How to Get Value for Money When Building a Software Product - Evolve

How to Get Value for Money When Building a Software Product

value for money in outsourcing

The way businesses get work done is changing rapidly. For tech startups, the rate of change is accelerating as we speak. Whether it’s taking a low code approach, lean, or agile, all sorts of businesses are trying to do more with less (and quickly).

However, if you’re not careful, you can quickly run into a world of problems. According to Gartner, as much as 45% of product launches are delayed by at least one month. As much as 20% of product managers also fail to meet their internal targets when product launches are delayed. 

If you’re in a highly competitive industry, such delays could spell the end of your startup dream. When founders and CTOs are faced with such a situation, tech partnerships and collaborations are vital to getting the most value for your money and maintaining business relevance.  

If you’re building enterprise software or a mobile app, the goal is to make a robust digital product at a low cost and as soon as possible. But this is easier said than done, right? Well, not exactly. 

Let’s take a look and some scenarios and the best way to overcome the challenges that often pop up during the software development cycle. 

Bootstrapping startup on a shoestring budget

You have a great idea, but lack funding. So what do you do? In this scenario, bootstrapping startups are forced to do the best they can with the resources available. 

More often than not, you have to do all the work yourself and fill the gaps with some freelancers. For example, if you have some of the required skills and knowledge, you can start working on the Minimum Viable Product (MVP) by yourself. 

When you need help to fill the skills gap and scale, you can add a few freelancers to your team to get your software product to market. 

Freelance developers

In the digital age, you can easily access a world of tech talent through freelancing platforms like Toptal and Upwork. For the most part, the costs vary based on location, skills, and experience. But it’s one of the cheapest approaches to software development, as you can easily hire a resource for as low as $15 per hour.

However, developing software products with a team of freelancers spread across the planet comes with significant risk. So project success will depend on how you manage and mitigate risk. 

Freelancing platforms enable access to tech talent around Britain, the European Union (EU), and around the world. You can read reviews and the experience of previous clients before building your development team. 

As their hourly rates will depend on their location and abilities, product owners have to get creative when formulating development budgets. 

You can also add interns into the mix to develop software cost-effectively and accelerate time to market. But the common mistake usually made by first-time founders is to hire cheap, inexperienced graduates, or someone learning while working. 

This is often a recipe for disaster!

On freelancing platforms, you also run the risk of hiring the wrong specialists or end up with unreliable workers who jump ship halfway through the development cycle. As the whole process lacks transparency, you can also find yourself buried in payment disputes rather than building your application.

What’s more, if you hire freelancers outside Britain or outside the EU, you won’t have adequate protection when it comes to intellectual property rights. So if you’re a bootstrapping startup, it will help if you have the necessary technical prowess to build most of the product yourself. 

Well-funded startup looking for the faster path to an MVP

You got a great idea, and you attracted the necessary funding. However, if you’re looking to fast-track your way to an MVP, cost-effectively, it’ll help to have the required expertise in-house.

Why?

Firstly, you need to know the best way to build your digital product. Secondly, the lack of tech talent within the United Kingdom can derail your project. 

Whether it’s bespoke software to achieve business goals or a new product that’ll disrupt consumer markets, you’ll have to look at all available options to build your software. 

So what do you do? Let’s take a look at some of the available options:

1. Engage a local staffing agency to build an in-house team

Staffing agencies play a critical role in helping businesses scale up or down cost-effectively. However, this approach can end up costing you a fortune in the long run. 

This is because staffing agencies can charge you up to 25% of each hire’s annual salary. So if you require a large team of developers, the costs can quickly add up.

The talent that goes through the doors of staffing agencies is usually looking to make ends meet while searching for a permanent engagement. As a result, you risk losing software engineers halfway through the project (if you can’t afford to hire them yourself with desirable benefits package). 

This means that you’ll have to start the process all over again, which is time-intensive and expensive. So whenever you leverage the temporary staffing model, make sure to factor in the time and costs associated with rehiring and more.

2. Outsource development offshore or nearshoring

For decades, the outsourcing model has helped businesses cut costs across the board. Today, any company looking to build bespoke software can choose from both nearshore and offshore providers.

If you’re thinking about taking this approach, sites and directories like Clutch and Goodfirms are useful during the decision process. With outsourcing, you can also choose the pricing model that best suits your budget. 

However, this approach doesn’t come without its own set of risks. When dealing with a company on the other side of the world, for example, you’re faced with a lack of transparency and run the risk of losing your intellectual property rights.

