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Subject: SBS

A Crisis Playbook: How Can Tech Startups Survive During the Economic Downfall?


PALO ALTO, Calif., March 11, 2020 /PRNewswire/ -- To the companies wondering how to survive an economic crisis, LITSLINK advises not to stop operations but to carry on providing their services to customers, which will positively affect their reputation and save most of their repeat customers. At the same time, this period is the best time to tighten their belt and think of the best ways to cut costs. 

What Has Actually Happened?

How Can Tech Companies Prepare for the Crisis?

The reduction in payroll is often a necessity for businesses during challenging times. They might be forced to reduce the headcount. The best solution here is to undertake effective cost-cutting measures, such as outsourcing or out-staffing, which will provide them with significant competitive advantages in the harsh business environment:

  1. They get more with less expense. Since rates are lower in developing economies, such as Ukraine, India, and Latin America, the companies have a chance to proceed with the development process without spending a fortune by outsourcing to reliable vendors. 
  2. Fast development and shorter time to market. As a rule, outsourcing companies have a rich talent pool ready to support tech startups at any stage of the development process. Even with tight deadlines, they're likely to find a vendor to provide them with a full-fledged product. 
  3. Cost-effective development scheme. Even during the crisis, there is an opportunity to raise funds. Keeping considerable costs for in-house development might discourage investors from funding private projects. By outsourcing their software development services, the startups provide investors with a cost-effective development scheme.
  4. Extend the company's runway. Sequoia Capital, in their memo, recommends preparing contingency plans and saving as much runway as possible. Nobody knows how long this crisis might last or whether there'll be another financial crisis. Thus, it is better to save now to be able to withstand a few more quarters.

During economic downfall, only the strongest and wisest are going to survive. Lots of companies have already established their R&D centers in top outsourcing hubs. Even with all the challenges involved, it might become a springboard for startups into a new, prospering economy. 

SOURCE LITSLINK


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