Outsourcing SaaS Development: Reasons, Benefits, Examples
So, you have decided to build a SaaS. What’s next? The most practical options for building a SaaS solution from scratch would be to work either with an in-house team or with an outsourcing SaaS development company.
At Brights, we might be a bit biased toward the latter option. After all, we are an outsourcing agency with experience in building SaaS products like Signal Intent and Showcase. But we know SaaS outsourcing is not a one-size-fits-all answer. That is why we wrote this article — to help you determine whether it’s the right option for your particular project.
Showcase and Signal Intent, SaaS products developed by Brights
Key takeaways
The key benefits of outsourcing SaaS development are cost efficiency, cross-platform teams with domain expertise, accelerated time-to-market, and project scalability.
Outsourcing is considered cost-efficient because it eliminates the expenses associated with recruitment, salaries, benefits, office space, and training for in-house teams.
The hourly rates of outsourcing companies listed on Clutch vary dramatically, ranging from less than $20 to over $300. Based on Brights’ experience, the perfect cost-to-quality ratio for outsourcing typically falls between $25 and $90 per hour, depending on the developer’s seniority and years of experience.
Depending on the complexity of the SaaS project, the end product can cost you anywhere from $15,000 for a Micro SaaS to $150,000 and more for a complex SaaS.
Outsourcing is the perfect option for projects that require specialized knowledge, must adhere to strict timelines, have limited funding, or seek scalability.
Reasons to outsource SaaS product development
Benefits of outsourcing SaaS development
Outsourcing SaaS development might be the right option if the following factors are important for your organization.
Access to domain expertise
Developing a custom SaaS solution requires a wide range of talent. The standard team will include business analysts, UX/UI designers, software developers, cloud architects, quality assurance personnel, and project managers. Preferably, most of them need to have experience in SaaS projects. Besides, some companies demand specialists with expertise in their respective industries if it's a vertical SaaS solution.
From this perspective, outsourcing your SaaS product development to a company with relevant experience will ensure a higher likelihood of working with the right team. This means that each member will come with deep knowledge in essential development areas like modern architectural patterns, APIs, cloud computing, security practices, database management, and other tech stack aspects required for a SaaS solution. In other words, outsourcing gives you access to hiring an already-prepared team that meets your needs.
Cost efficiency
One of the most common reasons companies outsource is because it’s simply a cheaper option than an in-house team. In the latter option, you’d have to deal with the costs related to recruitment, salaries, benefits, office space, equipment, and ongoing training and development. Besides, there can also be extra costs associated with employee turnover and managing a larger workforce. When you outsource SaaS development, you pay only for the hours that your team members work, and everything else is covered by the outsourcing company. Therefore, you could invest more in the product itself.
Moreover, outsourcing expands the choice spectrum, within which you can find a company whose rate will fit into your budget. Say you are managing a company in North America or Western Europe, and the local hourly rates of $150-250 are above the affordability ceiling for your project. You can then explore accomplished outsourcing companies in Central or Eastern Europe, whose rates rarely exceed $100 per hour.
The cost-efficiency of outsourcing SaaS development is especially notable at the early stages and when the project grows in scale.
Faster time-to-market
Outsourcing to a third party usually means the company you hire already has established processes and a ready cross-functional team of specialists with relevant experience. In case a few experts are missing, the company's recruitment team takes full responsibility for quickly filling in the gaps. Since any SaaS project requires at least six specialists, outsourcing relieves your team from all the headaches of the very time-consuming hiring, onboarding, and training processes.
Subsequently, there comes one of the most important benefits of outsourcing SaaS development. When you outsource, you also accelerate time to market and get a head start on addressing a market need.
Dynamic team scalability
The process of SaaS development looks like a curve: you start with a few specialists during the initial planning and designing phase. Further on, you move to intensive development, after which it tapers when you get to deployment and post-launch maintenance. Quite often, the middle becomes the peak of the development phase, and you have to scale the team up with additional experts in order not to miss the appointed delivery time. So, how hard can it be to hire extra specialists?
Different sources state that the median for hiring a software engineer is 35–49 days, with senior positions taking the longest to close. According to a McKinsey survey, 61% of HR professionals believe hiring software developers will be their greatest challenge in the years to come. Even the fairly recent layoffs in tech don’t bring hope. Around 80% of tech workers in North America who lost their jobs in 2022 found new ones within three months. What is more, new tech job postings outnumbered laid-off experts.
