Whether you’re a startup or more established, most businesses understand the importance of having one or more app development running to increase revenues and improve customer experience and retention.
As a business leader, you have some ideas about what kind of app will help your company thrive. But you must work with developers for years to make those concepts a reality.
Some companies want to keep app development in-house, while others want the expertise of skilled outsiders who can develop something innovative. So what’s the right choice, and is outsourcing the most cost and time-effective approach?
What Is Outsourced App Development?
Outsourced app development is working with an external software development business to deliver an app or software project that a company needs.
According to recent research, “60% of organizations turn to outsourcing for app development”, and demand for outsourcing varies across different sectors. There are several reasons for this, such as data security and the need to keep the intellectual property (IP) proprietary and, therefore, restrict technology development to an in-house team.
The research says, “In the financial services sector, 72% of organizations outsource app development. In healthcare, that number drops to just 31%.” Several factors influence whether outsourcing is the right approach for a company, including whether or not they’ve previously had good experiences with outsourcing.
IT services, including app and software development, is universally the most popular business process to outsource rather than manage in-house. Over 90% of organizations have outsourced IT, app, and software development or rely on Software as a Service (SaaS) and cloud storage contracts for key business functions.
There are pros and cons to outsourcing compared to keeping app development in-house. We will explore both in this article and outline the steps business, operational, and IT leaders need to take to outsource app development.
Pros and Cons of In-house Mobile Development
Before we go more in-depth on outsourcing, let’s consider the pros and cons of keeping app and software development in-house.
Pros of In-house
Control
As a project leader or product manager, you’ve got more control when your team is in-house. It’s the best way to avoid cost overruns, mission creeps, misunderstandings, or confusion when communicating goals, objectives, and app development feedback.
It’s easier to run scrum meetings and take notes for those meetings when everyone is in the same room rather than distributed in multiple locations.
Having an in-house team gives you more control over the project. However, it also comes with several problems and difficulties compared to outsourcing this work.
Cons of In-house
Cost
Hiring an in-house team of developers almost always costs more than outsourcing. Even for companies with an in-house development team, you need to ask yourself, do you have the right combination of skills for app development? If so, does your team have the time/resources, or are they working on other projects?
Cost is a huge factor in this consideration. Especially when your team is on-site. Developer salaries can be considerably higher in the U.S. and Europe in comparison with other regions. This includes the aforementioned ones (Central & Eastern Europe, Latin America, and Southeast Asia).
On top of salaries, you’ve got benefits, healthcare, pensions, office costs, and providing the team with the right tech stack and other resources. In addition, recruiting and retaining an in-house team is expensive, especially when competing against tech giants and high-growth, well-funded startups for talent.
It’s worth asking yourself: can your company afford to compete for the caliber of tech talent you need (locally) to develop the sort of app you want?
Competition for time, skills, and resources
Having an in-house team opens the door for scope creep or the team being pulled off app development and onto another project. A product or project manager will want to keep the team on app development; however, a CTO or CEO might have other ideas.
In-house development teams will always be at the mercy of competing business goals. Senior leadership will see this team as another resource to be used, putting an app development project at risk from the team’s priorities shifting to work on something considered a higher priority.
Now let’s consider the pros and cons of outsourced app development.
Pros and Cons of Outsourced App Development
Pros of Outsourcing
Reduced Costs
One of the most significant advantages of outsourcing is lower costs than hiring an in-house team working on-site. For example, you can drive substantial savings when you outsource to a software development agency or have a dedicated outsourced team assigned to your app development project.
This is usually a cost-saving decision without compromising quality, skills, creativity, experience, or expertise. Get the talent you need when you need it for a lot less money. Especially when you outsource app development to other regions. These can include Central & Eastern Europe, Latin America, and Southeast Asia.
Also, with an outsourced team, you don’t need to worry about all the other associated overheads, such as benefits, healthcare, pensions, office costs, and providing the team with the right tech stack and other resources.
Retaining in-house resources on core business functions
With an outsourced development team working on an app, you can ensure in-house resources and teams stay focused on core business functions.
Developing the best app possible for your business is the number one job for your outsourced vendor team.
So, not only are you making a real saving, and you don’t have to worry about internal competition for the team working on the app. Instead, that team or vendor is contracted for a specific job while opening the door to see how they might perform on other projects.
Get the expertise on-demand when you need it
On-demand expertise gives businesses a huge advantage. In the tech sector, many companies understood the value of remote work and onboarding teams from other regions to work on projects. The pandemic also paved the way for more established businesses to accept this fact. People aren’t less productive when not in the office. On the contrary, studies show remote teams are more productive than those working on-site.
