How To Outsource Web Development in 2024. Analytics & Guidance
January 3, 2022•10 min read
The COVID-19 pandemic was the starting point for a new IT outsourcing market development round. Since the virus situation is likely to last for several more years, outsource web development is becoming increasingly popular. In the summer of 2020, Perceptyx did an interesting study. According to its data, only 4% of employees of large companies would like to return to regular offices after the pandemic. In 2024, that trend continues.
The outlined vector in the world to outsource web development
Following the big players in the market, many companies are also adopting globalization and want to try to outsource web development. Here the The Frontend Company team will share the up-to-date analytics of the IT-outsourcing market, the reasons, and prerequisites of searching for a third-party partner.
Outsourcing web development is gold and oil for the 21st century
The British firm Technavio did detailed research with its tools about a year ago. According to the prognosis, the IT outsourcing market will grow by almost $100 billion by 2024. It is expected that the annual growth rate will be about 5% and will reach its peak in 2024.
So far, Technavio's forecasts are coming true. In 2019, the index for these contracts only in the U.S. amounted to $92.5bn. In 2020, it reached $92.7bn. If we talk about the world as a whole, in 2024, the mass of spending on outsourcing contracts will exceed $486bn. The same indicator for 2019 was $388.6bn.
Outsourcing contracts growth index in the U.S.
Most of the money, of course, will be spent on outsource web development because it is a popular service worldwide. The global coronavirus pandemic contributed to the fact that startups, medium, and large businesses plan to increase investment this year.
The pandemic and other external factors have led to increased outsourcing costs. Small and medium-sized firms will expand their budgets most of all. The U.S. software developer Flexera emphasized that in its data report.
Particular reasons for the growth of the IT outsourcing sector
The significant advantage of ordering to outsource web development is a reasonable price. It is economically profitable for firms to spend less money and get high-quality products. Foreign specialists use the same technology as skilled workers from the U.S. or developed countries in Europe.
In Eastern Europe, there is a high level of education of IT specialists and intense competition. It allows your business to hire an expert in your field much cheaper. Look at the picture below.
Average rate for outsourcing web development service
In one of its past articles, Information Service Group (ISG) noted Ukraine as an established technical staff and reduced margins for services. Popular countries to outsource web development include Belarus, Romania, and Russia. They charge on average $30-50 per hour.
In Southeast Asia or India, developers rate per hour even less. The quality of these experts' work is, as a rule, lower, the risk of getting a deficient quality product is higher. There are no studies on this topic, but people often have communication issues with these experts. The noticeable difference in mentalities affects your dialogue. It impacts the timely success of software deliveries. It is better to choose experts with a similar mindset to your own for a good result.
To compare: In TFC, we take an average of $50 per hour, and you can constantly monitor the workflow through the tracking service Clockify. Our client always sees what job and how many hours we spent on it.
Price is not the only reason for the service's popularity. Firms decide to outsource web development because of talent shortages in some countries. Information technology has been developing so fast for the last 20+ years that skilled professionals don't have enough time to grow properly.
Shortage of specialists in the U.S. IT market
Areas with the greatest needs of IT professionals
DAXX shared statistics about the scarcity of qualified professionals in the United States. Soon the country will have almost 1.4 million vacancies in IT. Meanwhile, just about 400 thousand specialists graduate each year in the US. Every year, this gap will only grow.
Outsourcing web development: Pros and Cons
If you are a business owner or hold an executive position in a company, you know the challenges of finding great employees. While ordering to outsource web development, you face the same pleasures and challenges as when looking for new staff. Assess the benefits and risks of this service beforehand.
Outsourcing web development pros and cons
Some business owners mistakenly consider outsourcing to be a magic wand. It is far from the case, however. This service will help you solve many problems; assist you in focusing on other related tasks and scheduling work.
What you shouldn't wait for when you decide to outsource a project to a third-party company:
- all the processes will be controlled for you by a remote worker or agency;
- the given task will be performed correctly in an unrealistically short time;
- cooperation with the experts will immediately make your business flourish;
- the vendor will know your business area perfectly and will figure out the process without your help;
- the outsourcing team will take risks and responsibility for the success of your product.
You will have to be involved in the process and guide the team all the time. Explain the problems of your niche and its specifics. Then look at how the vendor behaves. Experienced developers should ask many questions about how the whole process works, what to pay attention to, and what points to keep in mind. Every project is different, and the firm needs to understand where there may be difficulties and shortcomings.
Be wary if the experts don't ask questions. It is a bad sign, and you will get disappointed with the result you get after outsource web development. If a company is not interested in the inside of your business, it will probably make more fatal missteps, and the software development will take longer. Anyway, no matter what the qualifications and experience of the programmers, most of the risks are on you.
A journey of 1000 miles begins with a first step
Let's go on to the main object of this material. First, we want to clear two major points what should you know first while looking for a third-party firm:
- Your website or application is the face of the company. If you want your customers to like this face, it is worth a beautiful package and perfect functionality. You cannot entrust such a necessary task to the first found freelance specialist or company.