SaaS development outsourcing does not guarantee that the partnering company will have 100% of the specialists for your project right from the bat. However, at least part of the team needed will be ready to step in, and the outsourced partner will be responsible for recruiting support and quickly ramping up the team when needed. Besides, once the ramp-up phase is over, you won't need to fire anyone since the additional specialists will simply move on to other projects within their company.
Ability to focus on core business goals
Last but not least, outsourcing lets you be as involved in the SaaS development process as you want. By finding a trustworthy SaaS development outsourcing partner, your internal team will be assured of the technology part of the project, able to focus on what they do best.
Don't get us wrong, this doesn't mean you will be cut out of the software development process. For example, at Brights, we provide updates at the frequency our clients request, proactively seeking their input. Still, your team doesn't have to micromanage the tech partner when the tech part is taken care of. This, in turn, means the ability for your team to concentrate more resources on strategic business goals, marketing campaigns, customer and partner relationships, and so on. You will, therefore, be substantially improving your business performance while leveraging the tech competencies of your software development partners
In-house vs. Outsourcing SaaS development
Building a SaaS product with an in-house team might feel like the safest option since you have full control over the development process. But managing everything internally isn’t always practical, especially cost-wise. That’s why so many companies consider outsourcing SaaS development. While both options can be effective, the decision should be based on your project’s specific needs. We’re here to guide you through the main factors to consider, so you can choose the best path for your project.
| Factors | In-house team | Outsourced team |
|---|---|---|
| Cost | Hiring and maintaining an in-house team involves significant ongoing costs. In addition to salaries, you have to take care of benefits, infrastructure expenses like offices, hardware, and software licenses. There are also additional costs of time spent on recruiting, onboarding, and training, which can delay project start. | Outsourcing potentially comes with lower costs, especially if we’re talking short- and medium-term projects. It allows you to avoid costs like infrastructure, training, ongoing benefits for the team, etc. Besides, outsourced teams usually charge on a per-project, hourly, or monthly basis, which makes budgeting more flexible. |
| Expertise | Naturally, an in-house team has no rivals when it comes to a deep understanding of your company’s specific needs, culture, long-term strategic goals, etc. However, the expertise might be limited to certain technologies or methodologies. | While outsourced teams don’t have in-depth knowledge of your company’s processes, they compensate by bringing specialized expertise and experience from working with diverse projects in different industries, offering you a fresh perspective. |
| Resource availability | The availability of in-house resources depends on your company’s priorities, budget limitations, possible hiring freezes, etc. | Since outsourced teams provide comprehensive services, they typically can offer access to a broad range of resources and tools without the need for additional internal investments. |
| Time to market | Building or expanding an in-house team can be a lengthy process since you have to hire, onboard, and often train new employees. All of this can delay the start of your project. | As a rule, outsourced teams start working on your project much faster just because they already have the skills and resources necessary. As a result, you can significantly reduce time to market. |
| Scalability | Scaling an in-house team can be tough since it requires additional recruitment, onboarding, and training efforts. It can also be difficult to scale down if the project scope changes. | Outsourcing is a much more flexible option for scaling the team up or down based on the project’s changing requirements. For instance, once the design phase is over, the UI/UX specialists can move on to another project while the QA engineers step in. |
| Control and communication | With an in-house team, you have direct control over the specialists, overseeing their day-to-day operations and ensuring alignment with the company’s culture and objectives. In this case, communication is more fluid. | While communication tools can bridge the gap, managing an outsourced team may present challenges in maintaining clear communication, especially if the team is in a drastically different time zone. However, establishing communication guidelines can help solve most of these issues. |
| Risk management | An in-house team allows for better oversight and potentially lower risks related to intellectual property rights, data security, and project confidentiality. At the same time, the risk of over-reliance on key personnel can be higher. | Outsourcing can involve risks related to data security, confidentiality, and control. Luckily, these can be mitigated by creating detailed contracts and NDAs and choosing reputable outsourcing partners with a proven track record of similar projects. |
Outsourcing models for SaaS development
Let’s say you’ve set your mind on outsourcing SaaS development. There are a few more decisions to go through, and a cooperation model is one of the most important ones. Here is a breakdown of the three key outsourcing models based on how they fit into your project’s relationship dynamics.
SaaS outsourcing models
Staff augmentation
Staff augmentation involves hiring skilled specialists to work alongside your existing team. You bring them in for specific roles or tasks but you maintain control of the overall project. This model is quite flexible and allows you to scale the team up or down depending on your immediate needs.
