts of the project.

If bugs pile up and you get to the end of the development process, you will need to go back and rework it. Making changes takes time and money. It will also push the release date back. You will be left with a low-quality product, wasted money, and psychological stress.

There are ways to reduce defects, but there is no way you can catch them all.

That is why bug tracking is really an important step towards reducing your product development costs.

The worst thing you can do is build your software in such a way that your users cannot use it. If you want to change something after the release, brace yourself for overheads and additional payments. Poor project planning typically results in overblown budgets.

Early user acceptance testing (UAT) can be used to minimize development costs down the road. UAT should be done after unit testing and functional testing, but it can also be done during the prototyping phase. All you need to do is create test scenarios based on your user journey or personas and have an industry or customer experience expert run the tests.

This approach will also help you reduce turnaround time and identify defects that can be fixed promptly to avoid overheads.

The same refers to security: penetration testing should be embedded in your entire product development lifecycle as early as possible to avoid overheads at a post-release stage and unhappy clients.

One study found out that developers spent up to 50% of their time fixing bugs that could have been avoided earlier in the process. At the same time, the cost of fixing errors after development was up to 100 times higher.

Choose the right tech stack

Choosing a tech stack for your project development is similar to choosing a car to buy. As a future owner, you need to take into account the cost of your car maintenance after the purchase, as high maintenance costs will add up to your total cost of car ownership.

According to Colette Wyatt, CEO of a UK-based software house Evolve, the cost of technology you are going to use for your project will directly affect the cost of your product development. What tools will you use? What framework will you work with? How large is the available pool of developers skilled in this or that stack? These are questions you need to answer in the first place.

Choosing the wrong technology stack can be costly, and it may bring you the following problems:

  • A new stack will take additional time to accept, so your build time will be longer than expected;
  • Some of the latest tech stacks have frequent update cycles that will require frequent changes to keep the application running with the latest codebase;
  • You may have trouble finding experienced developers;
  • The technology stack can be hard to sustain.

Go to Cloud

If you’re a startup specialized in data analytics or data science, ignoring Cloud migration equals shooting in your own leg. Even if data isn’t your core business, you still should consider taking advantage of Cloud opportunities and streamline all of your data-intensive processes by migrating your eCommerce or customer analytics to Cloud.

Cloud computing can be extremely cost-effective for startups due to the increased productivity they gain. Deploying cloud-based software is significantly faster than a conventional setup.

While a typical company-wide installation takes weeks or months to complete, cloud software deployments can happen in hours. It means your employees will spend less time waiting and more time working.

What other benefits does Cloud-native architecture offer?

Greater flexibility

Cloud solutions are available on a pay-as-you-go basis. This format provides savings and flexibility in several ways. First of all, your startup doesn’t have to pay for software that isn’t in use. Unlike upfront licenses, in cloud computing, you typically pay per user. Plus, pay-as-you-go software can be canceled at any time, reducing the financial risk associated with any software that doesn’t work.

Finally, the initial cost of the Cloud is lower than on-prem solutions. For companies that need top-tier products but don’t have a lot of budgets, cloud solutions offer fantastic flexibility.

Save on hardware

For high-growth companies, new equipment can be cumbersome, expensive, and inconvenient. Cloud computing solves these issues thanks to resources that can be obtained quickly and easily. Moreover, you eliminate the cost of repairing or replacing equipment.

In addition to the purchase cost, external equipment reduces internal power costs and saves space. Large data centers can take up valuable office space and generate a lot of heat. Moving to cloud-based applications or storage can help maximize space and significantly reduce energy costs and utility bills.

Pay less with Cloud credits

One company boasts being able to reduce its AWS costs from $55k to $20k per month and accomplish more than $500k yearly savings.

To replicate their success, here’re some tips:

  • Applying for Cloud credits can reduce your annual development costs by as much as $100k (however, you need to check first if you’re eligible to apply).
  • Utilizing spot instances can save you up to 90% of costs;
  • Purchasing reserved instances in the Cloud marketplace can help save up to 75% of all Cloud expenses, etc.


Wrapping up, to reduce your software product development costs, you need to do the following:

  • Build a great team, either in-house or distributed across locations;
  • Start testing as early as possible;
  • Focus on the main features that will help you onboard first clients and monetize your solution fast;
  • Leverage Cloud computing.

