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Freelancers or Companies: How to Outsource Software Development Right?

80% of all IT projects are global. As a rule, enterprises partner with offshore vendors to cut development costs. In order to reduce expenses to the absolute minimum, some businessmen hire freelancers – to mixed results, extended budget and prolonged deadlines. If you consider outsourcing and don’t know how to find experienced developers, here’s a word of advice for you.

First and foremost, outsourcing makes sense. Even IT monsters like IBM partner with offshore vendors to reduce costs; why won’t the practice work for you?

The question is, should you hire a freelancer or trust your project to an established company?

Option 1: Outsource software projects to freelancers

  • Post a job offer on several reliable freelance websites (they will charge you for the add or take a commission off every project);
  • Receive proposals from potential employees;
  • Choose the ones who possess the required skills, compare their portfolios and ratings. You also assign a test task to the developers who made the final cut. Although platforms like Upwork generate similar tests automatically, you’d better make up a task yourself.

Best platforms freelancers dwell on:

  • Upwork. A great place to look for employees if you prefer to pay for the actual time spent on a project (the “time and material” model). In order to get access to employees’ portfolios, you have to pay $ 149 a month (plus 10% off every invoice). The platform allows you to monitor developers’ keyboard activity and take screenshots of their computers;
  • Freelancer.com. Choose the platform if you have a clear project vision and budget (the “fixed price” model). With Freelancer, you can outsource projects of all types and sizes (from $ 30 and up to infinity). Once you post an offer, the website gets messy. You will be charged for every activity until you purchase Gold Membership for $ 24.25;
  • Guru. A monthly membership fee is $ 29.95. The service provider also gets 5-10% from every project. Just like Freelancer, Guru is more suitable for clearly outlined projects. The website features over 100 thousand portfolios of US freelancers (compared to 2 thousand profiles of European vendors). Hiring a native English speaker is definitely a plus, although their hourly rates are higher.

Cost reduction is the only reason to work with a freelancer.

However, you should know where it’s cheaper to outsource software development to. American freelancers charge $ 120-200 per hour. By outsourcing to the UK, you’ll cut dev expenses almost by half. It’s even cheaper in Eastern Europe ($ 27 in Bulgaria and $ 23 in Belarus).

Freelancers or Companies How to Outsource Software Development Right

And here’s what you get if you mix freelancing and outsourcing:

  • Complicated management. If you want to launch an Android mobile app, you need at least 3 freelancers: an Android developer to write the code, a designer to create the app’s layout and a tester to make sure the program works on all Android-powered devices. Most freelance websites specialize on certain types of IT services, so you’ll have to register on several platforms (and pay fees). Then you need to set up your own dedicated team & make sure its members cooperate with each other (as a rule, freelancers don’t make good team players);
  • Cultural misfit. You consider hiring a freelancer from Asia? Ok, but there’s going to be just you and him. No project manager, no translator, no other team members. The quality of coding aside, it can be difficult to build business relations with people from different cultures & choose appropriate management tools;
  • Failure to stick to the budget & time requirements. 62% of IT outsourcing projects exceed budget, while every tenth project runs over time. And it’s fine – as long as you partner with an offshore company, choose the “fixed price” model and make no changes to the project. And what if you employ a freelancer and pay per hour?

To sum it up, freelancers are great for small (really small!) projects with clear scopes.

And yes, you should look for a developer with a Western mindset & a good command of English.

Option 2: Outsource software development projects to a company

There are numerous online platforms that generate data on software development companies around the globe. Some of these websites charge vendors for their services, so the ranking can be biased. However, you can find independent ratings on platforms like Clutch.co. It’s a comprehensive database of the world’s best mobile & web developers, IT service providers and marketing agencies (arranged by categories).

Here’s how to find developers on Clutch:

  • Choose a category and select several companies with the highest ratings & reasonable hourly rates;
  • Visit their websites, check testimonials and case studies. Pay attention to website design & content quality;
  • Contact the vendors. Evaluate the response time, accuracy of English and the quality of information they provide you with;
  • Make up your mind.

The benefits of outsourcing mobile & web software development to a company:

  • Cost reduction. Once you address an offshore company, you start saving straight away. First, you cut recruiting expenses, since all the specialists you need work within one company (even if not, the vendor will look for suitable candidates on the local market). Second, you hire top developers at a reasonable price. Finally, possible financial risks are shared between the two parties to a contract (you and the vendor);
  • Increased value. You’re a non-tech guy & don’t know how to outsource mobile software development? Simply address an offshore company and deliver your app idea! Your vendor will conduct a comprehensive marketing research, validate the app concept and come up with the most appropriate solution (you save time and hold your nerves);
  • High-quality product. Your project is carried out by top developers, testers and designers. Also, don’t forget about free support;
  • Flexibility. You can choose a suitable cooperation model – fixed price, time and material or dedicated team. A good vendor will offer a free consultation on what model is better for your business needs & budget.

Freelancers or Companies How to Outsource Software Development Right

Possible challenges & ways to overcome them

  • Project management. It’s definitely easier to coordinate an offshore team than a freelancer, since your project is assigned to an experienced manager within the company and the whole project life cycle is managed according to internationally accepted project management practices;
  • Higher costs. Outsourcing a project to a company is certainly more expensive than working with a freelancer (who probably doesn’t pay taxes and certainly saves on office space). The minimum price for mobile app development starts at $ 10 thousand; a freelancer can probably write the code for half as much. However, there’s no assurance you won’t have to address a software development company to fix his poor code later. Don’t be penny-wise and pound-foolish. In case you’re a startup and cannot afford a high-quality application, you should look for an investor or launch a crowdfunding campaign;
  • Cultural differences. According to Geert Hofstede, a notable Dutch phycologist & former IBM employee, people of different nationalities have different PDIs (Power Distance Index). It basically means you cannot fill the cultural gap between certain nations (you won’t understand each other anyway). If you don’t know where to outsource software development, remember that Americans are more likely to establish successful business relations with vendors from Europe and Latin America. In order to protect your intellectual property, you should choose an offshore company with headquarters in Western Europe or the USA, so that your contract falls under the international legislation (in some Asian countries the IP laws do not work).

Hiring a company is a perfect way to execute complex projects with unclear scope & serious goals.

Freelancing is less beneficial in the long run, and it makes outsourcing to a company the only option for businesses. It’s your vendor who fixes bugs. It’s the vendor who can scale up your solution and integrate it with other apps when your business grows. You are protected by a contract & non-disclosure agreement. You’re a customer, and the customer is always right.

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