HOW MUCH DOES IT COST TO OUTSOURCE SOFTWARE DEVELOPMENT? WAYS TO ASSEMBLE AN EFFECTIVE TEAM AND PAY THEM
Aug 06 2021
In 2021, IT outsourcing is the same common practice as creating a product within a company was a decade ago. Do you, too, want to hire developers for a project? Are you wondering how much it will cost? Let's figure out what defines the price of outsourced software development, how to assemble a team, and how specialists are paid for today.
Table of contents
Time to pay: popular ways to estimate the cost of the outsource software development
WILL OUTSOURCING BE THE FUTURE OF SOFTWARE DEVELOPMENT?
Today, every business has an opportunity to choose the work pattern that suits it for solving specific problems. And the developed international software market allows us to find solutions and companies for every taste and budget.
The amount of IT outsourcing services is growing steadily everywhere
According to the report of the respectable platform Computer Economics, the amounts spent by IT companies on outsourcing development services have reached their maximum levels over the past 10 years. Large organizations may even outsource work on their own internal processes to third-party developers, freeing the time of their in-house specialists for more strategic tasks.
- In 2020, 13.6% of the total IT budgets in the world industry were spent on outsourced development
Today even small businesses are ready to use the service of remote specialists to delegate some of their tasks to them. This means that outsourcing has become a truly affordable service in the modern high-tech world. Let's try to understand the world of software development outsourcing, determine why every year it becomes more and more popular, and why more companies choose it for financial reasons.
WHY DO YOU NEED TO OUTSOURCE IN THE FIRST PLACE?
There is no point in denying that modern life cannot do without high technology. We use IT infrastructure everywhere — in banks, shops, government agencies and for doing business. However, not all companies have access to the best experts, technologies and solutions. In such a situation, it is the IT outsourcing industry that will help fill the gaps in a company’s staff and not spend all the capital of your business on this. Your company should take advantage of the software development outsourcing if you have ever had at least one of these thoughts:
- “I need to cut costs.” You don't have to spend money and time looking for a full-fledged developer on the staff.
- “We should focus on our core business.” Your business may require solving new problems for which in-house specialists don’t have the necessary knowledge or qualifications. Outsourcing will quickly solve this problem.
- “We are having performance issues.” Routine tasks take up more and more of your developers' time, work on projects are getting slower. Outsource your routine tasks and focus on the global goals.
Thus, the outsourcing or outstaffing of IT specialists can immediately solve a wide range of problems, both purely technical and economic, and even some tasks from the field of HR. Now, let’s take a closer look at the top-5 benefits you would get if opting for IT outsourcing.
|Pros||Reasons||You save money||Even if you work with the best specialists in your field, the prices of their software development services in case of outsourcing would be significantly lower than if you’d decided to hire them in-house. As a rule, working with project specialists allows a company to save from 25% to as much as 75% of the estimated budget. In this case, it all depends on which country your experts are from.|
|You access more talents||Outsourcing not only reduces business costs but also expands your capabilities. If you only work with in-house developers, they may not have the required qualifications, or you may need a very narrow specialist. Thanks to the wider search options, you will find exactly who you need without any problems.|
|Your project grows faster||If you urgently need to scale up a project, the international IT market is always at your service. You just need to decide on the price and necessary stack of technologies. In order to not look for performers yourself, turn to a reliable partner, for example, Exceed Team, which knows the market well and will pick the best developers for you.|
|You get full control||Practice shows that outstaffed and outsourced specialists are more responsible and productive. They are bound by a contract and must meet the deadlines and solve a pre-agreed list of tasks.|
|You get rid of the routine and focus on the main goal||Delegating current tasks to outsource literally gives your business a boost of productivity. By eliminating necessary but repetitive tasks, your in-house employees can devote more time to your main projects.|
IMPORTANT Of course, we all would like outsourcing software development specialists to be a universal cure-all that will help any business to solve work-related problems. Unfortunately, despite all the advantages of this format of work, we must not forget that there are many unscrupulous and inexperienced performers on the market. Be careful when choosing developers.
