Outsourcing SaaS Development: How to Get Started in 2024

The Lowdown on SaaS Outsourcing

Software-as-a-Service (SaaS) describes a subscription-based or cost-per-use method of delivering software to clients.

The provider owns and manages these programs, while clients take care of the production of data. It means the latter no longer have to deal with the complexities of computer systems and their upkeep, and they can take advantage of these applications as a service using the internet only.

Moreover, in the SaaS case, outsourcing eliminates the need to employ programmers or designers, and your project will be finished swiftly and within a shorter period of time. Additionally, SaaS outsourcing allows businesses to access a wider pool of talent and expertise from around the world, leading to higher quality work and innovative solutions.

Why Outsource SaaS Development

Now that you've had a refresher course on SaaS outsourcing, let's explain why you should choose it for your next SaaS product.

The development of a SaaS product involves specific skills from the outsourced team and a financial and time investment, as well as effective management, from your side. Some individuals feel that outsourcing is dangerous because they are concerned about possible scalability and communication issues. They may believe that hiring an on-site team is the best choice, expecting stronger team commitment to their SaaS project.

However, when it comes to hiring an in-house team, there are several drawbacks you are likely to encounter:

• Hiring an entire in-house team for your SaaS product can become very expensive. You may find yourself dipping into your allotted budget more times than you'd like to admit.
• The process of finding and building the best in-house team eats up your time. Spending time in search for specialists with the best tech expertise, going through onboarding, and the need to monitor them simply aren’t worth the hassle.

When you outsource, you're avoiding these obstacles and are already miles ahead when it comes to the completion of your product. Let us now see in more detail the wondrous advantages that outsourcing SaaS development offers.

Benefits of Outsourcing SaaS Development

When it comes to the benefits of your software development project, there are too many to count, but here are a few key advantages.

Access to Skilled Professionals

Through outsourcing the development of SaaS solutions, you are hiring experts that understand how to properly manage the product lifecycle and data. They handle the development of products, picking the right processes, methodologies, technology stacks, and styles that are best for your cause.

An outsourced team with experience operates easily, methodically, and smoothly, since the architects they hire are skilled in producing strategies. They also have internal task managers, seasoned software engineers, and quality assurance professionals to keep everything on the run.

Creation of Scalable Goods

To be competitive in the market, you must be able to launch fresh features in as little time as possible. By choosing to entrust the product development to an experienced and devoted team, you have a much greater likelihood of delivering timely features and satisfying market expectations more swiftly. 

Cost- and Time-Efficient

With SaaS outsourcing, the firm you go through is responsible for finishing the project on schedule. They have administrators to oversee the development process and technical specialists to make that happen in time.

Faster Development Process

With SaaS outsourcing, the firm you go through is responsible for finishing the project on schedule. You can be confident that the project will be done according to schedule since they have administrators designated to oversee the project development process and technical specialists to assist them.

Stress Less

Challenges of Hiring SaaS Product Development Teams

While there are several advantages to hiring an outsourcing team, there are several red flags you should be on the lookout for.

Choosing a Trustworthy SaaS Outsourcing Vendor

Although not impossible, discovering a reliable SaaS team can be difficult. You'll want a company you can not only trust, but also know that they are prepared to be fully committed to the success of your project. It might also be tough to find a team that knows your target audience and commercial goals, while also aligning the software goals you have with those two metrics.

Fraudulent Contracts

It is critical for your company that you understand the terms of the contract you sign with an outsourcing firm. Otherwise, you may encounter unanticipated complications, such as additional expenses for services or even extra fees for small changes after the agreement has been signed. It's advisable to have your agency sign a non-disclosure agreement and a contract that has no loopholes.

Lack of Established Coding Techniques

There is always the possibility of encountering issues when it comes to the quality of the code being used by the outsourcing team you hired. It could prove to be difficult for you to align yourself with their coding methods. Consequently, it's critical to collaborate with organizations whose coding standards you know and who are even better than your internal teams.

Project Milestone Setbacks

Never rule out deadline delays that can be caused by communication difficulties or technical expertise problems because virtually all engagement is done digitally with the outsourced team.

Despite the fact that even the most reputable development firms use delivery managers to oversee project milestones, it is probable that one or two will be missed. Overall, there are usually three primary causes for project milestone delays:

• There are unrealistic expectations from the onset.
• Scope creep. Current functionalities are uncontrollably modified, or new ones are introduced.
• No or deficient risk management process.

You can prevent this from happening by finding software partners that have expertise in establishing initial objectives, offering estimations, and building clear guidelines for collaborating on revisions to make essential improvements.

Quick tip: for processes to go smoothly in the SaaS development outsource area, have frequent video conferences or face-to-face meetings.