Pros: The benefits include flexibility in scaling the team up or down fast, control of the project, access to specialized skills with no long-term commitments, and cost-efficiency for short-term tasks.
Cons: Staff augmentation requires management and oversight from your side and carries several challenges related to team incorporation and collaboration.
Suitable for: Companies that already have an in-house team but need extra expertise and capacity on a short-term basis due to peak periods or for specialized tasks.
Payment arrangement: The client pays for the hours worked by the augmented staff, usually on a time-and-materials basis.
Dedicated team
With a dedicated team model, you get a team of all the necessary professionals that will focus on your project entirely, aligning with your business’s goals and processes. You collaborate closely, and the team is fully committed to your project’s success.
Pros: Hiring a dedicated team implies full commitment and deep integration into your processes from the said team since they focus exclusively on your project. Other benefits include effective communication within the team, a unified vision in terms of your business goals, and long-term partnership potential.
Cons: It might take time for the dedicated team to fully sync with your company's culture and workflows. The model can also be costly but you can choose a skilled outsourcing team from regions with affordable hourly rates depending on your budget.
Suitable for: Companies looking for a committed team for long-term projects or ongoing development needs where a collaborative, integrated approach is necessary.
Payment arrangement: Typically comes with a monthly payment for the entire team, which covers salaries and administrative costs. The cost is stable and predictable.
Project-based model
In the project-based model, you outsource the entire project to a third-party provider. You define the project scope, and the outsourcing partner manages everything from planning to delivery. This is a hands-off approach where the focus is on meeting your deliverables.
Pros: With a project-based model, the outsourcing provider assumes full responsibility for the project. As a result, there is minimal involvement from your side, clear timelines and deliverables, and fairly predictable costs.
Cons: This model of SaaS outsourcing typically gives you less control over the process and decisions. Since you’re not working closely together with the team, there is a risk of costly changes mid-project.
Suitable for: Companies with a well-defined SaaS project and clear goals, especially when internal resources are stretched thin or focused on other strategic priorities.
Payment arrangement: Payments are usually tied to project milestones, so the client pays as the project progresses.
SaaS project development outsourcing cost
Software outsourcing hourly rates
As of 2024, there are over 15,000 software development outsourcing companies on Clutch. Their hourly rates range drastically, from below $20 to over $300. However, only a fraction have expertise with SaaS development.
When you choose a SaaS development partner, you will most likely screen the candidates based on relevant expertise and price. For example, if your budget is tight, searching for SaaS outsourcing companies outside North America and Western Europe is reasonable. However, keep in mind that hiring a team with the lowest rates may mean compromising the quality of the project.
Based on our clients' experience, the best cost-to-value ratio for outsourcing usually ranges between $25 and $90 per hour. In this case, you'll be able to expect relevant industry certifications, adequate English, previous experience with well-established enterprises, a high talent retention rate, and decent overall quality.
Another key determinant of the cost to outsource SaaS development is the project’s complexity. Let's see the four common options when working with a company like Brights.
Types of SaaS by complexity
SaaS development cost based on project complexity
Outsourcing SaaS development cost based on product type
| Micro SaaS | Limited scope and basic functionalities like login, a few screens with core functionality, and a simple admin panel. | $15,000+ |
|---|---|---|
| SaaS MVP development | Essential features like user registration, profile management, 1–2 integrations, and additional functionality for the admin panel. Perfect for startups. | $35,000+ |
| Average SaaS | Comprehensive core functionality, advanced subscription model, multiple user roles, and advanced admin panel features. | $60,000+ |
| Complex SaaS | Large-scale deployment with advanced functionalities, complex integrations with external systems, AI capabilities, and multiple workspaces. | $150,000+ |
When planning your SaaS development project, you will have to find the right balance between your budget and the expertise required to deliver a high-quality product. A team with a $40 hourly rate can be as great as one with a $150 rate. Just make sure to be transparent about your budget and expectations from the very beginning.
Best practices for successful SaaS outsourcing
Suppose you’ve decided that outsourcing SaaS development is suitable for your project. What should your next step be? To secure a successful partnership, we recommend the following:
SaaS outsourcing roadmap
Define requirements and budget
The first thing you need to do is outline the project requirements and goals. What features do you expect the SaaS product to have? Which problems and business objectives do you plan to solve with it? Who are your users? Are there worthy competitors? Start by answering these questions. Establishing clear objectives ensures that you and your SaaS development outsourcing partner are on the same page immediately.