So, you don’t need to worry about your remote app development team not getting the job done. Especially when you contract out the work. Vendors and freelancers working on a contract basis are often even more productive, working faster and more efficiently than an in-house team.
Despite the upsides, you also need to be aware of potential downsides. However, in most cases, those downsides only apply if you’ve picked the wrong vendor or partner.
Providing you are careful with selecting an outsource partner and putting the right processes in place before starting a project; you should come out with an app that makes a positive difference to your business growth objectives.
Cons of Outsourcing
Less control
When you outsource, there’s always concern about not having as much control as you would if you’d kept the work in-house. For example, business leaders are often worried about the following:
-Is there any chance our outsourced partner won’t deliver?
-What if we aren’t happy with the work and must fix it in-house or turn to another provider?
-Is there any chance they will take too long to develop an app we can launch to the market/our customers?
All of these worries are understandable. But you can overcome them. First, be careful when selecting the right outsourced partner with whom to work. Do your homework. Check reviews and case studies.
Ask for a portfolio. Even download other apps they’ve developed and play around with them; ensure you are happy with their work before commissioning the project.
Risk of mission/scope creep
App development projects taking longer than expected or a provider not delivering on time is a serious concern amongst business leaders. Not only could this delay an app launch, but it could also mean the project costs more than expected.
One of the best ways to overcome this is to be clear from the start on the project timescales, budget, and what happens if work takes longer than originally estimated. Have processes in place to cover these possibilities.
Below we outline the steps you should take before starting an outsourced app development project, including how to prevent mission/scope creep and budget overruns.
Before outsourcing app development, here are six steps business and IT leaders need to take.
6 Steps to Take Before Outsourcing
1. Ensure your business goals align with the need for developing an app
Ask yourself a few key questions before commissioning an app for development:
- Do we need an app?
- Would our customers or clients benefit from us having an app?
- Is this the best use of our resources and time (app development can cost anything from $50,000 to $250,000, depending on the complexity and number of features)?
- Does an app align with our business goals and growth objectives?
Want to understand better how to scope your outsourced app development project? Then, we recommend reading this article on how to scope your app project.
Be clear on the reasons behind getting an app developed. You don’t need an app for the sake of having one. Only commission the work if it will positively impact your business, revenue, and long-term goals.
2. Select a vendor who understands your goals and has sector-specific experience
One of the most important aspects of getting an app development is selecting the right vendor to build it. Make sure you partner with an agency or dedicated outsourced team who understands your goals and has developed similar apps in the past. Sector-specific experience is useful too, but optional.
3. Be clear on processes, expectations, and budget before starting an outsourcing project
Establish the most effective processes and expectations before commencing a project. For example, ensure you agree upon a budget, including a strategy for dealing with timescales or budget overruns.
4. Ensure you clearly outline achievable project milestones
Ensure project milestones are outlined from start to finish within the above point. You and any other internal team members need to know what to expect and when you will deliver aspects of the app project.
Both parties must have clear expectations and milestone plans, including the turnaround time a vendor should expect feedback. You need to see it as a partnership to avoid disappointment. Too often, projects take longer because the client rather than the vendor delays tasks they’re meant to be getting on with.
5. Establish transparent and responsive communications between the vendor and internal team members
Communication is essential to the success of a project. Establish systems and apps for communication right at the start. For example, set up a Slack channel with your app development partner.
Ensure the right people in your team have direct access and contact with the right people on their team so that messages aren’t getting filtered through a cumbersome chain of command or details getting lost and overlooked.
6. Make sure your testing and feedback tech stacks and processes are aligned
Testing and feedback is an important and needed part of the app development process. Without feedback, a development team won’t know what app features to improve or might have missed bugs that need fixing. No app, especially in the alpha and beta stages, is perfect.
Every app needs to go through a process of amendments and changes before you can release it to the public. So work together to ensure testing and feedback tools, processes, and systems are in place before you need them so that part of the development project runs smoother.
Key Takeaway: Advantages of Outsourced Mobile Development
Compared to having an in-house team develop an app, outsourcing is more cost-effective, faster, and better use of company time and resources. Outsourced teams and agencies consistently deliver outstanding work for large and small businesses worldwide.
Some of the best-performing tech leaders have outsourced R&D and development centers in well-known countries like Ukraine, Israel, Mexico, and India. Following this, several countries have done the same for years.
Startups and smaller companies often outsource development work to software engineers in other countries. Now, more businesses than ever are catching up with the fact that outsourcing is the best way to go when they want an app developed.
About the Autor
John Marquez is a 7-year digital marketing specialist. He spends most of his time testing different strategies and in his spare time, argues his findings with his dog. Zeus. You can follow him @J_PMarquez.
