Category: Software

In order to build a successful app, you do not necessarily need your own development team. There are numerous app development companies out there that provide outsourcing services for premium rates. However, in order to ensure that you get the most out of the collaboration, it’s important to keep a few things in mind. In this article, we’re going to take a look at how you can outsource your app development needs, and ensure that the entire process is a success.

Your company’s role when outsourcing

Depending on the development company you choose, your role can range from minimal to heavily involved. The decision is ultimately up to you, but if you do choose to be heavily involved you will need an experienced product manager or two in order to be able to steer the project. In Espeo Software we often meet business owners who are willing to learn a project leader role and take over this responsibility. We’re very open to this approach and can easily set up a development model which is suited to such a project management matrix.

However, even if you have no experience at all with software development within your team and you’re not willing to take on this kind of responsibility, you still have an important role to play in your app’s ultimate success.

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To start, you will have to develop the idea behind the app as much as possible, and provide all the relevant documentation to backup your decision making processes. This means taking a look at the market, your competition, your business goals, your marketing strategy post-release, your budget, and even possible future updates and releases. Most of this information can be found in your business plan or business model canvas. It’s also very helpful at this point if you craft a request-for-proposal and share it with prospective developers.

Developing the app idea itself can be a very complex process. In some cases, when you have experience in an industry, you have already identified the pain points of your target customers. In others, you might want to work with a prototype or MVP (minimum viable product) model, in order to test the market, and calibrate the product through iterative improvements.

Outsourcing is also a great learning opportunity and it can help your company develop the framework and methodology for future projects. You can also work with the outsourcing company in order to build your own development team. Some vendors are very keen to cooperate with their clients, and you can position staff members looking to develop project management skills in a way which allows them to overview the development process and gather best practices that you can use within your own company.

Working with a development company that has its own project managers is usually the best option for startups. The project will be handled from start to finish with a high level of professionalism and, as mentioned previously, all you have to do is provide the app idea and its business objectives. The rest will be handled by the dev team, and in some cases the vendor will help you fully flesh out your idea ensuring that the end product will be a perfect market fit.

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In-house vs. Outsourcing: Cost Comparision

When considering whether to develop in-house, or outsource software development, cost plays a big part in the final decision. We’ve already covered the costs of outsourcing in-depth in this article , so we will focus more on the average costs of building an in-house development team.

To start, it’s important to note that app developer positions are notoriously hard to fill. The demand for the skills involved is growing daily. In fact, according to research from Opinion Matters and OutSystems, 63% of survey respondents had anywhere from 11% to 25% of their development team unstaffed. On top of that, research from Deloitte shows that US companies need 52 days on average to fill an open app developer position, with an average cost of $4,000 per hired individual in on-boarding and recruiting costs (creating job postings, running interviews, training, and running background checks).

Now, let’s take a look at the costs and various factors that will come in to play based on the size of your team. The following salary averages have been sourced from Indeed.

Small, startup team (1-4 employees)

Small, startup teams usually consist of a group of friends and acquaintances looking to enter the app development market. These teams may be funded by investors, but in most cases, they are comprised of people willing to invest free time and energy into a project they believe in. The employees involved will have multiple, hybrid roles, where developers will handle design, project management, QA, and other aspects of development. For the most part, this is the lowest cost option, but it is also the riskiest one.

Small, agile team (3-5 employees)

These teams are usually found in mid-size companies that have an in-house development team. They consist of salaried employees, both independent contractors and full-time staff. If you are located in the US or Western Europe you can expect to pay the following in salaries:

• Developers: $83,937/year
• Designers: $84,255/year
• Project managers: $91,681/year
• Senior developers hired on a part time contract: $47,133/year

Thatbeing said, your in-house development team will run on $307,006/year.

Full development team (5-8 employees)

This is the ideal development team composition for large app releases, where you want to have a very smooth rollout, and you want to be able to routinely release updates for your app. With a team of this size and composition, you can build consumer and enterprise apps, both native and cross-platform. The salaries for developers, designers, project managers, and part time senior developers remain the same, but you will also have to hire:

• Backend developers: $120,861/year
• Lead UX designers: $92,331/year
• Quality assurance engineers on a part time contract: $37,739/year

This type of team will cost you around $557,757/year.

