Outsourcing SaaS Development: Reasons, Benefits, Examples

SaaS development can be an extremely promising venture for a business, but it’s also inherently complex. Building a scalable architecture that can securely handle multiple users and large volumes of data requires solid expertise in creating similar projects.

If you worry about approaching such a project, you are not alone. Deciding on the best course of action in terms of implementation doesn’t come easy to most organizations. You have to consider factors like development complexity, budget, potential scalability needs, ongoing maintenance requirements, and more.We at Brights approach SaaS development outsourcing as a strategic partnership that allows our clients to leverage specialized expertise quickly and enhance project flexibility. We might be a bit biased—Brights is an outsourcing company, after all. However, we know that 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 specific project.

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

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 diverse talent pool. The team typically includes but is not limited to business analysts, UX/UI designers, software developers, cloud architects, quality assurance experts, 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.

Outsourcing your SaaS product development to a company with relevant expertise increases your chances of working with a team where each member has an in-depth understanding of essential areas. These include modern architectural patterns, APIs, cloud computing, security best practices, database management, and other critical aspects and tech stack needed for SaaS solutions. Basically, outsourcing allows you to hire a ready-made team that matches your project's needs.

Cost efficiency

Outsourcing is a cheaper option than an in-house team by default. With the latter option, you have to deal with recruitment expenses, salaries, benefits, office space, equipment, and ongoing training and development costs. There can also be additional costs associated with employee turnover and managing a larger workforce. When you outsource, you usually just pay for the hours your team members work; the outsourcing company handles the rest. As a result, you can then invest more in the product itself.

On top of that, with outsourcing, you have more options in terms of choosing a company with rates that match your budget. Let’s say you run a company in North America or Western Europe, but the local hourly rates of $150-250 are too high for your business. In this case, you can look into reputable outsourcing firms in Central or Eastern Europe, where the rates usually don’t exceed $100 per hour.

The cost-efficiency of outsourcing SaaS development is especially notable at the early stages of development and when the project scales.

Faster time-to-market

Outsourcing to a third party typically means the company you turn to already has established processes and a ready-made cross-functional team of specialists with relevant experience. Even if a few experts are lacking, the company’s recruitment team takes on the responsibility of quickly filling in the gaps. This relieves your team from the burden of lengthy hiring, onboarding, and training processes. After all, a SaaS solution will likely require at least six specialists.Subsequently, accelerating the project schedule and achieving a quicker time-to-market is one of the main benefits of outsourcing SaaS development. So, if you want to be the first to address a market need and kickstart the project quickly.

Dynamic team scalability

The SaaS development process looks like a curve: you start with a few specialists during the initial planning and design phase. Then, you gradually move to the intensive development phase, after which the process tapers off once you get to deployment and post-launch maintenance. The middle, peak development phase often requires scaling the team up with additional experts to accelerate progress and ensure timely delivery. 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 isn’t a guarantee that the partnering company will have 100% of the specialists for your project right away. However, at least part of the team needed will be ready to step in, and the outsourced partner will be responsible for providing recruiting support and quickly scaling the team when needed. Besides, once the ramp-up phase is over, you won’t need to fire anyone—the additional specialists will simply move on to other projects within their company.

Ability to focus on core business goals

Last but not least, with outsourcing, you can be as much or as little involved in the SaaS development process as you want. Choosing a reliable, experienced SaaS development outsourcing partner gives your internal team peace of mind for the tech part of the project, allowing them 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 instance, at Brights, we provide updates at the frequency our clients request and actively seek their input. However, with the tech part taken care of, your team doesn’t need to micromanage the tech partner. Instead, they can put more energy into strategic business goals, marketing campaigns, customer and partner relationships, and whatnot. As a result, you can significantly enhance your business performance while leveraging the tech expertise of your software development partners.

SaaS project development outsourcing cost

As of June 2024, over 15,000 software development outsourcing companies are listed on Clutch. These companies' hourly rates vary drastically, ranging from less than $20 to over $300. But, only a fraction of them have expertise in SaaS development.

When choosing a SaaS development partner, you will likely narrow the candidates down based on relevant expertise and price. For instance, if you’re on a tight budget, looking for SaaS outsourcing companies outside North America and Western Europe makes sense. However, keep in mind that hiring a team with the lowest rates may compromise the project's quality.

Based on our clients’ experience, the ideal cost-to-quality ratio for outsourcing typically falls between $25 and $90 per hour. In this case, you can expect relevant industry certifications, adequate English skills, experience with well-established enterprises, a high talent retention rate, and decent overall quality.

Another major factor in determining the cost of your SaaS development project is its complexity. Let’s examine the four common options with a company like Brights.

Types of SaaS by complexity

  • Micro SaaS with limited scope and basic functionalities like login, a few screens with core functionality, and a simple admin panel. Cost: $15,000+
  • SaaS MVP development for startups with essential features like user registration, profile management, 1–2 integrations, and additional functionality for the admin panel. Cost: $35,000
  • Average SaaS with comprehensive core functionality, advanced subscription model, multiple user roles, and advanced admin panel features. Cost: $60,000+
  • Complex SaaS that involves large-scale deployment with advanced functionalities, complex integrations with external systems, AI capabilities, and multiple workspaces. Cost: $150,000+

Read also: What is a SaaS Business Model and How Does it Work

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.

Preparing for 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:

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 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 candidates 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 candidates with a track record in SaaS development, you can conduct a proper background check. Review their past projects, study testimonials, and contact previous clients for first-hand feedback. 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 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 companies outsource SaaS 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

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.

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