- You need to follow a clear plan. Without any preparations, you could not find the right solution. What is the aim of your decision to outsource web development?
A cheat sheet: If you need to lower your budget next year or need an expert with specific skills, then bravely test to outsource web development. Only choose teams or specialists who are on the same level as you for these purposes. In this case, the work processes will take the same amount of time. Big companies sometimes need months for each new stage to be approved.
The main types of outsourcing
We wrote above that the most profitable for startups and businesses from the United States and other countries are developers from Eastern Europe. However, it does not mean that you may not find a vendor closer to you.
There are three types of IT outsourcing:
- onshore;
- nearshore;
- offshore.
When you pick the first type, you look for a website and software development team in the same region and country where you are. Its benefits are accessible communication, the same time zone, and the ability to visit the office.
Types of outsourcing
Offshore outsourcing is the process whereby you hire experts who live in areas with different time zones. It is much more convenient and practical, but you may have some trouble with contact. You may only have 2-3 hours of overlap a day because of the locations. Therefore, the dialogue and workflow must be structured a bit differently. You need to discuss the already done tasks, corrections, and subsequent actions during this short time. And also, you will have to determine beforehand the priority, secondary and routine jobs.
Step-by-step guidelines on how you can outsource web development
What should you do first? Understand that this is not an easy task, and you should not immediately shift responsibilities to a third-party company. Try to delegate a small portion of the job to your partner, or ask for additional options.
For example, at TFC, you can hire a remote programmer or team with a one-week trial. It's great because you can evaluate the benefits of working with the team and build up communication. It is vital not just to get a deal, but also to provide a high level of service.
Except for cost issues and lack of the right specialist, the reason for finding a vendor is the length of cooperation.
It's crucial for the following reasons:
- For a short-term project, you don't need to outsource the development task to a big team. In numerous instances, it will be enough to hire a freelancer with good feedback.
- For long-term collaboration, it is essential to choose a third-party partner with whom you can build a deep-in relationship. In such a firm, you can calculate the options in advance for possible expansion and growth of the team
Step 1: Be realistic and determine the needed work amount
Do not think that the partner will be able to cover all your pains and problems. It is an impossible request at the first stage of cooperation. But such a plan may well function eventually. In the book «The Outsourcing Revolution», Michael F. Corbett argues that the proper firm can increase the productivity of your business 10 to 100 times.
The Compare Camp company has to lead research and find out that 78% of the firms are satisfied with the partnership with the third-party team. Many organizations feel positive about their decision to try to outsource web development.
Necessary preparations:
- Describe your product and the mission it performs.
- Add a list of goals to outsource that must be completed. Project's features, pages download speed, a timeline of deliverables, etc.
- Prepare all technical and non-technical documents, design-related files, desired business model, etc.
- Calculate the budget and make allowances for extras.As a rule, a third-party partner accurately assesses the work. Still, you should leave some money on your side to be spent on fixing bugs and errors. Let you have a little buffer, for complex projects take up to 30-40% of the budget for rework.
- Think about which company or web developer you would be the most comfortable working with. You will always feel intuitively and mentally how suitable a partner is for the collaboration. A nice firm always follows the end goal, can get into your position, and doesn't lie. With such companies, it is a pleasure to cooperate.
Project situations vary. Sometimes in the process, one realizes that they made a mistake with calculations or set the wrong priorities. For such cases, the company prescribes a work plan, the number of hours required to complete the tasks, and if possible, offers the best solutions.
Outsourcing & efficiency
What roles should the team you have assigned to outsource web development perform?
- Provide a project manager to oversee the phases of the task to meet deadlines.
- Assign a high-quality developer to implement a design of any complexity and breathe life into your product.
- Give you a designer to create a user-friendly and eye-catching design for your customers and clients.
The minimum required specialists' number is to create or improve an existing product completely.
Step 2. Find out the average prices
The cost of IT specialists varies greatly. Before you choose an agency or company, look at the median prices in the industry. Your job is to find the best balance between cost and quality.
We are sure you already know the most obvious way to research the cost segment. But just in case, we recommend adding a specific region or country in addition to the query «outsource web development price» for a more precise search in Google. That way, you will come across relevant answers.
Another good way to find a team of experts is to check out social media, ask friends and acquaintances. Surely, someone has already used such a service and can recommend a good vendor in your budget.
Where else can you find out the price?
- https://clutch.co/
- https://www.upwork.com/
- https://www.goodfirms.co/
- https://www.toptal.com/
- https://www.fiverr.com/
- https://www.freelancer.com/
- https://dribbble.com/ and https://www.designrush.com/
- https://www.linkedin.com/
Depending on the size of your project, you can choose a freelancer for a part-time job or an entire crew to create a product from scratch. Advise you not to settle for the cheapest offer or cooperate with someone who promises unrealistic deadlines. Under-budgeting is a risk factor.
Insight: Web developers work on two payment models – hourly based & fixed cost. It is vital to check with experts in advance which model they use to calculate the job. For some products, it is more profitable to cooperate with a third-party partner at a fixed cost. With others, it's much better to pay by the hour. Besides, a fixed price will work only if the task is down to the smallest detail. This way, you will not be misled and invoiced with an hourly-based price.