Additional costs

Besides the salaries of your team members, you will also have to pay taxes, and account for healthcare and unemployment insurance. These costs will vary from area to area so it’s important to check with your local government in order to get a full picture of the costs involved.

On top of that, you will also have to take into account a variety of overhead costs. There are hardware requirements such as desktop computers, and mobile devices that will be used for testing. You will also have to foot the bill for a variety of licensed software such as Photoshop, operating systems and others. Finally, your team will need office space, and office supplies.

The costs of outsourcing

As mentioned previously, we have covered this topic in-depth before, but in order to provide a complete picture, we will also try to outline the costs of outsourcing here.

The media cost for developing an app using a third-party developer usually ranges from $10,000-$500,000. However, complex apps developed by certain near-shore companies can cost over $500,000. Many factors will come into play when deciding the cost of an app, including the experience of the agency, their team size, the complexity of the app, the scalability of the backend, and the location of the agency. Some companies will also take into account your client profile. If you are able to provide a project oversight, and you have experience with app development, your costs could be up to 30% lower.

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Risks

It’s also important to know the risks involved with each option before making a decision. To start, there is a potential risk involved with hiring new tech employees, especially if you do not have tech experience yourself. Junior developers come in all shapes and sizes, and you will need a wide variety of skills and talents from each one of your team members.

The best course of action at this early stage of your team building effort is to bring in someone who has tech experience, and who especially has experience with developing a software product. They will be able to tell which candidates have the right skillset, attitude and experience to ensure that your development efforts have the best chance of success.
Once you’ve hired your team members however, you are still not out of the woods. High turnover is a big risk for tech companies, especially if they are smaller. IT talent is in high demand, and it is not uncommon for companies to come knocking with better offers in an effort to hire one of your team members. If this ends up happening, not only will you have to put the project on hold, or seriously delay it until you find a new team member, you will also have to wait until they are on-boarded as well.

When outsourcing, you also face several risks. However, these risks can be mitigated with proper market research, and by doing thorough background checks on your list of candidates. If you end up making a bad hire, the vendor might:

• Run out of business.
• Not deliver a quality product.
• Run up costs unexpectedly.

Benefits of outsourcing

To sum it all up, let’s take a look at the benefits you can expect when outsourcing your app development process:

1. You will receive a project estimation based on the scope of your project and you will be able to work with your tech partner in a time and material model where you decide on your priorities.
2. You will be able to start the development process as soon as the contract is signed.
3. You will work with a development team that is comprised of members who have a working relationship that spans multiple projects and several years.
4. You will be able to hold the firm accountable for any delays or mistakes, based on the terms of your contract.
5. You will have access to a large library of previously developed features and modules that can be added to your app right away, greatly speeding up the development process.
6. You will work with a team that has extensive experience, and is on top of the latest technological developments.
7. You will have several options at your disposal when it comes to the service package you choose. You can hire individual team members, you can outsource a part of your project, or you can hire a full team that is supervised by a project manager. You can tailor the service to suit your needs.

See also:

• From Idea to Working Prototype: Startup App Development Guide Initial Stage
• How To Start A Tech Company: Intro to Hiring Tech Resources and Early Stage Development
• 5 Mistakes Startups Make When Developing First App
• Mobile App Cost Estimation: What you need to know before you start talking with your development partner

Developing an app can be a time-consuming, expensive endeavor. As such, it’s important to work with a methodology that will deliver on ROI and business objectives. Many companies however choose the wrong approach. You have numerous startups which have failed because they took an idea, developed it for months, or even years, and never market tested it until launch. The results from taking this approach can range from disappointing to disastrous. To address this, companies have started working with MVPs, or Minimum Viable Products.

How to Develop an MVP

The methodology starts with identifying a problem and then building a bare bones product known as the MVP, in order to test assumptions and customer reactions to it.With each iteration of the MVP, the company gathers actionable data and metrics in order to determine various cause and effect relationships. 

If everything goes as expected, the MVP is developed further by adding new features and functionalities. However, if at a certain point, it becomes clear that the product idea is not viable, the company can pivot at a relatively low cost, and revert to a previous functional step of the development process. For example, if it becomes clear that the current development path will lead to a product that will not be financially viable for the current marketplace, the company can rollback changes easily, or even scrap the project in its entirety. However, the latter option is fairly rare when working with an MVP.

