The Ultimate Guide to Outsourcing SaaS Development

Hiring in-house talent for a specialized IT role is challenging. These roles require niche skills that aren’t always readily available, and geographical barriers further complicate the process. 

Many companies are reluctant to go through the inconvenience of obtaining work visas or conducting multiple rounds of interviews, often without finding the ideal candidate.

However, outsourcing these tasks to specialized teams can make a difference. With their expertise, these teams can augment your in-house team and drive your projects forward.

Read this guide to learn how to tap into the global talent pool and outsource SaaS development effectively.

Why Outsource SaaS Development?

The outsourcing SaaS development model may seem like a recent trend, but this has been practiced for some time and is gaining even more popularity. Many leading companies opt to outsource for several key reasons:

1. Cost-Effectiveness

You’re likely familiar with the challenges hiring an in-house team presents. Beyond the apparent salary expenses, typically higher in regions like the US; there are additional costs to consider, such as providing necessary equipment like a new  computer system for the IT staff and offering benefits like paid  work off. These expenses can accumulate rapidly.

However, companies can significantly reduce costs by opting to outsource these services. Businesses can take advantage of lower hourly rates often available in regions like India while not compromising on the quality of work.

This makes it more affordable and allows companies to focus on their core operations while leaving specialized tasks to the experts.

2. Access to Global Talent

When a company hires locally, it is constrained by the talent available within its geographic proximity. If more qualified candidates are beyond its reach, it misses those opportunities.

However, when it chooses to outsource, it expands its wings globally. This enables the company to access specialized skills that may be rare or costly to recruit locally, especially for advanced technologies like AI, blockchain, or the Internet of Things.

3. Speed of Delivery

Outsourcing can speed up your product’s launch by partnering with the right dedicated team focused solely on your project.

Unlike in-house teams, these dedicated teams aren’t distracted by other tasks or changing priorities, ensuring timely delivery.

Later in this blog, we’ll help you choose the right partner. When you do, you will realize how experienced external teams can collaborate effectively with in-house teams and often integrate smoothly into your company, making development more efficient than building a new in-house team.

Models of Outsourcing SaaS Development

There are different ways to outsource your SaaS development with each giving you a different amount of control over the project. Three such ways to outsource include:

1. Full Project Outsourcing

In this model, you entrust the entire project to an external team that manages everything from initial planning to development and launch. You can focus on other priorities while the external team handles the technical aspects, keeping you updated with regular progress reports.

This is ideal for companies or teams that lack technical expertise or companies that need to concentrate on other core functions. The external team will inform you of significant milestones and ensure the project stays on track.

2. Staff Augmentation

You could opt for staff augmentation if your organization experiences busy seasons or periods where the workload becomes overwhelming. This model allows you to hire external developers from the service provider to support your in-house team.

The key benefit of this model is its flexibility. You can easily scale the external team up or down based on your current needs.

This lets you maintain full control over the project while hiring additional staff for a specified duration without the commitment of full-time employment.

3. Managed Services

Managed services is hiring a third-party provider to handle certain functions or processes, such as maintaining, supporting, and monitoring your SaaS application.

The provider manages these ongoing tasks, allowing your team to concentrate on new development and strategic goals while routine operations are handled.

Benefits of Outsourcing SaaS Development

Outsourcing SaaS development can greatly boost a company’s growth and success. Here are some key benefits.

1. Access to a Broad Range of Expertise

Outsourcing SaaS development offers access to a wide range of expertise to help you carry out your project. However, not all companies provide complete services.

When selecting a partner, choose one that can manage every stage of your product’s journey, from initial planning to ongoing support. Look for a company with a diverse team to ensure a well-developed and successful product.

In addition to skilled engineers, consider other key roles, such as:

• Quality assurance (QA) engineers are responsible for testing and functionality.
• Product designers for a user-friendly and attractive design.
• Product managers will oversee and keep the development process on track.

2. SaaS Outsourcing Ensures Scalability

Your competitors are innovating day in and day out. To stay in the picture, getting new product features out quickly is important to stay ahead of your competitors. If you wait too long to innovate, you might fall behind in the market.

When outsourcing your SaaS development, you let a skilled and focused team handle the job. They ensure new features are rolled out on time, helping you keep up with customers’ needs.

This way, you can move faster than others in the industry and maintain your firm position in the market.

3. Easy Scalability

Outsourcing software development makes scaling your team up or down easy based on your business needs.

If market changes require a major adjustment during development, you can quickly add more members to your team. Once the project is done, scaling back is also simple.

You avoid the inconveniences and costs of hiring, training or firing in-house staff. This flexibility is a reason why many businesses choose to outsource.

Challenges of Outsourcing SaaS Development

Outsourcing SaaS development offers many benefits, but it also has challenges that require careful attention. Companies should understand and manage these challenges when deciding to outsource.

1. Loss of Control

Many worry that delegating their project to an external team could result in a product that doesn’t align with their vision, which is valid. A solution to this challenge is choosing the right service provider to manage this concern and transform it into a positive experience.

Establish clear communication and project management from the beginning to maintain control while outsourcing.

Choosing a partner who understands your vision and has relevant experience can make a big difference. The right partner will align with your goals and offer valuable insights to improve the final product.

2. Communication Barriers

Working on outsourced projects is not just about making plans and checking off tasks. It’s much more than that. You must build a strong relationship where both sides are always ready to talk openly and honestly.

A great partner understands the importance of good communication. They ensure every conversation has a clear purpose and help you move forward.

Being transparent and trustworthy is vital. Regular updates and open lines of communication help create an environment where problems are quickly resolved, stopping potential misunderstandings from worsening.