SaaS Development Outsourcing Models

SaaS development outsourcing isn't a one-stop shop where you just grab the only available item and go. You've got a few options to browse over and decide which is best for your current business model. We've broken down the top three models along with their pros and cons to help you choose the right one for your SaaS solutions.

Part-Time Outsourcing

This form of SaaS development outsourcing is great for companies that build their products in-house and require extra help to carry out specific tasks. In short, you outsource only a portion of the SaaS project to tackle an issue in the development workflow while still maintaining control over the overall development process. This approach allows companies to save time and money by leveraging the expertise of specialized developers without having to commit to a long-term outsourcing arrangement.

Pros

• You have better management over a large chunk of the development process.
• You have more versatility when it comes to picking new hires.
• Fewer resources are expended on extending the team to include the best tech experts.

Cons

• Additional effort is spent on employee training.
• There are challenges in coordinating separate groups engaged in the same project.
• Outsourced individuals will rely more heavily on internal procedures.

Dedicated Team

This model of outsourcing is ideal for any SaaS startup that focuses mainly on timely delivery and staying within budget. Projects like these typically do not have the time or money to employ and onboard an in-house team. They do, however, need the complete dedication of the contracted workers.

Your SaaS product will be handled entirely by a qualified development team. You will be privy to frequent communication, incredible versatility, and great time management from your dedicated team. Arguably, one of the most important aspects of this type of outsourcing is the capacity to respond to modifications to the scope and requirements of the project.

Pros

• The project timeline and budget can be predicted and significantly reduced.
• You will receive good, frequent communication from the project managers and team.
• There will be stellar commitment from the development team to your project.
• You can count on high versatility regarding project management. 
• The SaaS developers possess extensive knowledge regarding all things.
• No long-term training required.

Cons

• There is no universal solution regarding the SaaS product.
• This model is ideally only appropriate for long-term SaaS projects.
• Depending on where the development team is from, time zone differences will need to be worked into the project outline.

Fixed Price

This outsourcing approach can be suitable for a SaaS project that requires no expansion or major adjustments throughout. Assuming your service or product has a definite budget and timeframe, you can agree on a contract in which the cost of the vendor's operations will be projected and established in advance.

The fixed-price model is useful for developing a small or medium-sized SaaS product that follows a predetermined method of development.

Pros

• Your SaaS development experts value transparency and reliability.
• There is no need for you to monitor or micromanage their progress.
• There are fewer challenges regarding budget and timing difficulties.

Cons

• Requirements must be well-prepared and carefully described. We can't estimate if we don't understand the scope. Or it will be overpriced.
• There are more difficulties concerning communication.
• There is a chance of not retaining the highest quality possible for a SaaS product.
• Development teams can demonstrate less adaptation capabilities.

How to Choose the Right Outsourcing Partner for Your SaaS Development Needs

To begin with, be certain that the organization has appropriate experience with SaaS projects. SaaS is a sophisticated solution that necessitates a distinctive strategy, a versatile team, and plenty of expertise. Examine their collection of work and the evaluations of the candidates made by other firms that have previously employed them.

Second, make certain that the company you've selected has dependable methods, strong interpersonal skills, and organizational capabilities. If you manage a startup, you need to know that your engagement with technology partners will be flexible and productive in order to grow your business.

Now that we've got the basics out of the way, let’s go through the important points.

Focus on Your Objectives

Your project's objectives and criteria are the most critical considerations when it comes to hiring a service provider. Before you even begin looking for one, you have to know specifically what you want. Take the time to determine the scope and primary goals of your project. Then, present all the necessary details regarding your SaaS solution to your possible IT partners. As a result, the suppliers will be able to create an effective development plan and locate the best solutions.

Examine the Portfolio

As the saying goes, "Actions speak louder than words," and in this case, those actions are their portfolio. Take a look at their website to get a feel for their work and previous case studies. In particular, be on the lookout for their work regarding SaaS and cloud computing. This way, you will be able to determine whether their development team is capable of meeting your requirements.

Check Feedback

Adding to the examination of their portfolio, consumer feedback carries a significant influence on the selection of software vendors. Reviews are useful in terms of assessing competence and verifying other vital abilities such as communication, organizational skills, and competence. Reviews can be found on sites such as Clutch.

How to Sign a Contract for SaaS Development Outsourcing

Now moving to contracts. Contracts for SaaS development are quite comparable to more standard analogs. There are three different forms of such documents that you might use based on the aims, needs, and intricacies of the project.

Time and Materials

The payment under these contracts is entirely dependent on the time invested and the resources utilized to finish the job. The developers' labor is compensated by the hour. Time and Materials contracts work best for projects with an unclear outline.

