• strategy
• development
• outsourcing

Outsource or Develop In House

Startup teams have finite resources, so deciding whether to build capabilities internally or outsource them is crucial. Developing in-house gives you control over your intellectual property and allows rapid iteration because your engineers or scientists are close to the problem. It fosters a deep understanding of the technology and can create a core competency that becomes a long-term advantage.

Outsourcing can accelerate progress when you lack expertise or equipment. Contract manufacturers and development firms can leverage economies of scale and specialised skills. However, outsourcing reduces control and can slow learning. External partners may not understand the nuances of your domain or your need to experiment quickly. Communication delays and misaligned incentives can also lead to frustration.

A hybrid approach often works best. Keep activities that are critical to your value proposition or require rapid iteration in-house, and outsource commoditised tasks or large-scale production once your design is stable. As the company grows, revisit these decisions. What starts as a cost-effective outsource may later become a strategic capability worth bringing inside.