When you outsource development to India (offshoring), you’ll be faced with less stringent regulations when it comes to intellectual property (IP) rights. You’ll also have to deal with rampant privacy and cybersecurity issues.

If your outsourcing partner doesn’t have a presence on the ground in the UK, you really won’t know where your product is being built (for sure). Furthermore, developer incompetencies, misunderstandings, and more can quickly add up, and you’ll pay more for your project (that’s also delayed).

So, if you choose this approach, it’s best to focus on short-term benefits over long-term strategic partnerships.  

Read our interview with Jamie Beaumont, Founder of an innovative recruitment platform Offerd, who shares a story of how Evolve saved his project from rogue outsourcing agencies.

Speaking about pricing, if we go to Clutch and check India-based providers, most of them will charge below $25 per hour or a range of $25-49. In Ukraine, Eastern Europe, a typical price range of Ukraine-based companies is $25-49, but some companies. However, Ukraine hosts many extended R&D/software development centres of international software houses, and these companies’ prices typically fall within a $50-99 range.

3. Hire a local tech consultancy/bespoke software development provider

When it comes to the outsourcing model, the perfect scenario is to partner with a company that maintains a local presence. This is because it enables more transparency while ensuring that local laws protect your contract and your product.

Websites such as Business Insider and DevQuarterly list the top development providers in the country. You can also extend your reach by leveraging Google search (e.g., “bespoke software company locally”, “hire bespoke developers near me”, “hire a software house near me”, “hire a tech consultancy in Leicester”, “top software companies in the UK”, etc). 

You will pay more than you would pay, for example, freelancers or body shops in South Asia. But on the plus side, there’s a guarantee on your deliverables. 

In this scenario, it’s better to develop a long-term relationship with an established bespoke software development provider who’s passionate about client success. This translates into choosing the right tech stack, architecture, developers, and more. 

Mature tech consultancies charge much higher hourly rates than outsourcing agencies and body-shops but they’re also more flexible in working with underfunded startups that have non-trivial and unique business ideas. They can negotiate iterative or sprint-based payment, equity sharing, royalty (revenue-based) financing as well as assist with funding/search for investors, advise on Cloud credits and other software development budget optimisation models.

Are you a tech startup looking to build an MVP fast and in a cost-effective manner and speed up your time to funding/market? Sign up for a discovery session with Evolve!

As your development partner is based in the UK, you don’t need to worry about your intellectual property rights. However, again there’s some risk. 

For example, there’s always the possibility of choosing the wrong stack for your development project. To mitigate this risk, make sure to do your homework and select a partner with an excellent track record and strong software architecture expertise. 

You’re a company with strong tech expertise and experience

If you already have all the necessary skills and expertise in-house, the best way forward it to build bespoke software yourself. It’s the perfect development model as you’ll have complete control over the project and costs.

The same applies to small and medium-sized businesses (SMBs) who’s procurement department can block engagement with a foreign outsourcing agency. 

Whenever you lack the bandwidth to scale as your project grows, partner with a local IT consultancy, this approach allows you to extend your in-house team as needed while maintaining complete control of the project.

When startups and SMBs leverage the extended team model, they’re well-placed to boost productivity. This approach also comes with the added advantage of accountability (when it comes to quality), seamless team management, and rapid time to market.

In addition, an extended team model provides a fully transparent and predictable pricing structure: clients normally get a monthly check consisting of each team member’s salary and a provider’s service fee (i.e., $1500-1800 on top of each person’s salary). There’s no hidden agenda and as a customer, you can scale your team up or down depending on your current needs and financial situation.

Read an interview with Philippe Peron, Evolve's Head of Delivery, where he shares good tips and tricks of what it takes to build and manage a remote team of software developers and explains why you should consider your distributed tech team as a product.

However, if it’s a new business, you might not have the necessary maturity to seamlessly integrate an extended team. Usually, this is because of a lack of strategic focus and poor corporate culture (which takes time to develop). 

However, to overcome these challenges, investing in training programs and team-building exercises can help. After all, the goal is to help everyone get along and work together efficiently. But this will have an impact on your overall costs and time to market.

As you can see from the above, the best way to get value for money when building bespoke software is related to different variables like your business, corporate culture, and resources. If you’re developing a software product for the commercial market, you also have to factor in time to market and weigh your options accordingly. 

If you’re not sure about the best bespoke software development approach for your next project, we can help. Request a commitment-free call back now!

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