SaaS Solution Development | Outsource Or Keep It In-House?

・11 min read
SaaS Solution Development | Outsource Or Keep It In-House?

SaaS popularity has immensely grown among enterprises due to the feasibility and security it offers. You need no hardware or software to buy, install, maintain, or update to access SaaS applications, you just need an Internet connection.

If you have an idea for a SaaS solution, you want to develop one for your enterprise to attract investors or, if you already have enough funds, to invest in development. The next step of the process is – build a SaaS Platform. You can either hire an in-house expert team, or you can choose among an agency, freelancers, and staff augmentation. The big question is, what should you choose? This article will try to answer this question.

Why is there so much Hype about SaaS?

Software as a service (SaaS) is a mechanism that a cloud service provider hosts and makes programs available to end-users through the internet. A third-party cloud provider may be hired by an independent software vendor (ISV) to host the application in this manner. Or, in the case of more giant corporations like Microsoft, the cloud provider may also be the software seller.

Let's discuss some of the best characteristics of SaaS that make it so popular among developers and businesses.

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Multitenant Architecture

Multitenant architecture, in which all users and apps share a single, centrally maintained infrastructure and codebase.

Easy Customization

The capacity for each user to quickly adapt programs to meet their business processes without impacting the overall infrastructure. The result is more frequent upgrades for SaaS providers, with less risk to customers and cheaper adoption costs.

Better Access

It will be easy to manage privileges, track data usage and assure that everyone gets the same information simultaneously with better data access from any networked device.

SaaS Harnesses the Consumer Web

The Web interface of most SaaS programs is recognizable to anybody who has used Amazon.com or My Yahoo! You can personalize with point-and-click ease using the SaaS approach, making the weeks or months it takes to update typical company software look hopelessly outdated.

Flexible Payments

Customers subscribe to a SaaS product rather than buying and installing software or other resources to support it. Many organizations may now budget more effectively and predictably by converting costs to regular operational expenses. Users may also cancel SaaS subscriptions at any moment to avoid having to pay recurring fees.

Scalable Usage

Vertical scalability is a characteristic of cloud services like SaaS that allows consumers to access more or less services or features based on their needs.

Automatic Updates

Customers may rely on a SaaS provider to handle updates and patch management rather than acquire new software. It decreases the workload for in-house IT employees even further.

Accessibility and Persistence

Applications are delivered through the internet by SaaS suppliers, allowing users to access them from any internet-enabled device and any place.

How to Build SaaS Solution?

The process of building a SaaS application can be divided into 6 key stages:

  1. Market analysis
  2. Discussing requirements
  3. Defining the MVP
  4. Choosing the pricing model
  5. Deciding on technical aspects
  6. Finding or creating a development team

If you want to find out more, read the post How To Build A SaaS Product? A Step-by-step SaaS Development Guide.

Main Challenges of SaaS App Development

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The creation of a SaaS app is a difficult task. You may encounter some difficulties along the road. If you do not know how to deal with these issues, your SaaS development expenses will skyrocket.

Inadequate Execution

When a SaaS project fails, business owners frequently point the finger at the idea. In reality, while the idea is amazing, the implementation is far from flawless. Poor execution can cause the cost of developing a SaaS product to escalate.

We propose using SWOT analysis to ensure that your company idea is effectively executed. In other words, you must assess your SaaS project's strengths, weaknesses, opportunities, and risks.

Lack of Trust

Your level of trust might determine your SaaS project's success or failure. You will not get much use from your app if users do not trust it. This is especially true for SaaS programs, which deal with enormous amounts of sensitive data. Your primary focus should be ensuring the security of SaaS applications.

Small Audience

It is possible that in the future, the limited audience will try to take advantage of you. SaaS apps must be continually updated and optimized to remain relevant. You will undoubtedly lose money if you have a limited audience because this is not an inexpensive endeavor.

The Costs of Building a SaaS Solution

The costs of creating a SaaS solution will vary depending on features you choose, billing, who will develop the product etc. It is better to start with building an MVP as they are less expensive and serve as a great way to check the practicality of your app.

There are also costs associated with accounting, legal advice or maintenance. For SaaS applications, the overall price is usually around $15-$100k while for platforms, the range of costs you can expect lands anywhere between $50-$250k.

Different SaaS pricing structures might have a significant impact on the costs of development as well as the popularity of your product. It is crucial to tailor your pricing strategy to the demands of your target audience. Based on your pricing you can estimate the cost you can bear to build a SaaS solution.

You can choose from:

  • Usage-based pricing - when customers pay for a service depending on how much they use it.
  • Freemium - a free version with restricted features that may be upgraded for a fee based on the number of active users.

