Whether you already have experience in hiring a software development company or it’s your first time, it can be a rabbit hole to navigate through a myriad of choices. As you start planning, you may find yourself puzzled about how to make sure that a company is a good fit for your project. Your choice will, surely, depend on your budget, your timeline, the team members’ level of expertise and knowledge, and similar. 

But even if you have a clear picture of your needs, it may be rather challenging to address all uncertainties and foresee all the risks. So, to assist you in choosing the right software development partner for your business, JatApp gathered the answers to the most common questions that may arise during the hiring process. 

What does a software development company do?

A software development company is an agency that designs, builds, and maintains custom applications, frameworks, and other software tools for clients or businesses. While every software development team differs, it typically consists of software developers, project management team members, and at least one product owner (a worker who is held accountable for testing a product to ensure its smooth performance).

What types of companies exist and what makes them different? 

Software development companies can be roughly divided into onshore, offshore, and nearshore companies. More specifically, onshore companies are the local software development companies that operate in the same country as you. Offshore software development companies are located outside of your country and generally have a considerable time zone difference with you. Nearshore software development companies refer to agencies that are located in neighboring countries, where the cost of hiring engineers is lower compared to hiring talent in-house. 

What engagement and pricing models do software development vendors use?

Engagement models

An engagement model is a set of regulations that defines the relationship between the client and the development company. This includes all the project-related nuances, such as software team tasks and responsibilities, project duration, customer’s level of control over the development process, and so on. After discussing all the details, both parties sign a legal contract and start working on the project. 

As there’s no one-size-fits-all for each and every software development project, there are four common engagement models: dedicated team, team augmentation, project outsourcing, and managed service.

 

Dedicated team

Dedicated team

 

A dedicated team is an engagement model, based on which a vendor offers you a remote software development team fully dedicated to your company and your project. You can select the software developers based on your needs and manage them as your in-house team. The benefits of the dedicated team are:

Commitment. In this case, the team is fully committed to your product with no distractions. As an example, our agency provides dedicated teams tailored to clients’ specific needs. All we have to know is the type of project and the number of engineers needed, and we will make sure the team will include highly competent and motivated professionals. 

Management control. Management roles can be either left to a dedicated team provider or kept to yourself. In the case of our company, we always make sure that our clients can directly communicate with the development team and have complete control over all development processes. 

Hiring control. Normally, you can participate in the process of interviewing the candidates. Still, the software development company should provide only suitable candidates to join your team.  JatApp pays careful attention to the client’s requirements, making sure that all team members have the necessary competencies and skills to complete the project. 

Cost-effectiveness. Gathering a team for product development can mean spending a lot of time and resources searching and recruiting candidates. It also implies considerable administrative expenses such as human resources, office space rent and management, buying the necessary equipment, and so on. With a dedicated development team, you don’t have to deal with candidate screening, recruitment, and administration issues, which can significantly save your budget in the long-run. For instance, JatApp can provide you with a team of vetted developers and help you reduce your expenses by up to 60% compared to Western markets.

 

Staff augmentation

Staff augmentation

 

Staff augmentation refers to expanding the in-house team by outsourcing IT professionals, typically a few workers at once. The benefits of the following engagement model include:

Cost-effectiveness. The model enables you to reduce costs, as you don’t need to pay for employee benefits, recruitment, taxes, and such- the agency you partner with does this for you. 

Scalability. Staff augmentation services can allow you to scale the size of your workforce to respond to customers’ demands. The vendor will simply deliver new resumes for you to select the candidates.

Flexibility. With this engagement model, you can have as many IT workers as your project needs at the moment. This ability to upscale or downscale your team can help you meet the project requirements without any additional costs. 

 

Project outsourcing

Project outsourcing

 

Unlike the previous two engagement models, project outsourcing presupposes that the service provider has complete control over the development team. This means that you fully delegate your project to a supplier, from concept to launch. The main benefits are as follows:

Reduced expenses. By outsourcing your project, you can cut costs on staff recruitment, as the agency has a team of professionals ready to work.

Reduced time commitment. Even though some cooperation is needed, it’s mainly the vendor’s project manager who ensures that the tasks are timely completed and with high quality. 

Accountability lies on the vendor. The responsibility for the implementation lies on your software provider’s shoulders. You are accountable only for documenting project requirements. 

When you see this engagement model as the most promising one, JatApp is here to help. We can design and develop cost-effective innovative solutions based on your requirements while taking full responsibility for the product development life cycle from planning to release. 

 

Managed services

Managed services

 

The managed services engagement model means that you outsource not only the product development but also delegate a range of IT services to the development agency. This engagement model is known for the following benefits:

The ability to focus on core business objectives. As your company scales, so will your IT needs. Workers who aren’t on the IT team may find themselves overwhelmed with additional responsibilities. A vendor that follows a managed services model can provide you with employees to help you manage tasks related to the IT needs so that your in-house employees can focus more on core business objectives. 