At this point, it’s also important to establish at least a realistic budget so that you can narrow down your search for an outsourcing partner.
Research companies and evaluate top contenders
Now, it’s time to look for potential partners. In addition to asking your network for referrals, you can use platforms like Clutch.co and GoodFirms. The good thing about these is that they are independent listing platforms, and Clutch even verifies the reviews published.
After shortlisting companies with a track record in SaaS development, you can conduct a proper background check by reviewing their past projects and studying testimonials. After that, you can schedule a consultation with top contenders to discuss your project requirements and simply see if you are a good match.
Finalize details
Once you've selected a partner, delve into the specifics of your future collaboration before signing the contract. For example, you must decide on the contract type, sign an NDA, agree on a precise budget and timetable, establish clear communication channels, and negotiate any other critical terms. Once everything is settled, both parties can sign the contract and get down to work.
Additional tip from Brights
SaaS development is a lengthy and fluctuating process. Therefore, we always advise planning for scalability with your outsourcing SaaS development partner early on. This means designing the software architecture to support more users over time and keeping it flexible so new features can be added as your business evolves.
Last but not least, remember that projects don’t end with the SaaS product launch, so be sure to discuss maintenance and support services with your partner. This might seem far-fetched now, but such a forward-thinking approach will save you time and resources in the long run.
Examples of SaaS development outsourcing
SaaS development outsourcing isn’t reserved for just one type of company. This option can benefit startups, small and medium businesses, and big enterprises. Here are three examples of how different SaaS companies outsource product development.
Microsoft
As of 2023, Microsoft employed over 220,000 specialists worldwide. However, these aren’t all the people working for the company. The tech giant started outsourcing its IT activities to Indian tech vendors as early as 2004, engaging third-party vendors in developing Windows, Office, Azure, and other products.
For instance, in 2010, Microsoft signed a deal with Infosys Technologies, an India-based multinational corporation that provides consulting, technology, and outsourcing services. Specifically, the company managed Microsoft's internal IT operations, including IT help desk, desk-side services, and application support. The partnership encompassed over 450 locations in 104 different countries.
Outsourcing allowed the company to significantly reduce IT support costs. In fact, Microsoft's collaboration with Indian service providers has become so powerful that in 2016, the corporation increased its investments in the country’s cybersecurity, launching its first full-scale Cybersecurity Engagement Center (CSEC) in India.
When you have to hire not a couple but thousands of extra specialists, it’s only logical to team up with outsourcing companies in regions with lower rates. And competitive prices, along with the availability of skilled professionals, are precisely what makes India a popular destination for Microsoft and companies alike.
Slack
Eleven years after its launch, as of June 2024, Slack has a market cap of $26.5 billion and 38 million daily active users. Part of this success comes from leveraging outsourcing, particularly in the early stages of software development.
Like many startups, the Slack team faced resource challenges and time pressures at the beginning of their journey. Outsourcing became their strategic solution. The startup turned to Metalab, a Canadian interface design firm, to help them develop a prototype and a product vision. The MVP created together with Metalab was later distributed to beta testers and gained 8k users on the final launch day.
Termix, Brights’ client
Termix, a SaaS solution designed by Brights
As experts in SaaS development, the Brights team has a good deal of SaaS outsourcing projects in our portfolio. One of them is Termix, a cloud-based SaaS system designed for remote management, monitoring, and control of POS terminals in the bank's acquiring network.
The client came to us with a request to redevelop the existing poorly structured product into a scalable, comprehensive solution for hassle-free user interaction. During our collaboration, Brights revised and restructured the product through a UX audit and user testing of the prototype. As a result, we improved navigation and data hierarchy management for qualitative monitoring and control of the entire system. We also integrated modern interfaces and design elements into a scalable design system. The outcome is a functional and competitive application that is effective for business.
How Brights can help with SaaS development
Outsourcing SaaS development is not a universal answer. For instance, there might be better choices for companies that require close, real-time collaboration between developers. However, outsourcing can be a lifesaver for projects that require specialized expertise, need to meet tight deadlines, face budget constraints, or seek scalability that internal teams might not provide. We know this first-hand: as an outsourcing partner, the Brights team helped multiple companies build their SaaS solutions, both vertical and horizontal.
An IoT management solution that boosts business productivity, a platform for creating online calculators, and a B2B service processing payments are just a few of the SaaS projects we completed. We'd love for your project to be next.