This focus on good communication shows a deeper commitment to serving clients well and constantly finding ways to improve the project’s results.

3. Intellectual Property (IP) Security

It’s natural to worry about who owns and protects information while sharing all the important information with an outsourcing partner.

There is always a chance that your valuable ideas and innovations might be at risk, which could affect your business’s edge and overall success.

To address this concern, we ensure clear agreements right from the beginning. This way, your intellectual property is protected, and you can benefit from working with experts while keeping all your ideas and developments as your own.

Best Practices for Outsourcing SaaS Development

Here are a few SaaS outsourcing best practices:

1. Relevant Industry Experience

One of the first things you need to do is check if potential vendors have experience in your industry. 

Start by reviewing their case studies and portfolios. Look for:

• The specific problem they addressed
• Their approach to solving it
• The team and technology used
• The results and impact

If the case studies are unclear or lack these details, it is a sign that the vendor might not fit your project’s needs.

2. Relevant Tech Experience

When choosing an outsourcing partner, ensure they have the right technical skills for your project. Check their experience with the following:

• Web applications
• Android apps
• iOS apps
• Cross-platform apps
• AI applications

If they specialize in only one type, like iOS apps, they might not be suitable for other needs, such as web applications.

Also, verify their tech stack matches your requirements. A compatible tech stack will make collaboration smoother and avoid delays.

3. Price

Costs can vary widely based on location and company. Prices aren’t uniform and can differ greatly. 

If a deal looks too good to be true, it probably is. Low prices may mean lower quality, and opting for the cheapest option could lead to higher costs if you need to fix mistakes later.

Aim for a balance between cost and quality. Choose a company that provides good value and ensures your product is the best.

How to Choose a SaaS Development Partner?

Step 1: Define Your

Nearly 68% of technology projects fail, largely because of inadequate planning and insufficient documentation from the outset. Define your needs clearly before choosing a company to develop your SaaS app.

Consider your product’s features, future growth, security requirements, integration with other systems, and industry-specific needs.

This will help you assess if a development company can meet your expectations. Align what’s needed to avoid overspending, delays, and wasted time, which can negatively impact your business and potentially lead to project failure.

Step 2: Research and Shortlist Companies

To find the right company for your SaaS project, start with thorough research. Look into different companies, paying attention to their reputation and customer feedback. Check if they have experience with similar projects.

Without proper research, you might end up with an inexperienced or unreliable company, which could lead to unmet expectations. Check their years of experience in the industry, their qualifications, and their reliability. 

Independent review sites like TechBehemoths, Clutch, and GoodFirms can provide valuable insights into a company’s performance and customer satisfaction.

Step 3: Examine the portfolio and case studies

Before choosing a SaaS outsourcing partner, look closely at the portfolios and case studies. This will help you understand their past work and see if it fits your needs.

Check if their previous projects align with your industry, the complexity of your product, and the results you hope to achieve.

Explore areas where they have successfully created high-quality, scalable, easy-to-use SaaS applications.

If you skip this step and don’t review their past work, you might choose a company that doesn’t have the right experience or proven success in similar projects.

This can lead to problems with your project and a gap between what you expect and what the developer can deliver.

Step 4: Assess the Potential for Long-Term Partnerships

When choosing a company for a long-term partnership, look beyond its initial services. Ensure it offers ongoing support and updates, stays informed with new technologies and trends, and is committed to helping your business grow.

Ignoring these factors could lead to issues with future updates and changes.

Cost of Outsourcing SaaS Development

1. Asia (Best Option)

• Cost: US$20 – US$50 per hour
• Countries: India, China, the Philippines
• Pros: Low cost, vast talent pool, high reliability, competitive rates, and a large English-speaking population, especially in India.

2. Eastern Europe

• Cost: US$30 – US$70 per hour
• Countries: Ukraine, Poland, Romania
• Pros: Good balance of cost and quality, many English-speaking developers.

3. Western Europe

• Cost: US$50 – US$120 per hour
• Countries: Germany, the UK, the Netherlands
• Pros: High cost but excellent quality and reliability.

4. North America

• Cost: US$100 – US$200 per hour
• Countries: US, Canada
• Pros: High-cost but offers proximity, similar time zones, and cultural alignment.

5. Latin America

• Cost: US$30 – US$60 per hour
• Countries: Brazil, Argentina, Mexico
• Pros: Competitive rates, growing talent pool, and suitable for North American companies due to similar time zones.

Top Locations for Outsourcing SaaS Development

1. Asia

• Key Countries: India, China, Philippines, Vietnam
• Advantages: Affordable outsourcing, extensive and skilled talent pool, diverse technical expertise, and good English proficiency.

2. Eastern Europe

• Key Countries: Ukraine, Poland, Romania, Bulgaria
• Advantages: High-quality work, strong technical skills, good English proficiency, close to Western Europe with similar time zones and culture.

3. Western Europe

• Key Countries: Germany, UK, Netherlands, France
• Advantages: Excellent quality and reliability, strong cultural alignment with North America, excellent communication skills, and good time zone alignment.

4. North America

• Key Countries: United States, Canada
• Advantages: Top-tier quality and expertise, no cultural or language barriers, compatible time zones.

5. Latin America

• Key Countries: Brazil, Argentina, Mexico, Colombia
• Advantages: Competitive pricing, close to North America, overlapping work hours, and a growing number of skilled developers.

Conclusion

You should choose partners carefully to ensure their abilities match your goals when outsourcing SaaS development. When done right, it can boost innovation and growth and keep you competitive.

Feel free to reach out if you’d like to explore how we can support and enhance your in-house team. We’re here to help!