YOUR TO-DO LIST: 5 STEPS TO GET SUCCESSFUL IT OUTSOURCE EXPERIENCE
After you decide that you need outsourcing development services — be it app development, software or website development — do not rush headlong to publish an ad on the first IT recruiting platform that comes across. Think over the current situation in your company, analyze your resources, identify the strong and weak points of the available specialists. Draw a plan for further action. For example, something like this: 1. Define your goal Formulate your expectations for the job. Too vague goals (for example, “I want to make a discount aggregator”) will lead to a waste of money and time. What do you want to see in the end? 2. Specify the technical characteristics of your project What technology stack will you need for work? What business metrics do you want to achieve? Describe everything in as much detail as possible — in the future it will provide invaluable assistance to your development team. 3. Calculate financial and time costs Think about how long the project will take from the idea stage to the MVP release. Determine your budget and, based on this, select the performers. If you are not sure how much it costs to outsource software development, contact a reliable company offering out staffing services. At Exceed Team, we take into account the specifics of each project and the financial capabilities of our clients. 4. Choose a team or a company to partner with on this project If you decide to assemble a team for the project on your own and one person at a time, it will take you forever. The optimal solution for saving time and energy will be cooperation with a company that deals with outsourcing of the software development experts on a daily basis. 5. Provide efficient communication At least half of the success of a project depends on effective communication between all team members. If you are hiring developers from a different time zone, they will adjust to your schedule, but it is worth checking this before launching the project. Choose the messengers and other means you will use to communicate, such as Slack, Trello, or Zoom. Determine in advance the frequency of receiving progress reports and completed tasks.
Take these steps to make the best of IT outsourcing
Now that you have a plan, and you have made a list of requirements for the team, it is time to put this very team together.
WHAT SPECIALISTS DO YOU NEED?
The determining factor in building a team for an IT project will, of course, be your business objectives. However, there are specialists that no outsourcing development team can do without. Here is the minimum set of experts you will need to work effectively: Project manager (PM) This is your second-in-command in any project, not necessarily outsourcing one. A PM is a kind of mediator between the customer (you) and the developers. This specialist knows what you want from the team and understands what the team needs to be successful.
UX/UI Designer This is not to say that a designer is a vital person for creating your MVP but they are responsible for making your project attractive to users. However, if you initially think about how to make interaction with your project convenient, you cannot do without a designer in the original team. Frontend developer This programmer is responsible for the interface with which users will interact. He or she owns a wide range of technologies. This allows them to implement any design, of course, if they have the necessary qualifications. Backend developer A qualified back-end specialist is a key to successful operation of internal processes in your project. He or she is responsible for the operation of the server and the interaction between the server and the interface. Poor back-end work will turn any project into a disaster.
Read more about hiring developers with different tech stacks:
Thus, we have just put together your MVT — a minimum viable team. Of course, you can change this layout the way you want: add more specialists, or refuse the services of others (not recommended). Create mixed teams of outsourcing specialists and your in-house employees.
If you decide to hire an all-outstaff team and want to know how much it costs to outsource the development of a website or an app for your project, be sure to contact Exceed Team. We will help you find performers to work quickly and efficiently on your tasks.
TIME TO PAY: POPULAR WAYS TO ESTIMATE THE COST OF THE OUTSOURCE SOFTWARE DEVELOPMENT
After you have decided on the global goals of the project, made a list of technical requirements and assembled a team, it is time to think about paying for services. It is not necessary to know by heart all the current software development outsourcing prices, it is enough to know what services you need and contact a company that recruits out staff specialists for IT businesses. In the IT outsourcing market, there are several popular models of payment for developers' work. Each of them has its own specific characteristics, so business owners should select the most suitable method individually based on their capabilities and requirements. So, if you are wondering how much it costs to outsource software development, the information below is exactly what you need.
You can use one of these popular ways
Time and Materials
It is used when it’s difficult to determine the cost of a project in advance. In this approach, the price consists of the payment of the time spent and the resources of the team. Suitable for: a small team of up to 3 people. Pros:
- Flexible approach to work;
- Efficiency. You can change the plan or requirements for the finished product right on the way;
- Result: the result is visible at all stages. You can continuously monitor the process.
Cons: the uncertainty of budgeting (it’s not clear how much money will be spent in the end) and the need to spend a lot of time communicating with the team.
Specialists are assigned to a specific project. They receive monthly/weekly (negotiable) payments + administration costs. Suitable for: large projects if the client company does not have its own specialists. Pros:
- Skills. You can select the best specialists for your project, depending on its complexity;
- Control. You fully control the work and distributes the workload between each performer;
- Cost reduction. Developers have deadlines that they adhere to, and more specialists can be hired if necessary.
Cons: Before starting the project, you must provide the team with detailed guides and instructions so that there are no discrepancies with the final goal.