Predictable costs. Businesses need proper security, storage, and networks. Unexpected expenses may emerge at any time. By outsourcing IT services and operations, you can break down your expenses into fixed monthly payments, compared to the large costs associated with managing systems in-house.

24/7 availability. The model ensures assistance on weekends, holidays, days, and nights. 

The JatApp team provides a managed services solution that ensures business continuity and helps to cut operational costs. Ranging from QA, design to support services, we fully manage all processes and deliveries.

The pricing models

While an engagement model refers to the plan that will define the relationships between you and your vendor, the pricing model explains how you will address payments to the vendor. There are two common pricing models: the fixed price model and time and material model.

 

The fixed-price model 

This pricing model means that parties sign a single-sum contract where a vendor is responsible for delivering the project within the agreed sum. It can be a perfect solution in those situations when both rates and requirements can be easily predicted.

 

The time and material model

The time and material pricing model suggests that you will pay for the number of hours that the team has spent completing the project, plus costs of materials. The model offers you an opportunity to make adjustments in the requirements, the amount of work, materials, and so on. 

What is the best place to look for a software development company?

Eastern European countries, South American countries, China, and India are all good choices in terms of outsourcing development. Having so many options in front of you can make it difficult to decide what destination for outsourcing to choose. So, we’ve put together an overview of the most popular countries where you can find your software development company.

Eastern Europe

Eastern European countries, such as Ukraine, Belarus, Romania, Hungary, Czech Republic, Poland, and Bulgaria, are considered to be the ones of the fastest-growing regions in terms of software development. Outsourcing to these countries has a wide range of tangible benefits ranging from developers’ advanced skills at favorable prices to engineers’ good command of English. 

You can have access to a wide talent pool, as all the countries mentioned can brag about a large number of engineering graduates each year. For example, Ukraine is home to more than 36,000 tech graduates and 200,000 tech professionals in 2021. More than 85% of Ukrainian developers have an Intermediate level of English. Poland has surpassed the level of over 22,000 tech graduates annually and only 34% of IT specialists are working for Poland-based companies. 

For Western European businesses, partnering with software engineers from Eastern Europe can be a viable option. They are located in time zones that don’t have a significant time difference, compared to China and India. This means that these remote employees can adapt to the work of the in-house team easier. 

Outsourcing to Eastern Europe

China and India

China and India are the long-held software development destinations with 4.7M and 2.6M tech graduates annually. A large number of IT experts coupled with the low rates also make these countries a great location for outsourcing. However, in both India and China developers usually lack English level proficiency, as well as the difference in time is quite considerable. It is also not uncommon when software development is implemented at a fast pace in these countries, which in some cases may negatively affect the quality of a project.

Outsourcing to China and India

Latin America

The countries of Latin America, such as Brazil, Argentina, and Colombia, have witnessed an increase in demand for software development, especially from clients residing in Canada and the United States. Outsourcing to these countries seems attractive due to territorial proximity and minimal differences in time zones. 

The governments of these countries have realized the investment potential of tech training, with a heavy focus on producing as many tech graduates as possible. In many Latin American countries, like Colombia, the government is covering nearly 80% of the costs for people who are willing to study information technology. This means that you’ll have a good choice of highly qualified IT specialists with solid educational backgrounds.

Still, the cultural gap is something that might be an issue when outsourcing talent in Latin America. Different traditions, mentality, as well as holidays, are something that you should always keep in mind when partnering with a vendor from Latin America.

Outsourcing to Latin America

What’s the cost?

Outsourcing software development can help you save a great deal of money. It’s one of the major reasons why many businesses opt for this model of collaboration. Why more affordable prices? Generally, the costs of product development in a location depend on the local market situation as well as economic stability. Many developing countries, such as India and Brazil, with low incomes typically have lower rates because of their less elaborated economy. 

Still, having a low price, in this case, doesn’t mean low quality of software. Located in Ukraine, JatApp provides access to the largest pool of IT experts in Eastern Europe. At the same time, our agency helps you to cut more costs as opposed to working in Western markets. 

The average hourly rates in Eastern Europe range from $30 to $80, while in Latin American countries the rates reach approximately $45-65. In India, the cost of developing software is the lowest with an average hourly rate of a developer equating to $19-40. Below you can find a table to compare the average rates of software development in different countries. 

Software development in Ukraine is in the medium-price segment compared to other countries in Eastern Europe, Asia, and Latin America. Even though outsourcing to this country may not be the cheapest option, it’s definitely one of the most cost-effective strategies out there. Ukrainian software developers are both well-educated and highly competent. If you want to find engineers who’ll provide quality software and still be able to cut costs, this country is the best way to go.

