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Thought Leadership

How VC Firms and Their Startups Can Improve Their Staffing Strategy

By Javier Navarro-Machuca, CEO at IO Connect Services
August 11, 2022

Venture capital (VC) companies and the startups they fund frequently face challenges when trying to staff technical teams to develop applications and speed them to market. Staffing for application development and scaling minimum viable products (MVPs) to minimum acceptable products (MAPs) is particularly difficult and expensive. According to the human resources solution developer Paycor, the workforce can account for as much as 70% of total business costs.

Startups often lack the skills needed to develop, test, and scale products. Hiring staff members with specialized expertise takes time, and these employees demand high salaries.

An outsourcing strategy helps VCs and the companies in which they invest to cost-effectively augment their technical staff and benefit from consulting when scaling products.

Staffing Challenges for VCs and Startups

VCs and their startups have difficulty building the DevOps teams they need to transition MVPs to MAPs. Teams at VCs and VC-funded startups must have the right combination of skills and experience to develop new applications and modernize their IT infrastructure. The process of recruiting and interviewing employees with desired qualifications is time consuming and can be expensive.

Hiring new employees may have hidden costs. For example, new employees must be trained and onboarded, and other employees may need to pick up the slack while a new hire is experiencing a learning curve. 

Research from performance management experts at Trakstar found that the average cost of recruiting a new hire is $3,449, and the time it takes to fill a position averages a little over a month. MIT Sloan Management Review found that after employees are hired, it takes 8 to 26 weeks for them to become fully productive. 

Because these skilled employees are few and far between in the job market, they may demand salaries that are too high for startups to provide. Once highly qualified employees are hired, they may be lured away by other companies, leading to high turnover and necessitating retention efforts.

Why Outsource

Outsourcing is a cost-effective way for VC firms and their startups to meet staffing challenges. When outsourcing, the VCs or startups hire another company to vet potential employees to find the specialized expertise that they lack. 

Outsourcing saves the costs of recruiting and hiring and enables the in-house team at the VC or startup to focus on its strengths. Outsourced staff can immediately help with modernization projects, developing products, and scaling products for the market without the need for training.

Outsourced staff acts as an extension of the VC’s or startup’s team. The VC or VC-funded startup still maintains control over project management during the development of a product. The outsourced staff may even help cross-train the in-house team. A VC or startup has the option of hiring outsourced staff for a limited time or extending contracts for a longer term.

An outsourcing company can also provide consulting services. These consulting services may help a startup develop a strategy for transitioning a product from a viable solution to a full-scale solution, as well as marketing the product.

Advantages of Outsourcing Using Nearshore 

When outsourcing staff, VCs and their startups may turn to far-off companies in India or Eastern Europe to save money. As its name implies, IO Connect Services Nearshore Software Outsourcing solution provides outsourced employees who are available closer to home. 

Outsourcing with Nearshore enables a VC and its startup to work with a partner in the same time zone and to hire employees with a shared language. IO Connect Services requires that employees be business-proficient in English. 

Nearby developing countries provide employees with specialized expertise at cost savings. These countries often share the culture and intellectual property laws of the VC or startup they are working with.

Overcoming Staffing Challenges

To overcome staffing challenges, VCs and their startups must find the right outsourcing partner.

IO Connect Services is an American-based company with headquarters in New Jersey and nearshore delivery offices in Guadalajara, Mexico, and Madrid, Spain. Leading companies have trusted IO Connect to execute projects and extend their teams with our consultants through our Nearshore Software Outsourcing. Our AWS, MuleSoft, and DevOps experts have helped many customers in the U.S., Canada, Latin America, and Europe. 

IO Connect was founded to overcome the outsourcing challenges and provide cost-effective nearshore solutions to companies. Our consultants go through a very selective hiring process, and we invest heavily in their training and continuous education.

Find out more about IO Connect nearshore services and solutions. Reach out to us today. 

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