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Who Will Build My SaaS Application?

The success of your SaaS product heavily depends on the decision of who will develop the software. Here’re your most available options.

#1: Freelancers

Freelancing began as a set of professional abilities in which an individual was distinct enough to be unattached to a single business.

Over the years, the concept of freelancing has changed, from individuals or groups working out of their homes providing specific services for a limited time to freelancing websites that provide a menu of talents to choose from.

Here are the Pros and Cons based on each factor for Freelancing.

Cost

  • Pros: Freelancers are often easier to find and less expensive to hire.
  • Cons: The lesser the freelancer's pay, the worse the quality of his or her work.

The Flexibility of Team Structure

  • Pros: Flexibility in the event of a team shrinking or upsizing.
  • Cons: In fixed-price assignments, it is impossible to track the time spent by the freelancer.
  • Cons: Maintenance support is tough for freelancers since the odds of hiring the same developer are slim, and a new developer may need to work more hours simply to get a handle on the problem.

Quality of Software

  • Pros: Most freelancers are reliant on the client's review/feedback to acquire their next work. They must make every effort to meet the needs of their customers.
  • Cons: For a freelancer, developing an SW adhering to ISO requirements might be time-consuming. As a result, quality is limited to the views of the developer and tester.

Access to Global Talent

  • Pros: Working as a freelancer allows you to recruit skilled engineers from all around the world.
  • Cons: It might be tough to communicate your thoughts to people from various cultures and backgrounds.

Control

  • Pro: When a single person is in charge of a project, all choices are made quickly and intuitively.
  • Cons: It's difficult to ensure that all resources are on the same page in such situations. Furthermore, the client has an additional duty of supervising these developers.

# 2: In House

In-house development has several major advantages:

  • Full control over the team - because your internal staff will be accessible at your fingertips.
  • Better communication — face-to-face interaction with developers working closely with you is far less cumbersome and responsive than outsourcing.
  • Better awareness of the company's values - as regular employees, in-house developers are more informed of the company's interests and requirements and are culturally fit.
  • Internal teams are frequently more involved than external contractors since they have well-matched team members. This is since such a group is working on behalf of the firm to which they belong.

Disadvantages of an in-house team:

  • Additional costs - hiring a team means extra costs like perks & benefits, insurance, training etc
  • Extra administration - you will need to handle days off, maternity or health leaves
  • Space & equipment - for each employee you hire, you need extra space for the desk and necessary equipment
  • Extensive hiring process - to create an in-house team you will need to go through a lengthy screening process plus train the newcomers

# 3: Outsourcing

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We may reap a slew of benefits by enlisting the help of outside specialists.

  • Increased efficiency – you may start working on a project right away if you have a team of specialists in a specific subject. You do not waste time training your staff, and the development process is considerably accelerated;
  • Facilitated scaling - Scaling the team up or down is considerably easy when you engage with an external outsourcing team.
  • Cost savings – outsourcing allows you to save more money. Subcontractors are not required to use your equipment or office space. You employ a crew and pay them when you need them, and you can simply scale up or down your project based on your budget and requirements.
  • Good time-to-market — by hiring an outsourced team, you can skip the additional recruiting and personnel procedures that in-house development often entails.

Risks of Outsourcing Software Development

  • The lack of regular face-to-face interaction with subcontractors is to blame for the majority of these drawbacks. When opting to outsource, there are a few more factors to consider:
  • Potential communication issues — communicating with an external team will mostly be done through e-mails, instant messaging, or other methods that lack the power and benefits of face-to-face interaction.
  • There is a lot of debate about using trusted teams because of transparency and security concerns. There is a significant possibility of exposing confidential information or data while outsourcing.
  • Less control – both in terms of completing the team and checking their skills, you have less control over these issues in the case of outsourcing.

#4: Staff Augmentation

Simply defined, staff augmentation is the temporary hiring of outside experts to supplement an organization's capability. It's a sort of outsourcing approach in which people are employed to cover gaps on projects that align with the company's present goals. This personnel is recruited depending on the expertise required and can work with a client for a short or extended period.

Because of the peculiarities of the IT sector and the scarcity of talent, services like these are gaining traction. Staff augmentation firms in the IT industry can supply programmers, QA engineers, designers, marketing specialists, and system administrators.

Conclusion

According to a recent McKinsey & Company research, technology industry analysts estimate the software as a service market to expand even more in the coming years. The market for SaaS products is expected to reach almost $200 billion by 2024.

We have demonstrated to you how to create a killer SaaS application. It is now up to you to expand upon it and create your product, whether you choose to do so through outsourcing or in-house development.

If you are looking for a team of experienced developers, don't hesitate to contact the Selleo team.

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