 

Developers hourly rates
The average hourly rates of software developers in different countries.

A list of tips for choosing a right vendor

Check for reviews and rating

Find as much information about the vendor as possible. For example, you can always visit websites like Clutch and examine profiles of different software agencies. You can check the years of experience, company’s rating, project sizes, and similar. 

You can also take a look at what other customers are saying about the service provider by examining the detailed reviews. The ratings are equally important. They are usually based on four criteria, such as quality, cost, schedule, and willingness to refer. 

 

Clutch functionality

Clutch functionality

Check the vendor’s portfolio

A portfolio can provide valuable insights into the company’s main areas of expertise. It also gives an understanding of challenges that their customers had and how the software provider assisted them in addressing those challenges. 

Please, keep in mind that even if the agency does not present a case study relevant to your company, it does not necessarily mean that the vendor lacks expertise in working on such projects. Many software vendors sign non-disclosure agreements that do not permit them to show any information related to their projects. 

Check what types of services the company provides

Are they capable of developing a product from scratch? Are they competent in mobile and web development, VR & AR, artificial intelligence, or SaaS? All this information is normally presented on the company’s service page and will shed light on what the agency is capable of and what kind of expertise it has. It will also help to better understand whether the provider suits your requirements and needs. 

What are the major risks of outsourcing and how to address them?

When deciding to outsource, you may face some risks on your journey that may decrease your chances for success. In order not to let it happen, you should be equipped with a range of strategies to timely mitigate these risks.

Information leakage

Information leakage or violation of intellectual property rights is listed as one of the main risks when deciding to cooperate with an outsourcing company. 

To minimize the risk, it’s recommended to take two steps as follows. When you hire a software development company, you need to check whether the agency is open to signing a non-disclosure agreement. This will ensure adequate protection of your intellectual property. The second step is to learn more about the agency’s experience in working with sensitive data as well as their data protection methods. 

Lack of control

When you outsource product development, you risk losing control over the project. At some point, you may find yourself being unable to put your finger on what actually went wrong. 

Begin with establishing multiple communication channels. E-mails are the most common way to communicate with business partners, but occasionally your messages may go unnoticed. Choose other channels as well, like Skype and GoMeeting, to keep the lines of communication open. Then, regular reporting should become a must for keeping track of your project. You may choose either daily or weekly reporting depending on the level of project complexity.

Hidden costs

While cutting costs remains the main reason for outsourcing, the software company may generate new overheads for modifications during the product development period. Clearly, the overall outsourcing expenses become sky-high this way. 

For a healthy outsourcing relationship, you need to determine your existing IT needs to negotiate the right costs with the software development partner. Instead of having a number of changes and adjustments, you may need to set specific objectives so that you can include them in a contract. It’s also a good idea to ensure that the contract contains a full list of additional costs that may arise, such as overtime, or purchase of hardware for your team members. If possible, engage a law firm for assistance to receive advice on the contract. 

What’s next? 

We’ve included answers to common questions that you might have when choosing a software development company. You may also want to learn more about some must-know details to consider when hiring a service provider:

  • If you can go without the request for proposal (RFP) process, please do. It’s time-consuming and doesn’t necessarily lead to incremental benefits. While it is required in many capitalized corporate projects, in most cases it’s enough to provide project requirements in the form of a document, a wireframe, or just mention them during a call to let the company write them down.
  • The main tip with a non-disclosure agreement is to ensure that it doesn’t contain any requirement other than secrecy. 
  • Another contract that you may need to sign is a master services agreement. You can negotiate the price down, if you provide larger deposits, agree to pay earlier, or let the agency use the product in its portfolio. 
  • Make sure that you sign the intellectual property clause. You need to clearly define who owns what part of the final product.

Now when you know all the pitfalls and useful hacks, you may want to hire a custom software development company at the earliest opportunity. The JatApp team is here to help you with your business objectives. JatApp is a full-cycle enterprise software development company offering a wide range of services, such as the dedicated team, mobile app development, application development, support services, QA & software testing, and UI/UX design.

  • Our agency prides itself on the ability to quickly recruit the right top talents for your product development. We can bring together competent and easily scalable team members to meet your needs in a timely and cost-effective way.
  • Take advantage of decreased operational costs and reduced risk with our end-to-end Managed Service solution. We can readily assist in managing all processes and deliveries, like DevOps, QA and support services, and design.
  • Based on your unique business needs, we offer innovative tech solutions and can help you at all stages of a product’s life cycle.

Our company has delivered more than 200 software projects to customers from all over the world. Our specialists and developers leverage their solid experience and expertise to spark innovative software solutions that will make your business thrive.