Tech 101

What to Consider When Outsourcing SaaS Development Services

May 5, 2022

Learn how your business can benefit from outsourcing SaaS development, as well as tips for choosing the right vendor.

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Hardik Shah - Guest ContributorGuest Contributor
What to Consider When Outsourcing SaaS Development Services

What we'll cover

From enterprises to small businesses, companies worldwide are upgrading their tech stacks to cloud technologies and all credit goes to Software-as-a-Service (SaaS) solutions. 

It’s expected that this technology will generate approximately $185 billion by 2024, and the reason for that is the rapidly growing market for outsourcing SaaS development. Software-as-a-Service is growing at a rate of almost three times more than Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Companies now estimate that 70% of the business apps they use today are SaaS-based, and predict that this will grow to 85% by 2025. In fact, according to Gartner, the cloud market became larger than the non-cloud market for the first time in 2020, and will be double the size of the non-cloud market by 2025. 

This move to the cloud shows no signs of slowing down, and your business should consider outsourcing SaaS development services to keep up. Read on to learn about the benefits and challenges of outsourcing SaaS and a breakdown of the costs associated with this decision. 

What is SaaS?

Software-as-a-Service (SaaS) is a subscription-based or pay-per-use model for customers to access applications. 

These applications are owned and managed by the vendor while customers handle data generation. This means that users don’t need to deal with the complexity of software and hardware management, and they can use these apps over the internet as a service. 

If you’re curious about which apps are considered to be SaaS, this list will help you understand. 

Why is SaaS outsourcing a smart choice for SMBs?

outsourcing saas

Ultimately, outsourcing means that you don't have to deal with recruiting programmers or architects, and the project will be completed smoothly in a shorter time frame (if you have selected the right outsourcing partner). 

To understand why outsourcing SaaS solutions is a go-to move for most organizations, let's dive into the details. 

Advantages of outsourcing SaaS development 

Saves you time and money

SaaS products are large-scale and often have multiple components. Because of this, it’s difficult to develop a minimum viable product (MVP) with limited features internally since it requires very skilled developers.

When you outsource SaaS development, you get access to cross-functional teams working to build the product using cost-effective methods. It saves you valuable time as you don't need to get into the nitty-gritty of finding suitable developers, and it saves you a lot of money because you’ve already selected the extended team that fits within your budget. Once that’s in place, it frees up time to focus on other essential business operations. 

Allows you to work with pre-vetted, experienced teams

When you outsource the development of SaaS products, you're employing specialists who know how to manage product lifecycle and data. These specialists navigate product development with the practices, tech stack, and design best suited to your business requirements. 

Experienced members from outsourced teams run development work smoothly and systematically because their architects have experience defining strategy. In addition to this, they have internal project managers to steer the ship, senior developers with relevant technical experience, and quality assurance engineers. 

These experts have extensive experience developing products with different tech stacks and use cases, so they already have the ability to build customized solutions. 

Speeds up the development process

When you choose to outsource product development, the outsourcing agency is accountable for completing the project within the given timeline. Because they have managers assigned to monitor the project development process and technical experts to guide them, you can be assured that the project will be completed in the stipulated timeline. 

Plus, you don't have to worry about recruiting tech workers for a particular task or specialization. Not having to spend time on processes such as hiring, onboarding, and training the right people greatly speeds up SaaS product development. 

Provides the opportunity to build scalable products

It's crucial that you have the ability to deploy new product features as fast as possible to remain in the competitive market. When you put this product development in the hands of an experienced and dedicated team, you have a much better chance of implementing timely features and more quickly meeting market demands. 

Allows you to learn from your partners

The outside team you are partnering with will already have the experience your internal team would need to gain through project development experience. For this reason, it’s beneficial for your tech teams to learn from these industry experts who’ve already worked through and resolved challenges related to SaaS development. 

Challenges of outsourcing SaaS development 

While there are myriad benefits of outsourcing, there are a few things to look out for. Here are some of the top red flags.

Fraudulent contracts

It’s essential to your business that you’re familiar with the details in the contract you make with your outsourcing agency. If not, you might come across unexpected issues such as additional costs for features or even extra charges for minor fixes after the contract is already signed. It’s best practice to have your agency sign a non-disclosure agreement, as well as an agreement with no loopholes. 

Lack of standard coding practices

You may face challenges in code quality when working with an outside team. You might also find it challenging to align with their coding practices. Because of this, it's essential to work with teams whose coding standards are even higher than the ones your internal team follows.  

Difficulty finding a reliable software development partner

A good software development partner is hard to find. You’ll need an agency that you not only trust but also one with the same willingness as you to dig deeper and be genuinely invested in the outcome of the project. It may be challenging to find someone who both understands your target audience and business goals and can align the software development goals in the same direction.