What are the factors that affect the scope and cost to outsource web development:
- design and functional complexity;
- functionality and additional features;
- the seniority of the developer specialist or team;
- the vendor's location;
- the number of pages of the application, service, or website.
Once you know how much your project will cost on average, you can go further in preparing tasks to give them to outsource web development.
Step 3. Choose vendors you want to hire
Now you have probably generated a list of leaders. Put the names and contacts of these firms or solo specialists into a document or Google sheet. Next comes the most exciting and vital process: studying the outsourcing company reviews and evaluating the tech stack.
The easiest way to understand who is in front of you and what to expect is to explore various services and google reviews. If the development firm is quite well-known, you can always ask about them on specialized forums.
What else is important:
- look at the portfolio to assess the quality of past projects;
- explore the company's site and blog;
- take a look at the team (many companies often share photos of employees with a signature of their position on their websites);
- if there is a social media or YouTube channel, be sure to be familiar with them as well.
Important things
Write to each candidate saying that you want to cooperate. Those interested in providing the client with the best service and solution will send an approximate estimate.
Step 4. Pay attention to the English level and communication
To avoid disappointment, you need to properly communicate with your supervisor and agree on everything in advance. IT professionals who offer you the service have a high English level. The companies are interested in having web developers communicate with their clients smoothly and understand their tasks firsthand. For the fastest possible communication, we advise the use of various apps like Slack, Discord, Zoom, etc.
The more complicated your project, the better the level of foreign language skills should be. If a person does not know English, so they cannot use the new databases of code, learn the latest news in IT and other technologies. As a last resort, the company must provide a business analyst with an excellent language or other people who can establish your communication.
Step 5. Control your processes with innovative solutions
The world today is a paradise for outsourced web development services to prosper. To control business processes and the productivity of remote team members, it is enough to use up-to-date software. Here is a small list of things that will help you keep track of the workflow:
- time trackers (Clockify, Harvest, CleverControl, Timely);
- project management software (Trello, Asana, Notion, Jira);
- services for organizing efficient work (Bonusly and other).
What you shouldn't forget
Step 6. Write every little detail into the contract
To outsource web development without unpleasant surprises, it is better to thoroughly write out every aspect of the deal and agree with it on the shore. Put in the documents the tasks that must be done, on what terms, and in what cases.
What points must be indicated in the contract:
- list of services;
- what technologies should be used;
- terms of execution;
- results of work;
- responsibilities of the sides;
- payment option (hourly based or fixed price).
Moreover, spell out what circumstances you reserve the right to terminate the contract and on what terms. In doing so, be prepared for the vendor to tell its terms and risks in the agreement.
Step 7. Interviews, interviews, and interviews again
The project plan, feedback, and portfolio will allow you to assess the developers' hard skills. However, understanding soft skills will require frequent and long conversations with the team via phone or video calls. It is also advisable to make beforehand a list of questions you want to ask during the interview.
Step 8. Tell your expectations and set specific goals
Help the firm define the exact goal and meet the deadline. Prepare clear instructions on what the expert should do, what technology to use, and what results to achieve. Take the time to draw up terms of service for creators and write even the smallest points in them.
For a long and happy relationship when outsourcing web development, staying honest with yourself and others is important. We may not design a rocket or a spaceship for you, but we know how web development runs and always hear what we need to focus on. The Frontend Company values people and helps find a low-cost way to get the best result.
FAQ
Is it necessary to sign an NDA when ordering outsource web development?
An NDA (Non-disclosure Agreement) is a valuable document that parties sign to protect confidential details of a project. The NDA allows you to feel more comfortable sharing information, materials, and knowledge with a third-party company. The NDA has a more emotional effect on partners, demonstrating the seriousness of your intentions.
Is it essential to look at the level of education of specialists?
The level of education in a particular country shows how good specialists graduate from universities and what base web developers get. You have a better chance of finding a great expert in a country where the level of education is also high. Also, if your business expands, it will be easier to find a crew to outsource web development.
Why do I need to count turnover when working with long-term cooperation?
In many countries, specialists on average stay with one firm for 1 to 3 years. It would be best to remember this specific market when you plan to develop and support a particular product for several years.
Would it be a problem if I didn't think about expanding the project ahead of time?
1. Ask about experiences and unique solutions that experts have implemented in other partners' products. 2. Learn how the workflow is built and what criteria to evaluate team member productivity. 3. Get an overview of how the third-party partner plans to help you with your difficulty and in what ways.
I want to use the service to outsource web development. How do I contact you?
We are glad you decided to choose us! Please email us anytime info@thefrontendcompany.com.
Alex Vasylenko is the founder of The Frontend Company, DBC and several other successful startups. A dynamic tech entrepreneur, he began his career as a frontend developer at Deloitte and Scandinavia's largest banking company. In 2023, Alex was honored as one of 'Top 10 Emerging Entrepreneurs' by USA Today.
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