2020/2021 survey results on why startups work with software development vendors

Last year we conducted a survey targeting founders, co-founders, and CTOs of startups and scaleups. We wanted to know, how many of them use software development services vendors, why they do it, or why they don’t. Here’s what we’ve found.

One in two startups/scaleups choose services of a software development company

Not so long time ago we’ve written about the pros and cons of hiring a dedicated product development team. We also compared the benefits of working with such teams and the benefits of building in-house IT departments. Our survey shows that one in two startups and scaleups cooperate with a software house. We also asked respondents whether they work with one company or more. Remarkably, as many as 61% indicated that they work with more than one vendor.

The most common reasons for working with a vendor

Our respondents also answered why they chose to work with a software company.

It’s certainly significant that people who work with product development teams want to achieve their goals quickly (delivery speed) while saving money (cost-saving). We are happy about this because one of the main promises of Pragmatic Coders is to deliver an MVP in less than 3 months. Also, the eventual pivot after the first user testing takes less time. You can read more about a new product development strategy in our guidebook: “How to go live with your product in less than 3 months?“.
In addition, many startups want to use software development companies to accelerate growth. This is attainable by partnering with an experienced product development team that is focused on the client’s business and already has a strong work culture. Such a team can accelerate a company’s growth by making the right decisions based on data and experience.

Why some founders don’t want to work with startups?

We asked this question to people who marked in our survey that they do not work with product development companies. As we supposed, most of them (61%) have their own in-house IT department. The next place ex-aequo went to “Rates” and “Localization”. This second reason is particularly surprising since most companies work remotely these days, and software houses have long been creating products for clients with whom they interact only via the Internet.

Survey 2021

Remember, however, that the survey was conducted a year ago. We are very curious how founders and CTOs of startups and scale-ups would answer our questions now. If you are one of them, please subscribe to our newsletter (you can do so at the bottom of this page). We will inform you by email about the new survey.