A mix of the right people on the team, proper communication, the right tech stack, Cloud-native architecture, and a reliable tech partner is a significant prerequisite of successful product development.

Image Credit: Scott Graham

The post Six Tips for Startups to Reduce Their Software Product Development Costs appeared first on ReadWrite.

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Remote Work in the Time of COVID-19

The world has changed…

Two months ago, if I told you that remote work would be the global norm by mid-April, you’d have thought I was hanging out with Elon Musk too much. And, if I told you that by the beginning of May, you’d make every hire remotely, you might have laughed in my face. Here is remote work in the time of COVID-19.

…suddenly, nearly all technical jobs are remote-jobs, all dev-teams are distributed teams, and virtually all hiring is remote hiring.

In this article we’ll take a quick look at the trends that have accelerated this progression beyond all expectations, we’ll consider what to expect once we’ve made it to the other side of the coronavirus crisis.

And finally, we’ll dig into the fundamental changes in leadership, management, and mindset that will allow people to weather this period of extraordinary change and come out the better for it.

The shift to remote work has radically accelerated.

Fully remote distributed companies used to be a rarity. Now, it’s the new normal. As a result of COVID-19 and the sudden need for social distancing, everyone is working from home. In an instant, remote work went from a small Silicon Valley trend to a ubiquitous element of daily life. Zoom, Slack, Trello, Jira, and Microsoft teams – are all suddenly household names.

You can’t read the news or watch TV without seeing a how-to-go-remote guide.

What’s fascinating is that this global experiment in remote work has been a surprising success. Sure, there have been a few hiccups, a few cats (or kids) in the frame during the nightly news, and one or two things that were shared with co-workers unintentionally.

What we’re not hearing is businesses blaming their problems on the fact that people are working from home.

Square lets employees work from home permanently
Announcement: Square lets employees work from home permanently

Why remote work will persist after the disease dies out

Coronavirus may have accelerated this change, but it isn’t this crisis that will cause the change to stick. That’s because remote work is more than just concerns about health and social distancing. Driving this tectonic shift in the way we work, the way we hire, and who we’ll be hiring (and working with) in the future — is something else. 

The perspective of running a company that specializes.

From my perspective, as someone that runs a company specializing in hiring high-quality remote engineers, matching people with opportunities, and managing remote teams, there are three key drivers.

The Coronavirus pandemic is undoubtedly a catalyst for this sudden movement, but the underlying factors that are powering this change include:

  • Employee preference to work from home (plus higher productivity in many cases)
  • Cost savings companies experience when they eliminate expensive office rents and the payroll costs associated with the salaries required for people to live in major metro areas.
  • The fact that the Internet and remote work apps are finally fast and robust enough that near-seamless remote collaboration is possible.

Many people are more productive working from home

During this sudden office-exodus, where every company has had no choice but to become boundaryless, my long-held conviction that remote-work works are being borne out by new data. A recent study by YouGov that surveyed 10,000 people working from home found that productivity increased. From the USA Today Article: 

So perhaps it’s not exactly shocking to learn that working from home during the COVID-19 pandemic has had a positive effect on workers’ productivity, according to 54% of respondents in a recent survey of professionals ages 18-74.

The reasons for this, they said, were time saved from commuting (71%), fewer distractions from co-workers (61%), and fewer meetings (39%).”

People have discovered that working from home works for many of us. It turns out that we like skipping a hectic commute, living in an affordable community, the reduced need for childcare, and the chance to spend more of our days with our families.

CFOs expect the trend will continue since it saves companies money

Another driver of this shift is financial. In today’s economic climate, which very likely reflects a severe recession, companies need to prioritize efficiency ruthlessly. If eliminating big office rents and the costs associated with operating in major metropolitan areas don’t equate to a significant loss in performance, why should a company spend the money? If your people can deliver from the comfort of their kitchen table, why make them commute, ride crowded elevators, or share space with other people?

Supporting this trend is a recent Gartner survey that revealed that:

74 percent of CFOs expect some of their employees who worked from home because of the COVID-19 will continue working remotely after the pandemic ends.

