SaaS Development Outsourcing: How to Outsource the Right Way

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Key Takeaways

• Custom SaaS development services outsourcing is gaining popularity due to the growing demand for tailored, scalable solutions that meet specific business needs.
• Benefits of outsourcing SaaS development include wider tech expertise, absence of staffing pain, lower costs, reduced time to market, and no micromanagement.
• There are three common types of SaaS development outsourcing: part-time outsourcing, dedicated team, and fixed-price model.

As a business owner, you may wonder what to choose — in-house or outsourcing software development. In-house solutions are not always efficient as it requires major time and resource investments. And that’s where outsourcing may come to the rescue of your custom SaaS software development outsourcing project.

This shift towards outsourcing is highlighted by the rapid growth of the SaaS market, valued at $314.54 billion in 2023 and projected to reach $358.33 billion in 2024, with an expected rise to $1,251.35 billion by 2034, according to Precedence Research.

Read this article to reveal the real value of SaaS outsourcing. We will focus on its benefits, types, and stages to provide useful tips on choosing the right team. Finally, you will learn how to manage custom SaaS development outsourcing effectively.

Why Do Companies Outsource SaaS Development

SaaS (Software as a Service) development outsourcing is the practice of hiring an external team or company to design, develop, and maintain a cloud-based software application.

Many believe that outsourcing is risky for fear of potential flexibility and communication issues. Some businesses choose in-house app development, counting on increased team dedication and enhanced control. But here’s what you should consider:

• In-house solutions may be too expensive. You need to hire a full set of specialists. Payroll costs may inflate your budget.
• In-house web development lasts longer. You will have to spend time finding and hiring talents. Later, you should be more involved in the process and conduct constant micromanagement.

On the other hand, if you outsource your product development, you may address these issues and get some extra advantages. Here are some of the most notable benefits of SaaS software development outsourcing.

Wider Tech Expertise

Outsourcing SaaS software development solutions differ from building on-premises products. Certified tech partners understand all the details of web apps architecture and technical requirements.

To name a few, they should be experts in:

• Third-party integrations.
• Software customization.
• Frictionless onboarding.
• Subscription management.
• Zero-downtime deployment
• Compliance with certain regulations, etc.

Hiring a solid SaaS outsourcing development team like ours will ensure your SaaS product is in good hands.

No Staffing Pain

Developers shortage is becoming a real issue. Deloitte projects U.S. tech talent demand to rise from 6 million in 2023 to 7.1 million by 2034. Also, nearly 90% of leaders mentioned that recruiting and retaining talent posed a moderate to major challenge.

At the same time, the IT market shows no sign of a crash. On the contrary, Gartner claims that in 2024, it’s expected to grow 7.5%.

Outsourcing provides a much wider choice of available software specialists than an in-house solution. Moreover, it may be twice or even three times cheaper without compromising quality.

Lower Costs

Outsourcing your SaaS product development will considerably reduce your budget. Cost optimization is one of the key benefits, especially for a promising startup with a strictly limited budget and schedule.

Turning to the SaaS outsourcing option, you can save more than 50% of the SaaS development cost. An outsourcing company will likely offer you their service with lower hourly rates and no extra operational expenses.

Reduced Time to Market

Reducing time to market is crucial for any SaaS startup. For in-house solutions, you will waste precious time looking for talents, hiring a cross-functional team, and onboarding new employees.

In contrast, outsourcing vendors normally have sufficient expertise to start working on your multi-tenant SaaS project right away. Having gained extensive experience working together, they know what to do to meet your deadlines and effectively manage your time.

No Micromanagement

An in-house development team needs strict supervision and micromanagement to support the performance quality and control workflow. When you outsource SaaS product development services, experienced vendors can help your product managers build more efficient planning, adjust technical requirements, and conduct additional analytics.

SaaS Development Outsourcing Models

There are a few types of SaaS development outsourcing, and each of them has its pros and cons. Here are the three most common ones:

• Part-time outsourcing
• Dedicated team
• Fixed-price

Before choosing the appropriate company and signing the contract, ensure you know which model suits you best.

Part-time Outsourcing

This type of outsourcing SaaS development is perfect for those who build their product in-house but need additional resources to complete certain tasks.

Pros:

• Control over the major part of the workflow.
• Flexibility in staffing.
• Less effort in expanding the team with necessary specialists.

Cons:

• More time on additional onboarding.
• Difficulties synchronizing two different teams working on one project.
• Dependency of outsourced specialists on in-house processes.

Dedicated Team

A dedicated team will be fully immersed in your SaaS project. The developers should constantly be in touch, providing you with regular communication, quality time management, and flexibility. One of the key features of such outsourcing is adapting to the changes in the project’s scope and requirements.

