The way towards outsourcing success in start-ups : A multiple case study in Swedish software firms

Abstract: Background: Sweden is the home to many successful startups. The lack of IT-developers causes companies to use offshore outsourcing to realize their ideas. In research, there are studies on what needs to be done to outsource successfully. Researchers and practitioners argue that different perspectives on the impact of success need to be considered. Many studies show that the quality of the partnership relationship between customer and supplier is essential for the success of an outsourcing project. However, there are little studies on how success in outsourcing for a start-up comes about in the pre start-up phase and from which factors this depends. Purpose: This research has the purpose to understand why software startups outsource offshore in the pre-startup phase and how success can be achieved in these outsourcing projects. The partnership relationship has an influence on the success of outsourcing and is influenced by several factors. This research aims to find critical success factors in the pre start-up phase for offshore outsourcing. Method: To find answers to our research questions a multiple case study within 9 Swedish start-ups was conducted. Therefore, we collected all data through semi-structured interviews based on an interview guide. The critical success factors in outsourcing in the pre start-up phase were analyzed using content analysis methods. Conclusion: Our results show that outsourcing was an essential business step for all the examined software start-ups in order to realize their idea. In most cases, tactical reasons like availability of resources and costs savings were why start-ups chose to outsource software development to a provider abroad. The quick confirmation of ideas was another important aspect for some start-ups:  "fail fast and fail cheap". All investigated factors play a role in offshoring success, but communication, which directly influences trust, has the biggest influence on outsourcing success in the pre start-up phase of a firm. All other success factors influence the trust between client and vendor, which has a positive influence on the outsourcing success. It turns out that factors such as performance become more relevant in a more mature phase of the business.