The technology is mature enough that working from home works pretty well

Ten years ago, having the whole world exit offices and connect from home would have yielded a very different result. The internet itself, and most particularly last-mile connectivity, would not have supported the sudden global shift. Who knew our current infrastructure could support several billion people suddenly streaming video, sharing screens, and running multiple connected applications, let alone also homeschooling their kids, and playing in VR worlds. 

Even in developing countries, fast connections are now common enough that almost anyone that needs a fast internet port has access to one. And the applications that support all this working from home have made a quantum leap too.

There are already half a dozen enterprise-grade video communication applications in our Boundaryless Landscape. And even more collaboration, asynchronous communication, and project management tools for all kinds of work, and a world that is ready to embrace a workforce that works from home.

After the crisis

My crystal ball isn’t any better than anyone else’s when it comes to seeing how this pandemic ends, nor how long it will massively impact daily life. But my vision is clearer when it comes to how companies are going to look when we arrive at our post-COVID normal.

I think many companies will be leaner. The survivors will be the ones that are particularly effective at cutting unnecessary expenses, adding or maintaining talent, or identifying new niches. All of them will include managers that are skilled at managing remote people and teams.

I expect that we’ll see far fewer corporate headquarters with thousands of people working on-site, with many companies maintaining smaller offices along with a large number of semi or permanently remote personnel. On this, I’m not alone; Mondelez, Nationwide, and Barclays all expect many positions to become permanently-remote.

I think big tech hubs like silicon valley will still be highly relevant for securing capital, and for bleeding-edge ideas. Still, my bet is that the next generation of successes may be bred in San Francisco, but they will be born around the globe.

In other words, I think that the post-coronavirus world will be flatter than the one we just left behind.

Managing to Win

There are already a ton of great resources online for helping companies get a handle on running a remote operation. There’s a nice synthesis of them here. If you need to choose better tools or want a primer on communication best practices for remote teams, there’s no shortage of options. But what I haven’t seen are any articles that talk about the company-wide processes that you must build and maintain to achieve success with a company that no longer has walls. 

I thought it might be helpful for people to learn about the process I have found to work best for managing and scaling a distributed engineering team – this is how we run Turing.

Firstly, you need a clear plan for your company. And second, you need to communicate that plan with all the stakeholders in your business. 

If you’re the CEO of the company that’s your executive team, whether it’s engineering, product sales, marketing, social media, and all these other functions, you need to have feedback loops, with checkpoints to track how well you’re executing relative to that plan.

For example, we establish a plan for a month. Then we set monthly OKRs. We have weekly executive reviews of those OKRs to track how we are progressing against intermediate milestones relative to the ultimate monthly goal. In the old days, this might happen in a meeting in someone’s office or in a conference room where you’d come up with a plan and build those checkpoints. 

Now, for a company like Turing, we create a plan like that, but it’s in a Google spreadsheet or some other format communicated widely across the company. Then, we have these weekly check-ins to see how we’re doing relative to plan and to make periodic course corrections. If we have to reprioritize something, or we see something is not going as planned, we can determine what to do. 

We used to make these adjustments synchronously through a lot of meetings and a lot of face to face communication. Now, we’re doing this using Google Sheets and video conferences, and other asynchronous forms of communication. I find it highly efficient to share a spreadsheet with all the people in a company so that everyone can see what our priorities are at any point in time.

One can argue that this way of working is better than the old way. Prior methods tend to create knowledge silos in an organization where people who were not in the room may not know what the company’s prioritizations are. Now everybody does. That’s the more efficient way to do it. 

What’s particularly important at this time, is also to make sure that the leadership team in the company is present, and over-communicates with everyone on the team. Whether it’s reassuring the team about the short-term and long-term future of the company, staying positive, and making sure you substitute for all the social connections that would have otherwise happened in an office.

At Turing, we do that with our boundaryless lunches, with our weekly thank-yous where we tag people in the team for their contributions, and we do a virtual happy hour now, too, where people get together and connect over a video conference.

Companies Must Build a Process for Managing Distributed Engineering Teams

To put a finer point on it, I use the following specific framework to help lead my leaders and their teams.

