January 01, 2021
Software outsourcing is a practice of contracting another company to develop your software solution. You can outsource complete applications, hire a software house to help your in-house dev team, build a supporting solution for your existing software or even order a tech audit.
However, the most important question is should you do it?
In this article we are breaking down the advantages and challenges of software outsourcing.
If you don’t already have a working development team, building one from scratch will cost a lot of money and time. Today, there’s an extreme talent shortage in software development (approx. 800k programmers needed in EU, 1mln in the USA and 7mln in China). As a result, recruiting and managing software teams now is now more challenging than ever.
Not only is finding programmers a difficult task, but the total cost of the in-house developer can also be 2-3 times larger than their base salary.
If you want to build your software product in the most cost-efficient way you should definitely consider working with a software house.
Software outsourcing is cheaper because a software house already has all the structures in place. You don’t have to worry about HR, recruitment processes, technical audits, code reviews and so on.
Poland is an especially good place to outsource your development to. The cost of living in Poland is significantly lower than in other western countries and polish developers have a great reputation worldwide. As a result, you get better quality and lower development costs.
Setting up software projects from scratch can be quite a challenge. Building an in-house team can take months before you get started with your work. And after you have built your team you still need to set up project architecture, workflow, planning tools and conduct constant code reviews.
It’s especially true for startups – for instance, let’s say you’ve raised your first FFF (friends, family and fools) round and look to release an MVP (minimum viable product) really quickly. You don’t have any time to waste because you need to start measuring customer traction asap.
That’s a great case for software outsourcing. When you hire a software house they can have your MVP up in running in a matter of few weeks. While it might not be ideal for the entire lifetime of your startup it’s definitely a great starting point.
Software outsourcing is quicker because a good software house already has a ton of experience building and releasing software. That means they already have the expertise required to start right away and know all the processes in and out. In addition, reusable components play a major role in efficient software development.
Let’s say that you want to develop an event planning application with events, calendar, invitation system and user accounts. There’s a good chance that if you choose the right software vendor they will already have ready-to-use components like calendar or user accounts. That way software outsourcing saves you both time and money.
As previously mentioned, finding and recruiting great developers is very difficult. If you want to start hiring your own developers you have to prepare yourself for months of searching before you find the right fit for your company.
It’s also important to remember that with such a talent shortage it’s increasingly difficult to attract top talent and recruitment costs are rising rapidly. In such environment, every recruitment mistake means wasted time and thousands of dollars.
There is a decent chance that the software house has been recruiting the best programmers for a long time now. They will enable you with access to a much larger talent pool, therefore making your product better and providing a smoother, more enjoyable experience for your users.
Another important thing to remember is that growing and maintaining your product requires rock-solid fundamentals. If your MVP doesn’t have good fundamentals it might be that you will have to start from scratch when your product begins to scale.
When your software solution starts scaling really quickly you will need to expand your team in a very short time. That means getting more developers to work on deploying new features requested by customers, fixing bugs, maintaining constant development.
If you need to scale on your own, it can quickly become a daunting task – you will drain a lot of money and resources just to set up the recruitment processes.
Software houses have a good understanding of the challenges of rising the popularity of your product and are ready to face them. Usually, you will wait no longer than a month to expand your team with additional developers, QA engineers, UI/UX designers and development operations specialists.
Make sure to account for that when signing an agreement with a software development company for your software outsourcing needs. If you suspect that your product might require a lot more resources in the near future definitely discuss your options during the contract negotiations.
Technology today is a very complex topic. It takes countless hours of learning to really understand all the nuances of what it takes to develop great software.
When you hire a software house you hire experts. That means you won’t need to waste your time and mental energy on figuring out what’s the best tech approach – you can simply ask your software team. Meanwhile, you and your core team can focus on what you are really good at – your business and product strategy for the years to come. And that’s a huge gain because no one knows your product as well as you do.
When you hire a software house you hire experts.
Software houses work with many different industries and see countless business ideas, business models and business strategies. As a result, they can provide you with a different perspective and help make better product decisions. In addition, they can help you figure out better ways to attract new customers and monetize your product.
Remember that software house founders usually have wide professional networks. Make sure to ask for their help – they might connect you with a potential business partner or introduce you to investors.
To build your in-house team you need to have tech knowledge or a technical co-founder/consultant. When you choose software outsourcing, you don’t need deep knowledge of software development. A good software house will present you with different options and point you in the right direction, while also warning you about potential challenges.
Ever heard of Slack, Opera, Skype or Alibaba? Each of these companies used software houses and independent contractors at the early stages of their product development.
Even today most of them still use software outsourcing to help maintain the steady development of new features.
Let’s talk about two significant challenges of working with a software house.
Finding the right software house deserves an article on its own. Here we will go over a summary of the most important topics.
Find a software house that specializes in your industry
When you start looking for a software house, you will find that there’s plenty of companies that advertise themselves as “Jack of all trades.” As a result, they are a master of none.
So, what you need to do is find a software development company that works in your specific field and technology. Even better if they have developed a solution similar to yours before.
For instance, if you want to build a great mobile app, you should look for a company that builds mobile apps, not a company that delivers everything from brand identity through software development to SEO and marketing.
There’s a good chance that someone in your network has already used software house services before. Ask people you trust for recommendations. It’s safe to assume that company which delivered great work for your friends will also deliver for you.
Even if you got a great recommendation, always do your homework. There are cases where a certain company might have been great for your friends but won’t be the best fit for you.
Always check their portfolio, reviews on reputable sites like Clutch and GoodFirms and their team. It’s always a good idea to reach out to someone who worked with that company before asking about their experience.
During your research, set up an intro call – check how quickly they respond, how they handle communication and so on. Verifying this early on will allow you to rule out software companies that don’t meet your communication expectations.
This is an often overlooked yet critical factor. You should really click with the people that you are going to be working with. After all, they might become your tech partner for a long time. This partnership will definitely work more smoothly if you actually like working with your software house.
When working with a software house, you have many contract models. You will find that most companies work with variations of either T&M or Fixed Price models.
Time and materials – you pay for the developer's time based on the hourly rate. It’s usually cheaper because you pay exclusively for the time spent on development.
As a result, you risk paying more if the development complicates, but you don’t pay the premium for the price guarantee if everything goes smoothly.
In a fixed price model, you know exactly how much you will pay before the development starts.
This usually costs more because the software house takes full responsibility and guarantees price. So, even if the development complicates, the cost stays the same.
What we usually offer our clients, in the beginning, is a smaller scale project for a fixed price. That way we get to know each other and work out all the details of cooperation. Later, when both parties find the work effective, we switch to T&M and continue development for our client. That way, you really know what you pay for.
When your core business is very technical and you don’t have technical team members, you probably shouldn’t outsource your software.
It’s almost always a good idea to have a software development partner, given how complex software development is today. However, if your core functionality is very tech-specific, hiring a software house for the entire product development cycle can backfire.
Of course, it can be done and has been done. However, you have to keep in mind that if your core business is tech and you don’t have any in-house tech team, then your business success relies entirely on another company.
Build your MVP while recruiting the in-house team
If you are building a very tech-specific product, it might be great to hire a software house to kickstart the project and build an MVP.
During that time, you can start building your own in-house team, which will focus on the core features while the software house provides continuous support and development.
To conclude, software outsourcing can be really beneficial for you. Just make sure to do your homework and choose the right software house for your needs.
And if you would like to build a mobile or web app, make sure to contact us 🙂
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