A price has been pre-set for the services of the development team. Most often this method is used when working exactly with outsourcing companies. The customer doesn’t need to know how much it costs to outsource, let’s say, a website development, since a manager of the partner company will be responsible for calculating the cost of all works. At Exceed Team, we use a flexible pricing approach and will always help you determine the work you need. Suitable for: small (up to 2 months) projects but can also be used for larger projects. Pros:
- Terms. The deadline and all the details are discussed in advance and documented;
- Accuracy. All stages of work are discussed before the start.
Cons: The fixed price approach will suit you if the project requirements will definitely not change during the course of the work. Otherwise, you will have to recalculate everything from scratch.
As the name suggests, this is an hourly wage payment model. It is most suitable for small projects, for example, when you outsource app development. The partner company determines how much time each specialist will spend on a specific task and informs the customer how much it costs. Pros: Saving funds. The services of one specialist are cheaper. Cons: The performer may add extra hours to the actual work time. It is recommended to work with reliable vendor companies to avoid such unpleasant situations.
A modern way of pricing when working on an IT project. The calculation takes into account the volume of work performed, team costs, and even competitors' prices. The work is divided into short periods — sprints. Suitable for: Agile is suitable for any project. Pros:
- Efficiency. Flexible management allows the customer to get exactly what they need;
- Clarity. The customer sees the result at the end of each sprint.
Cons: The main disadvantage of this approach is that any change, even the tiniest one, will require more time for approval.
WHERE TO LOOK FOR OUTSOURCED PROGRAMMERS
The trend towards outsourcing developers has not been slowing down for several years. Modern opportunities allow specialists from any country to enter the global IT services market. Traditionally, there are several clusters in the world that provide outsource software development services:
- Eastern Europe;
- Central and South America.
Most of all IT outsourcing services are offered by India and China, but, unfortunately, the quality of their work often leaves much to be desired. There are many talented programmers in America, but the prices for their services are higher for geopolitical reasons. The best option for outsourcing IT specialists is Central and Eastern Europe. The pros of hiring a team from there include:
- Price. The cost of such developers' services starts at $15 per hour.
- Education. Eastern Europe is known for its strong technical background, which allows local universities to launch thousands of programmers in the market every year, who are able to successfully compete with specialists from other regions.
- Flexibility of work. With a wide selection of specialists, local outstaff development companies will always offer you the best performers or will quickly replace the team if something doesn't suit you.
Top countries by the number of IT outsourcing firms:
Choose developers from any suitable country. In order to not get lost in the huge IT market of Eastern Europe, it is worth finding a suitable partner — a company that will help you assemble a team for a project, conduct onboarding, monitor the processes and help determine the optimal payment approach.
WHY INTERNATIONAL COMPANIES CHOOSE OUTSOURCING WITH EXCEED TEAM
For 6 years of work, we have proven the effectiveness of such a personalized approach to each client. We work with companies from Western Europe, the USA, South America, and Australia.
- We carefully analyze your project and offer the best solutions for its implementation.
- We work with performers from Eastern Europe and can choose the best specialists for your tasks, thanks to the huge market for outsourcing IT services in this region.
- We have a trial period: after we pick a team for you, the test period will allow you to understand whether you are comfortable working with these performers and assess their qualifications. If some specialists don’t suit you, we will very quickly find a replacement for them.
- We bring all projects to completion and don’t give up even the most difficult tasks.
Do you want to discuss your project with us? Not sure where to find the current prices for the software development outsourcing services? Productive and long-term cooperation with each customer is our life-long goal. We will bring your business to a brand new level. Contact our managers and we will help you right away! Fill out the form on our website briefly describing your project, and we will contact you after we conduct the initial analysis of your tasks.
Most popular questions
In general, outsourcing of developers as a format of work suits my company, but how can I be sure that information about my project will be protected?
Any company offering IT outsourcing services always signs an NDA (Non-Disclosure Agreement). In addition to the contract, they use proprietary repositories on Gitlab and work on secure servers. So you can be sure of the security of your data and project.
I wasted a lot of time trying to find performers on my own. How fast can you pick me up a team?
After we have discussed the specifics of the project with you, the selection of a team will not take us more than 3 weeks tops.
They say that developers from Russia are very cool but very expensive. Is this true?
No, that's not true. The cost of their services fully justifies itself, given their qualifications and the stack of technologies used. The price per hour of work starts at $30. You can definitely find cheaper options in Asia, but in most cases, you will need to redo the work after them and pay for the same services again.
I have some questions left, how can I ask you?
Contact us at firstname.lastname@example.org or fill in the form on our website.
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