The “CAPE” framework consists of 

C – Communication. You must be brutally realistic about what’s happening in the market today, good or bad, with yourself, your team, and your investors. Because if you’re not communicating the reality the right way, then everyone can’t be aligned on the same plan. 

A – Alignment. Make sure everyone is aligned on the right priorities, that you’ve communicated those priorities, that everyone understands them, and that the whole team shares a consistent view of what needs to be done.

P – Prioritization. During times of crisis, you need ruthless prioritization where you don’t focus on things that don’t create immediate business value. You must focus on growing revenues, predicting revenues, and reducing expenses. You should not be doing things that will deliver value 12 months from now. 

E – Execution. Have clear goals and targets that you track with high-fidelity. By high-fidelity, I mean high frequency. Now is not the time to have quarterly targets. Especially during challenging times, you need to have a monthly target and track it weekly to see how you’re tracking relative to that so that you can course-correct quickly.

 If you apply the general concepts of the CAPE framework in the context of a fully distributed team, you’ll achieve a much higher level of efficiency throughout your organization; people will be more certain of what’s happening, and what needs to be done next. Short cycles with small corrections can yield easy wins that add up to a company that succeeds. 

One small silver lining

“That which does not kill us makes us stronger.” Nietzsche 

Not every business is going to survive this massive shift in our economy. But the ones that do make it will come out the better for it. The good habits that these teams have developed, management’s skill at running distributed teams, and the ability to execute under pressure will create a generation of antifragile companies poised to grow when conditions allow it.

A Quick Word About Hiring in the Time of COVID-19

If your company is in the fortunate position to be expanding during this time, you’ll find yourself awash in talent, especially when you’re able to recruit from anywhere on earth. Furthermore, as part of the ruthless economic triage, you’re likely to be doing, finding skilled engineers in geo-arbitrage regions is probably more attractive than ever before. But how can you go about hiring engineers in an age when a face to face interview can kill you? The answer is obvious. Remotely.

All Hiring is Remote Hiring

Touchless hiring. It sounds simple. But many things sound simple, not all of them are. It’s easy enough to imagine sorting through resumes, maybe checking a reference, and setting up interviews over the internet with your favored candidates.

To be fair, a lot of companies do hire people like that, but this method doesn’t scale. It takes an unreasonable amount of time to identify the best candidates, and a substantial percentage of your hires will likely fail in their new roles.

Hiring Challenges

These challenges are particularly serious if you want your hiring net to consider talent from all over the globe. While people can (and do) rely on recruiters for help, how do you find a recruiter that can operate without meeting candidates before passing them along to you?

Recruiters and Resumes

And how do you or a recruiter know if a resume is good? It’s easy to vet Silicon Valley hires. You know Stanford is a great school. But what’s the Stanford of Kosovo? Or the Harvard of Brazil? We don’t know.

US resumes are likewise simpler to evaluate. If someone worked at Google, or Facebook, or Apple, or a highly regarded venture-funded startup, you can be reasonably certain that the person is skilled. You can also be reasonably sure that they have advanced English communication skills.

But you can’t assume that these things are true if an applicant is from Hungary. They may be a top-tier engineer or not. They may be an excellent communicator with well-developed remote working skills, or not. Tons of talented people live in Africa, but can you name even a single African company, much less be able to vet the resume of a Nigerian applicant?

What Solves the Problems?

Globally, finding the best candidate may appear to be a big problem — and throwing more people at it won’t solve it. An army of recruiters would still fail to find and adequately vet the top 1% of job-seeking engineering talent from every continent.

How to Find the Best

Even today, during the COVID-19 pandemic, when millions of newly jobless people are actively searching for opportunities, getting to the best of them is a job better suited for AI than humans. After all – how many resumes can you read in an hour? How many hours do you have to spend reading CVs?

The point is, that if you’re in the fortunate position of needing to add headcount, you’d be well-served to consider one of a number of the work-from-home platforms that undertake the task of sourcing and (in some cases also) vetting the talent.


Companies in this space include my company, Turing, as well as  Andela, UpWork, Fiverr, Dribble, and others. Global talent like these platforms too. My experience running a company that sources talent is that more highly skilled people are joining our platform every month. April was the biggest month in Turing’s history, and May is looking likely to be bigger still.

Image Credit: Matilda Wormwood; Pexels

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