Keep Your Project From Being Locked in Tech Jail

Startups relies on technical development, you have two main choices: develop your tech in-house or outsource, which is right for you?
Latest posts by Alex Friedman (see all)

Your project and technology development

If your startup relies on technical development, you have two main choices: develop your tech in-house or outsource. If you have a limited budget, outsourcing is less costly than bringing in a tech co-founder or hiring an in-house team, and it’s not hard to find a firm that has experience building similar products.

However, there’s one significant danger to outsourcing tech development: The relationship can turn sour, and if you don’t protect yourself, you could find your code held hostage in “tech jail.”

3 Steps to Avoiding Tech Jail

While you may not anticipate having a dispute with your outsourced firm, there are a number of things that can go wrong with a tech project — even if you’ve developed a strong personal rapport. Common problems include disagreements over scope or payment, misalignment in expectations of quality, and the subjectivity of design and user experience.

Luckily, there are steps you can take to avoid getting locked up in a dispute and to protect your interests.

Step 1: Select the Right Outsourced Tech Firm

To assess whether a firm is the right fit, start by understanding what kind of technology stacks it uses. Gain access to architecture and database diagrams for development capabilities, and be upfront about specific information your team will require access to throughout the process. Other questions to ask the team should include:

  • How long have employees been at the firm? High turnover is never good for project completion.
  • How do they manage and control each version of code? There should be a system in place to ensure code won’t be lost or overwritten.
  • Will they update a third-party repository that you have access to? Look for firms that commit to at least once a week.
  • Do they utilize agile development methods or waterfall methods? Agile is preferred, as it allows the project to be built and checked in pieces rather than all at once.

Step 2: Establish Proactive Protection

One of the best ways to protect your interests and project is to explicitly lay out terms in the agreement. When negotiating your contract, focus on securing:

  • A work-for-hire clause. Retain full ownership of all intellectual property.
  • An immediate release. Should the partnership end, all code in its most current form will be immediately released into your possession.
  • A third-party repository commitment. Require the outsourced firm to check the code into a third-party manager and repository such as GitHub weekly.

Step 3: Have a Strategy for Relationship Success

The best way to ensure that an outsourced provider follows through on its end of the contract is to:

  • Have a project plan. Milestones will keep the engagement moving forward.
  • Understand the architecture of the system. This will facilitate communication with your outsourced team and help avoid functionality issues.
  • Know which party is responsible for delivering each piece and when. Setting clear expectations from the beginning will prevent items from falling through the cracks.
  • Maintain code control. As mentioned above, a third-party repository is critical to avoid losing control and access to the code you’re paying to have developed.
  • Require agile as opposed to waterfall development. Agile makes for more timely deliverables, as well as easier bug tracking and correction.

By putting these steps in place from the beginning, you greatly reduce the likelihood of having your project gridlocked over disputes. But despite your best efforts, sometimes you still end up in tech jail.

When this happens, you have two main courses of action to salvage your project. If the firm is located within the U.S., consult an attorney. As long as you followed the contract suggestions above, an attorney should be able to help.

If an attorney can’t help, as is the case with most international firms, it’s time to start negotiating. The firm will probably attempt to obtain a fee or a full release of liability waiver. Both can be detrimental either monetarily or by obstructing your rights to recourse.

Tech jail is a crippling place to find your company, and it’s nearly impossible to escape unscathed. But by taking a proactive approach, you can give your company the best chance of avoiding tech jail and put yourself in a much stronger negotiating position if the worst should happen.

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