How To Hire Developers For Startups [Step-by-Step Guide]

Despite the challenges posed by inflation and recession risks in 2023, many companies resorted lay off thousands of employees. However, despite these workforce reductions, the tech market has maintained steady growth. As signs of economic recovery emerge in 2024 following the tough previous year, businesses are increasingly embracing new digital technologies to adapt and transform their products and services.

Projections indicate a promising outlook, with worldwide IT spending expected to surge by 8% from 2023 to 2024, reaching a staggering five trillion U.S. dollars. This uptick reflects the growth of tech-driven startups and organizations’  efforts to invest in emerging technologies.

Such tendencies can make hiring a qualified software engineer a tough task. When you are a startup, everything becomes even more complicated. Based on statistics from Harvard Business Review, the cost of a poor hiring decision amounted to 30%–50% of the employee’s salary, significantly impacting startup budgets. To mitigate such financial setbacks, founders must transition to a more data-driven hiring methodology. Fortunately, outsourcing can ease things for small companies assembling teams.

Learn more about how to hire developers for startups step by step and why you’d better outsource it in our article.

Failory’s research, conducted through interviews with over 80 failed startups, highlighted that 18% identified Team Problems as crucial factors contributing to their failure. These issues encompassed a spectrum of problems, including a lack of domain knowledge, marketing expertise (and strategy), technical proficiency, and business experience. Additionally, Tech Problems were mentioned in 6% of cases despite technology being integral to the majority of the startups analyzed. Notably, the most prevalent error identified was the premature over-investment in costly technology, particularly developer time, without first validating marketing assumptions.

In startups, lack of experience is a big issue. Among 83 respondens, 20 mentioned it, with 9 saying it caused their failure. Here’s what it usually means:

1. Lack of technical knowledge:If your product is technical, having a skilled technical person is necessary. Without one, building a good product becomes difficult. However, it’s important to keep technical aspects lean and agile in the early stages of a startup.
2. Lack of domain knowledge: Talking to potential customers early on is crucial to understanding the market well before building anything. If you skip this step, it often leads to failure.
3. Limited marketing knowledge: Being able to reach and engage customers is vital for business growth. Many tech-focused teams struggle with this, highlighting the need for a skilled marketer among the founders.
4. Lack of business understanding: Poor business decisions can ruin all efforts and the business itself. Fortunately, this challenge can be addressed by seeking mentorship or technology consulting from an experienced team that has successful cases in their portfolio.

If the founder of a startup has no or little technical background, they won’t understand what tech stack is better for the project. Hence, they will need consulting services before hiring software developers to know who to look for.

When the project is fresh, you cannot hire junior software developers to work on it. People with minimal experience will require mentoring and can make mistakes that are too costly for startups. Besides, inexperienced engineers cannot complete complex tasks that are common at the initial software development stages. That’s why startups should search for skilled developers who have already created complex software from scratch.

If everything goes well, startups grow fast. Hence, when hiring developers, startup owners need to be ready that their team will increase and change all the time. It puts additional pressure since startups have to quickly find new team members in the scarce market.

The harsh reality of the competitive market and picky candidates result in many hiring challenges for startups. Here are the main ones:

No established recruitment process

Startups have no established recruitment process and usually don’t have in-house recruiters at the start on their way. It additionally slows down the hiring and onboarding procedures. Startup owners either have to search for specialists by themselves through Upwork, TopTal, and other resources or outsource this task to professionals.

Based on statistics from The Josh Bersin Company, the average time to hire people has increased to 44 days in 2023. The trend shows that across almost all job roles, the time it takes to hire is increasing. This indicates that hiring quickly remains a challenge for many types of jobs, including hire developers for startups.

Lack of software engineers in the local market

As we have already mentioned, the global shortage of tech talents reaches dozens of millions and will only grow. It takes 50% more time to hire someone for a tech role than other positions. The deficit is even more evident in Western European and US markets.

Hence, if you run a startup and look for skilled software engineers, you are sure to spend lots of time on search because of the excess demand.

Startups cannot offer the same bonuses and perks as large tech companies. Even if they manage to hire promising tech specialists, they may be unable to retain the employees. Tech giants keep hunting for professionals day and night, offering salaries and working conditions startups cannot afford. The innovativeness of your project and the employee’s loyalty may be the only leverage to make the person stay.

Financial limitations

Most startups have limited budgets and cannot afford high salaries, certifications, educational programs, and perks. They need to carefully plan and redistribute their expenses to be ready for unexpected costs and prevent bankruptcy.

Financial constraints narrow down the choice in the tech talent market and make outsourcing a more viable option for startups.

Startups are characterized by their agility and potential for rapid expansion. They provide a dynamic setting where developers can immerse themselves in diverse aspects of the business. However, startups also entail greater risks due to their untested business models and volatile market conditions. Consequently, highly qualified developers often opt for established companies that offer a more stable work environment and typically provide greater financial security.

So what should startups do?
Here are several strategies to follow when hiring tech experts.

• In-house developers. Hiring developers full-time to work directly for the startup offers the advantage of having dedicated team members who are fully immersed in the company’s goals, culture, and projects. In-house developers can foster stronger collaboration and communication within the team, leading to greater efficiency and cohesion in web app development. However, we’ve already discussed numerous challenges hiring in-house developers could pose for startup owners.
• Outstaffing. Outstaffing development tasks to third-party agencies provides startups with flexibility in scaling resources based on project needs. This option can be cost-effective, especially for short-term projects or tasks requiring specialized skills. Outstaffing allows startups to focus on their core competencies while leveraging external expertise to accelerate development.