The process of developing an MVP starts with a planning phase. During this phase, you will want to map out the long-term goals of the product, identify the reasoning behind its development, and the criteria which will indicate whether the product is successful or not.You then need to take a look at your users. This is where you create user personas, identify use cases, and map out the journey each user needs to undertake in order to achieve their end goal with the product. 

Once the conceptual framework is in place, it’s time to start thinking about features. In an MVP, features are ranked according to importance, and the most important features relate to your user map and your end business goals. For example, if you own a chain of coffee shops, and you would like to build an app that reduces the number of time people wait in line for their coffee, you might be looking to implement features that allow customers to pre-order coffee online before they reach the coffee shop.

In this case, you will need several essential features: clients have to be able to pay through the app, they will have to be registered in a database, and they will need to receive a proof-of-payment on their phone, in order to redeem their order when they reach the coffee-shop. At this point, we’ve identified three essential features for your app. In order to build an MVP, we will have to break these features down even further, and perhaps only market test one or two of them, so that we can reduce costs and development time. 

Let’s say we’ve decided to test the concept: are clients really interested in pre-ordering coffee? The MVP will perhaps allow customers to simply pre-order coffee without paying for it, and the app will log their order into a database. The experiment can be run for a couple of days with a handful of loyal customers, in order to test results. If everything looks good, the mobile payment feature can be added and tested next.

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Features to avoid in an MVP

That said, there are features which are almost universally poorly suited for an MVP. Features that are completely aesthetic in nature, for example, do not have to be added to the MVP, because they provide very little quantifiable value. These features should be added only after the core functionality has been tested. Other features such as social media integration also fall into this category. 

You then have copycat features. Adding features that are similar to more established apps will extend your timeline and budget, but they will not provide new insights into the usefulness of your product. Copycat features have already been tested by the larger, more successful app, and as such, they can be added at a later stage of the product development.

Finally, you have features which are requested by early users. This may seem a little counter intuitive because one of the main purposes of the MVP is to test the users’ response to a product. However, features requested by early users might not actually be a good fit for your business goals. For example, some users may request social media integration at a very early stage of the product, which would take time and resources to implement, without providing any quantifiable value to the MVP. These requested features should be noted down and kept in mind for later versions of the product.

The Most Common MVP Development Pitfall

The main purpose of the MVP is to provide validated learning. Validated learning is the iterative process which measures the effectiveness of a product in reaching the set business goals. As such, it’s important to keep in mind that any feature added to the MVP has to have a measurable impact across relevant metrics. Some companies will make the mistake of not taking this into account, and they will go on to view the MVP as the most stripped down version of a product, removing essential features in the process. 

To avoid this mistake, always keep the business goal in mind, as this will help you reach a balance between cost-effectiveness, and validated learning. However, balance is the key word here. Some companies will go overboard with the initial features of the MVP, to the tune of the MVP occupying 97% of their backlog which contradicts the whole idea of an MVP. The MVP should have several key features that will be tested, with the rest of the functionality being implemented once the market responds positively to the concept behind your product.

The Benefits of Developing an MVP

So what are the benefits of developing an MVP? The first benefit would be a rapid development process. It usually takes one or two months to have a market ready MVP. You will also need a much smaller budget to develop an MVP since most features will not make it into the product. 

Since the MVP is a lightweight version of a larger final product, the risk for investors is much smaller. With a reduced development timeframe and budget, investors are much more willing to test an idea and see if it is well received by the market. And, once the concept has proven itself within the market, stakeholders and investors will be much more willing to buy in.

Finally, the MVP development process itself builds an audience. At first, the MVP may be used to test market reactions, and see if a product is welcome by users. But once the MVP starts to gain traction, some users will become early adopters, and develop loyalty towards the product. This means that by the time you get to market, not only will your basic assumptions about the user base be validated, you will have a core set of users ready to support the product.

See also:

• Minimum Viable Product: from MVP to MMP
• 5 Mistakes Startups Make When Developing First App
• How to Build a Successful MVP