Delayed project milestones

Since you’ll be communicating virtually with your outsourced team, you might feel deadlines are being delayed due to communication barriers or technical knowledge gaps. 

Though reliable development companies have delivery managers to take care of project milestones, it’s possible they still might miss one or two. Generally, there are two major reasons for project milestones being delayed:

  1. Impractical expectations in the initial phases

  2. New functionalities are added or existing features are changed

To avoid this, find tech partners that are experienced in helping set initial expectations, providing estimates, and developing clear roadmaps for working in iterations to incorporate necessary changes. 

Choosing the right outsourcing partner for SaaS development

Luckily, there are a few steps you can take to vet these partners before signing on the dotted line. Here are a few things to consider:

1. Research their level of experience 

As a business owner, you should do thorough research to select your augmented technical team. It's best if you evaluate your potential SaaS development partner’s track record of successfully completing projects by:

  • Studying their website to determine the services they offer

  • Reviewing which tech stacks they excel at building and if those align with what you need

  • Vetting the resources at their disposal

Once you’ve thoroughly studied their profile, you'll know if they’re the partner you're looking for. 

2. Be transparent

Transparency is essential for any successful business partnership. For this reason, it’s advisable to share any concerns you have with your technical partner upfront. Look out for things that could potentially cause issues such as language barriers, different communication channels, and conflicting project management tools. From the beginning, both parties should remain transparent about project iterations, technical issues, budget, or anything else that could cause conflict.  

3. Communicate early and often

Communicating frequently with your SaaS development partner will help you stay in the loop and it will give them the chance to share progress details with you. Determine who your point of contact is and ask them to send regular progress reports. Because this agency will be your augmented tech team, it’s essential to be on the same page.

4. Determine their willingness to understand your business

SaaS development service providers must understand clients' business perspectives and goals to build better products. Your outsourced partner should be willing to put time and effort into learning about your target audience, users, and business goals to successfully build the product according to scope with minimal iterations. 

5. Ask about methodologies

Software development companies use different methodologies, so ask questions to see if the methodology they use lines up with what you’re looking for.

For example, some vendors focus only on completing the project without understanding end-user perspectives, while others focus on code quality as well as the user-friendliness of the product. 

It’s also important to take different approaches to project management into account. Some vendors subscribe to the Waterfall methodology, while others might prefer the Agile approach. 

Having clarity on technical aspects will give you the best chance of getting the result you want when working with your outsourced vendor.

6. Evaluate their familiarity with technology updates

Each generation of technology is better than the last. It evolves faster, enabling engineers to build feature-rich digital products and user experiences. 

However, these technologies and tools have a major effect on building SaaS products as they impact the performance, scalability, security, and other important metrics of the application. For this reason, you need to define the requirements of your application, discuss dependencies, and plan the scope of scalability. Once that’s finalized, you’ll know what questions to ask your SaaS development company to determine the relevancy of their experience. If your vendor is well-informed about the latest trends and technology updates, they’re more likely to suggest a solution that lines up with your priorities. 

How much does outsourcing SaaS development cost?

The last question you need to answer is how much it costs to outsource SaaS development. Of course, you don't want to compromise on quality, but it is important that you get a reasonable quote from your vendor. Outsourcing is automatically more cost-efficient than hiring new internal team members, but outsourcing can still get pricey depending on the company and scope of the project. 

The cost of outsourcing software development services varies and can depend, in part, on the region you choose to hire from as well as the experience and reputation of the team. Here are some ballpark figures for the normal pay ranges for outsourcing your SaaS needs: 

Pricing for software development services, by region:

RegionCost per hour
Europe$20-$170
U.S.$50-$200
Asia$10-$150
Canada$30-$160
Mexico$20-$150
Latin America$20-$100

(Source)

Are you ready to hire your SaaS developer?

Use the above checklist when considering different Software-as-a-Service development partners for your next project. 

Find out which methodologies your potential agencies use, the relevant projects they have done in the past, and their coding standards. Once you have the fundamental information about the agency and the validation of their client's testimonials, you are good to go to select your partner for your software development project.  

Are you interested in becoming a guest writer for GetApp? Reach out to guestcontributors@gartner.com for details.

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About the author

Hardik Shah - Guest Contributor

Guest Contributor
Hardik Shah is a tech consultant at Simform, a leading Saas development company. He leads large-scale mobility programs that cover platforms, solutions, governance, standardization, and best practices. Hardik has published articles in leading tech pubs including TheNextWeb, TechCrunch, and Techtarget.
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