Fixed Price

Contracts like these are suitable for outsourcing projects with specific due dates and objectives. As a result, customers and suppliers can settle on a price for the whole project. Before entering into such a contract, you must provide all necessary papers and acceptable terms ahead of time.

Target Cost

These kinds of contracts are not particularly reliable, since no set price or projected hourly costs are specified. It is ideal for big and advanced SaaS projects with an unclear scope. Because this form of contract can be quite risky, the suppliers may provide an upfront cost to guarantee clarity.

Entering into a contract with a development outsourcing company is a significant move. It is important that both sides handle it professionally. Let's go through a few pointers on how to do this effectively and safely.

1. Time and Resources

Ensure that the contract specifies the time and cost of the vendor's products and services. This can change concerning the type of contract you enter into. Nevertheless, you must guarantee that the timelines and budget are realistic and clear.

2. Qualification Criteria

Establish deliverables, objectives, and monitoring procedures. It is essential to agree on the method of communication and the frequency of virtual interactions to stay up-to-date.

Furthermore, the provider must clearly understand who is in charge of the approval procedures and when a consumer intends to utilize the product in question. They must also be aware to which person they should report any possible problems.

3. Intellectual Property Ownership

We touched on this earlier with the potential of encountering fraudulent contracts and how important it is to make sure everything is properly outlined. With regard to intellectual property, this clause in the contract is particularly essential for a SaaS product as it pertains to IP upkeep. Therefore, you should be sure to include this in your agreement if you require continual maintenance for your SaaS software post-launch.

4. Privacy

There are several prohibitions and IP regulations relating to secrecy in several countries, including the United States. To avoid any issues, it is advisable to sign an NDA that protects important confidential data in accordance with your country's rules.

Cost of Outsourcing

Now that you know the benefits of SaaS development, the challenges to look out for, and how to find the right team for you, let’s take a look at the pricing of it all. Outsourcing can be two to three times more cost-effective when it comes to SaaS development. However, this is all dependent on the scope of your SaaS project and where your outsourcing team is located. We've provided a general overview regarding the SaaS development cost based on the region.

*please note that these numbers are based on the Accelerance Analysis 2021 Report and are subject to change.

If you were to hire an in-house team, you would need to account for the costs of the hiring process, onboarding, and retaining them as well. By outsourcing SaaS development, you mitigate these expenses and are able to relocate them to other endeavors your company may have.

Frequently Asked Questions

What is SaaS outsourcing?

Software-as-a-Service (SaaS) refers to a way of offering software to end users that is subscription or pay-per-use based. They are owned and managed by the supplier, while subscribers are in charge of data output. It means that users no longer have to be concerned with the intricacies and maintenance of computer systems, as they are accessible with any internet connection.

What is outsourcing software development?

Outsourcing software development entails engaging an outside vendor to undertake software development initiatives. Services can include designing software for your organization, overseeing business processes, and developing software for your clients.

Is outsourcing software development a good idea?

Outsourcing SaaS development is one of the best choices for your company, regardless of its size. SaaS development is built on core business principles to provide you with the most affordable development cost, timely outcomes, and the best tech stack. Additionally, SaaS development allows for easy integration with other systems and applications, streamlining your business processes and increasing efficiency.

What are the benefits of outsourcing SaaS?

The benefits of SaaS software development outsourcing are numerous, but the key advantages are access to skilled professionals, time and cost efficiency, a fast development process, and the development of scalable products or services.

How much does IT cost to outsource software development?

The average price to hire a SaaS professional from an outsourcing partner can be anywhere from $15–$45 for junior developers to $50–$100 for professionals. However, this number is highly dependent on what region you are hiring your SaaS product development team from.

What is the risk of outsourcing SaaS?

A few challenges you can encounter when looking to hire a team for your SaaS product development needs are:

• Finding a trustworthy SaaS outsourcing vendor;
• Encountering fraudulent contracts;
• Lack of established coding techniques from the SaaS product development team;
• Project milestone setbacks due to unrealistic expectations or unexpected changes.

What is the difference between SaaS and outsourcing?

When we talk about SaaS, you do not own this software. Rather, it is provided to you on a subscription basis, such as with Google Workspace or everyone’s beloved Netflix. When the subscription has ended, you cannot access it. On the contrary, when you outsource software development, the final piece of software will belong to you. You are free to use your SaaS products as you see fit.

Ready to Begin Outsourcing SaaS Development?

So, are you in favor of the court's ruling that going through a SaaS development outsourcing partner is worth it? No matter the size of your company, big or small, entering the SaaS market and browsing through all the options of skilled software engineers is one of the best things you can do to ensure the success of your product. Outsourcing to a reliable SaaS development partner can save you time, money, and resources while also providing you with access to a wider range of expertise and technology.

Not sure how to hire a SaaS product development team? Contact us today to discover all the SaaS services we offer!