Pros of the dedicated team model:

• Team’s commitment
• Flexibility
• Well-established communication
• Reduced budget and timeline
• Deep expertise
• No long-term onboarding

Cons of dedicated team model:

• No one-size-fits-all solution
• Better for long-term projects
• Time zone difference

Fixed Price

If your product has a fixed budget and deadline, you may sign a contract where the price of the vendor’s services is estimated and set beforehand. Such a model is beneficial for building a small or medium-scale SaaS product with a pre-defined development strategy.

Pros:

• Transparency and predictability
• No need for supervision and micromanagement
• Fewer risks of budget and time issues

Cons:

• Lack of communication
• Risk of compromising quality
• Lower flexibility

Countries to Outsource SaaS To and How Much Does It Cost

One of the key factors that impact SaaS product outsourcing cost, quality, and reliability is the hired team’s location. There are several popular destinations you may choose from. SaaS software specialists have different hourly rates and, accordingly, the project’s cost will differ significantly.

There are three main types of outsourcing team location:

• Onshore is outsourcing software development in the same country. This type of outsourcing is the most expensive since developers’ hourly rates in the US and Canada are the highest.
• Nearshore is outsourcing to the country located nearby, such as Mexico.
• Offshore means outsourcing to a distant country with a significant time zone difference. The most popular offshore outsourcing destinations are Eastern and Central Europe, South and South-East Asia, etc.

Offshore SaaS development: Pros and Cons

Offshore SaaS app development outsourcing services can be twice or three times cheaper than onshore. The highest SaaS app development price is often not equal to the best service quality, though.

A considerable difference in price ranges is due to many different factors, such as economic condition, market specifics, and average wage rates. Thereby, a dedicated offshore development shop may offer high-quality service at a reasonable price.

Let’s reveal the pros and cons of SaaS outsourcing development offshore.

Pros:

• Top IT talent pool.
• Deep expertise in SaaS product development.
• A much lower price with no compromising the quality.
• Flexibility and self-management.

Cons:

• Potential communication issues.
• Big time zone difference.
• Lack of direct supervision.

The Most Popular Outsourcing Destinations

There are five most common destinations of SaaS application development outsourcing:

• North America (the USA, Canada).
• Western Europe (the UK, Germany, Netherlands, Switzerland).
• Eastern and Central Europe (Ukraine, Poland, Czech Republic, Hungary, Romania).
• South and Central America (Argentina, Brazil, Mexico).
• South and South-East Asia (India, Indonesia, Taiwan, Thailand, the Philippines, China).

Let’s overview some salary statistics from Glassdoor.

If you decide to build your product by hiring a team from the USA or Canada, the price tag will be the highest. The average hourly rate of a software developer is approximately $58.

Software development in Europe is cheaper, especially in Eastern countries. For example, in the UK, the average rate of an experienced professional is approximately $46 per hour, while in Ukraine, software engineers earn $19 per hour. Ukrainian developers are in no way inferior to their Western colleagues — they have strong backgrounds in STEM and are known for expertise in advanced technologies like AI, machine learning, blockchain, etc.

Talking about South and Central America, as well as South and South-East Asia, these regions are the most cost-efficient — $11-13 hourly. However, companies seeking niche skills or large-scale hiring may struggle to find the right talent.

How to Choose Right Offshore SaaS Vendor

Choosing an IT outsourcing company for your SaaS app development is a supremely important decision to make. You should take your time and consider different options, relying on the following factors.

Rely on Your Goals

The most influential factors in choosing a vendor for your project are your own goals and requirements. You should know what exactly you’re looking for. Define your project’s scope and core goals. Next, provide your future tech partners with all the essential information concerning your SaaS product. Thus, the vendors will be able to build an efficient development strategy and find the right solutions.

Check the Portfolio

Outsourcing company’s portfolio speaks louder than words. Carefully examine the examples of the candidate’s works and case studies on their website. Pay extra attention to SaaS- and cloud computing-related cases. Thus, you will see if a particular team can meet your expectations.

Find Reviews

Along with the portfolio, clients’ feedback has a tremendous impact on the choice of tech partners. You can find reviews on specific websites like Clutch. The reviews are helpful in both expertise assessment and verification of the other important skills like communication skills, time management, and professionalism.

Places to Find

You may simply google the desired services to find the top-ranking vendors’ websites. However, to approach this more meticulously, you may use B2B platforms like Clutch or GoodFirms. Finally, visit Acropolium to check our outsourcing SaaS development services and portfolio. Our skilled software engineers have extensive experience in building SaaS products for numerous different industries.

How to Manage Offshore SaaS Development Process

Here is a short description of a SaaS application SDLC, its key stages, challenges, and specifics.