• Remote developers. Hiring remote developers offers startups access to a global talent pool without geographical constraints. Remote developers work from their own locations but collaborate with the startup’s team virtually. This option provides flexibility in hiring and allows startups to tap into diverse skill sets and experiences. Additionally, remote developers can help reduce overhead costs associated with maintaining a physical office space.

Now that you know what hiring choices can help you fill the talent gap, let’s examine why hiring remote software developers can be a great option for startups.

Startups can mitigate the listed challenges by delegating the entire SDLC or separate tasks to a outsourced remote team. When even the world giants like Apple, Google, or Skype outsource, small companies definitely should consider this business model for the following reasons:

• Remote destinations open global talent pools.
• Rates in areas like Eastern Europe or Asia are more affordable than in the West.
• Tech expertise meets international standards since remote developers complete the same certifications as Western specialists.
• Remote cooperation gives more flexibility as you can hire developers and other teammembers in less time.
• Many administrative and managerial tasks also become outsourced, increasing the productivity of startups.

Summing up, hiring remote software engineers ensures the best price-quality ratio. You can find experienced developers fast while meeting your budget.

Remote recruitment is not more complicated than in-house. In fact, due to broader opportunities in remote markets, it may be more convenient. Below are step-by-step instructions startups need to follow to hire developers.

It might seem obvious, but you must know why you need a software developer before hiring them. What tasks will this engineer (or engineers) have to complete? What technology stack must they be proficient in? How much can your startup spend on hiring developers? If you cannot answer these questions yourself, request consulting from a software development agency.

You may want to hire developer on a freelance or cooperate with a professional software development outsourcing agency. For startups, the latter option is preferable. Outsourcing agencies have internal tech specialists proficient in all core technologies ready to take on new projects. They also hire other tech specialists you will need on your way to the project launch, including business analysts, QA specialists, designers, and project managers.

Eastern Europe, Asia, and Latin America are the most popular outsourcing locations. Although each region has its strengths and weaknesses, Eastern European countries are the most balanced choice. In outsourcing destinations like Ukraine, you hire among 200,000+ software developers with international certifications, proficient English, and excellent tech skills. The local average hourly rates vary from 30 to 60 USD/hour, depending on the experience.

Browse the web to pick several companies in the chosen location. Shortlist the options and start in-depth research. You will need to view the completed projects, available cooperation models, working approaches, and rates before making the final choice.

After studying your tech needs, the outsourcing company will do recruitment for you. They will either hire the necessary specialists for your project or delegate someone from an existing internal pool.

Even if the chosen agency has a flawless portfolio, you will need to interview the software engineers before inviting them to your team. This step is essential to check the hard and soft skills of the candidates.

Once you do it and finally hire developers for your startup project, start the job.

Leobit is an outsourcing company that provides services to startups, SMEs, and large enterprises. We find a custom approach to companies of any size depending on their financial capabilities and tech needs. Since Leobit has completed multiple projects for startups, we know what limitations beginners face and how to overcome them.

Leobit offers three cooperation models suitable for startups:

• Custom dedicated team: Full-time involvement for long-term projects
• Time and material: Part-time involvement for additional expertise
• Fixed price: Scope-related involvement to complete specific tasks

Choose the collaboration model that meets your business requirements best and contact us to hire software developers.

With 8 years of experience in software development under the belt, Leobit has helped many rising and established startups to grow their business. Here are a few real-life examples.

Project 1: Alternative Electronic Payment SaaS Solution

Our customer, US-based fintech company, decided to scale the project gradually, starting with MVP development in the first stage and implementing additional features and functionality with each subsequent software version release. We delivered a comprehensive one-stop fintech solution to the client, facilitating the management of revenue streams for direct bank-to-bank funds and simplifying C2B, B2C, or B2B debit and credit card transfers.

Project 2: Web, Mobile and Embedded Cycling Solution

Our client, a Norwegian SportsTech startup, faced challenges with system scaling, as their monolithic architecture couldn’t accommodate the growing number of clients. Furthermore, they aimed to switch their outsourcing software development provider due to unsatisfactory results and communication challenges.

With Leobit’s extensive experience in SportsTech software development, we leveraged .NET and other cutting-edge technologies to help a startup create a full-spectrum indoor cycling solution enriched with gamification features. As a result of our collaboration, the product’s user base surged from 20,000 to 200,000 users. Additionally, the developed mobile app for solo indoor sports activities garnered over 60,000 installations on both the Apple Store and Google Play.

Here’s what our clients say:

The recruitment process may be complicated when hiring qualified professional developers for startups. Tech experts may often tend to choose established companies because of the higher salaries and stability they offer. This may leave startups empty-handed and shift their timelines because of the lack of talent. Good news: outsourcing software development can be one of the quickest and most effective ways to assemble a professional team for startups.

You can find a remote team of tech specialists to outsource specific tasks or fully delegate software development for startup. This way, you won’t need to go through lengthy recruitment and onboarding to engage engineers. Instead, you get qualified software engineers with the necessary tech expertise within the shortest time.

Leobit can help you bridge the tech talent gap by providing access to a remote dedicated team of developers. Partnering with us allows you to tap into a pool of skilled professionals. With our expertise and experience, we can help you build and scale your technology projects efficiently, ensuring that you stay competitive and innovative in today’s fast-paced business landscape. Contact us, and we’ll be happy to consult you deeper on the topic.