Discovery

The initial stages of SaaS web app production are planning, strategy building, and business analytics. If you’ve already hired an outsourcing team, they might share their rich experience in customer journey mapping, user persona, etc.

The list of your requirements will directly impact the number and complexity of your SaaS app’s features. It should include all you know about your target audience, competitors, technical aspects, and so on. The more informative the requirements are, the easier it is for your tech partners to estimate the project’s cost.

It’s important to interview the chosen outsourcing development team. Prepare the list of questions you want to ask. Be sure to learn the roles of all team members. And above all, ask them how they can address the key project’s development challenges.

Once you’ve signed the contract and NDA, it’s time to build the single- or multi-tenant app’s architecture and work on documentation. At this stage, you will work closely with developers. They will prepare a draft that includes all essentials of your future SaaS product. It should contain details about the server, code deployment, databases, app’s installation, solving potential development issues, product’ launch, etc.

UX Design

This phase of app development is often underrated yet crucial for further success. SaaS products require a particularly careful approach to UX design. Since your application will provide clients with certain services, you need to enhance the quality of the user experience.

One of the major challenges of SaaS products is to reduce churn rates. Customers leave the app when they are overwhelmed or simply not satisfied with its usability. The end-users should have no frustration as the main goal is to attract and retain new clients. It can be achieved with a frictionless and personalized onboarding experience.

User Experience and SaaS app architecture should be based on your business goals and your target audience’s needs. You may ask the designers to build a clickable prototype to test the app’s features before the UI design and development stages begin.

Development

Before the development process begins, it’s extremely important to choose the right tech stack (frontend and backend frameworks). The decision completely depends on the development solutions and the features required for your product. However, remember that this choice will have an impact even after your SaaS product launch. Select a technology that is future-proof and has a sufficient developers community.

It is also essential to consider a microservices architecture, as it breaks down applications into independent modules, ensuring better scalability and flexibility.

SaaS app development outsourcing is a complex process that takes time and effort. However, there are a few things that may facilitate workflow and prevent unwanted errors.

First, don’t try to build a full-fledged SaaS product right away. It’s highly recommended to start with a SaaS MVP. It will contain the essential features yet is simplified and takes less time to create. An MVP will give you a chance to get early feedback from the audience and see if your SaaS app meets their needs. Later, you can improve it, increasing your product’s workability and performance.

Second, your SaaS outsourcing development team should use the agile management technique. It involves dividing the project into separate modules, ensuring a more flexible approach and frequent reassessment.

And finally, constant communication and multilevel testing will enable you to control the team’s performance, ensuring that the development process goes according to plan. Constant demos, updates, and reports will keep you involved and allow you to make on-the-go adjustments.

Looking for a Reliable SaaS Outsourcing Partner?

Looking for experienced software engineers to outsource SaaS development? We at Acropolium have delivered an impressive number of successful SaaS solutions for enterprises and medium businesses (from logistics to healthcare and fintech). We have ample experience finding robust solutions that can make your business one of the market’s leaders.

Acropolium’s services include web, application, and SaaS platform development, APIs, third-party integrations, multi-tenancy, and scalability. Now, let’s dive into some of our latest cases.

SaaS-based Live Event Streaming Platform Development

A leading event management provider needed a SaaS live streaming platform with payment integration to modernize its system. We developed a solution that enabled global live streaming of offline events. It reduced streaming lags by 95% and achieved under two seconds of latency. Additionally, it dynamically scaled during peak hours using intelligent load balancing.

SAAS Fleet Management Software for a Logistics Company

For an American logistics company, we developed a SaaS for fleet management with advanced features to optimize routes and lower fuel consumption, as well as provide real-time tracking. As a result, we reduced delivery time by 31%, fuel consumption by 14%, customer satisfaction by 28%, and improved driver behavior and safety.

Final Word

Taking advantage of SaaS software development outsourcing, you can considerably reduce the project’s budget and time to market. Besides, there’s more chance to find a team with deep expertise in SaaS development than if you turn to in-house solutions. You won’t have to seek talents, train them, and conduct constant micromanagement.

However, you should choose your tech partners wisely. Look for a team with sufficient experience working on SaaS projects. They should be flexible, have good communication skills, and fully understand how to reach your business goals. Finally, it’s important to sign a reliable contract, setting budget limits and time frames suitable for both parties.

Acropolium can become your reliable outsourcing partner. Feel free to get in touch and share with our SaaS development outsourcing company your case!

Sources of Information

• Precedence Research: Software as a Service Market
• Deloitte: Overcoming the Tech Talent Shortage
• Deloitte: Tech Talent Is Still Hard to Find, Despite Layoffs in the Sector
• Gartner Forecasts Worldwide IT Spending