Before developing a SaaS product, startups have an important decision to make. They can either outsource the product’s development or leverage an in-house team to execute the project. Be sure to explore the advantages and drawbacks of both options before you make that choice.

Understand the pros and cons of outsourcing and in-house development.

“The major differences between hiring an agency or keeping the development in-house come down to cost, timelines, flexibility and dedication. Companies that hire a software development agency are ultimately going to be able to spend less, launch faster and dedicate more time to other aspects of the business. However, a set scope can make pivoting difficult and the agency may not be as dedicated as an in-house team. If you hire a firm, it’s important to make sure that they understand the problem you are trying to solve.

Using an in-house development department for your SaaS product will offer more flexibility, increased control and greater dedication to the product and the problem you are trying to solve from the team. Alternatively, it often costs more and takes more time to launch the product.”

Consider the benefits of outsourcing a SaaS product to a software development agency.

Outsourcing your SaaS product to a software development agency can be incredibly advantageous, particularly for companies that don’t have the appropriate in-house team. However, even companies with established UI/UX and development departments may find it beneficial to outsource smaller projects to keep the team focused on core offerings or more critical matters. The two major benefits of outsourcing projects are that it’s often more cost-effective and frees up time and resources for other aspects of the business.

The cost to develop a SaaS product is often less when using a software development agency.

By outsourcing, you can experience significant savings in overhead expenses, as you won’t need to contract freelancers at high hourly rates for full-time work or hire an in-house team. Our approach allows our clients to reduce costs by 50 percent on average while still producing elevated SaaS products in industry-leading turnaround times.

You’re able to invest your time in other critical matters to prepare for launch.

We understand that the successful launch of your Saas product is essential. By outsourcing its development, you won’t need to take the time to hire, onboard and manage the project, which allows you to kick things off much faster. With a trusted partner working on the product, you can spend your time in other important tasks, such as marketing, business development and legal, to help ensure it launches successfully.

Explore the benefits of keeping SaaS product development in-house.

It may seem counter-intuitive for a software development agency to make this statement, but we think every startup should aim to have an in-house team at some point. Eventually, as the SaaS product grows, it will require a dedicated department’s time and attention. However, this isn’t always feasible or strategic at first. For those considering it, the benefits of an in-house team are two-fold.

Employee dedication can enhance the product.

Employees are likely to have more passion for the company and its product than an agency may have. The team could have better insight about your customers’ pain points and they’re also more inclined to go the extra mile for the project, as they’re committed to the company and also aren’t as bound by restrictions like scope and budget.

In-house development gives you more control.

Keeping the development of your SaaS product in-house can afford more control in the future. With a team dedicated to the product, you can easily move forward with changes, new designs and expanded development. An in-house team also becomes beneficial if you need to pivot the product suddenly.

Weigh the drawbacks of outsourcing.

There are drawbacks to outsourcing the development of your SaaS product. Some of these can be avoided by following our advice on picking the right software development agency, but it’s important to understand the risks before you decide to either hire an agency or use an in-house team.

Outsourcing makes it harder to make significant changes if needed.

One of the risks of outsourcing your SaaS product is that it affords less flexibility if or when you need to change the scope of the project. Agencies tend to provide proposals with set deliverables, timelines and budgets. Should the product need to pivot, it could require that you renegotiate the terms of the contract with the firm in order to redefine the scope. This shift could result in changes to the timeline and budget.

An agency team will function differently from an in-house team.

While a development firm’s team can be passionate about your project, it likely won’t match the same commitment and interest of an in-house department. Agency teams often work on more than one project at a time. While this diversity in experience can be a benefit, an in-house team offers the advantage of a sole focus on the project.

Understand the risks of in-house development.

There are downsides to developing your SaaS product in-house, including cost and timelines. Companies that face the biggest risk in using an in-house team are those that will need to hire a team or expand their current team in order to meet the needs of the project.

Overhead costs for an in-house team can quickly exceed an agency’s fees.

The payroll costs of UI/UX designers and software engineers can not only add up, but they also come with a commitment that will last at least several months. For a startup that’s launching a new SaaS product, this becomes extremely expensive and risky. Even hiring contractors can prove to be costly.

The process often takes longer when developing in-house.

If your company is in the position of needing to recruit in-house talent, you’ll need to dedicate time to the hiring and onboarding process. That’s valuable time that could be spent developing the product instead. Additionally, as the product is being managed internally, you’ll need to be more involved in decision making, task management and other aspects of project management. This opportunity cost can have adverse effects, as other areas of the business like marketing and business development could be neglected and have a negative impact on the launch.

Take these final considerations and recommendations into account.

“If you decide to hire an agency, you must ensure that the contract’s terms indicate that your startup will own the product’s rights and source code. Because your company will likely need to build an in-house team to support the application’s growth and improvement in the future, you’ll want to be sure that they’ll be able to work with the original source code when that time comes.

Selecting an in-house team means that you’ll need to make one more decision. You’ll need to choose if your team will be made up of employees, contractors or a mix of both. By hiring employees, your company will be making a significant commitment. Hiring contractors can reduce some of your risk, as those are often short-term commitments; however, hourly rates for full-time freelance work can add up and you may run into the same issues as you would with an agency, as they may not be as dedicated and passionate about the project as an employee.”

Weigh the options and decide how to develop your SaaS product.

You’ll ultimately need to decide if you want your SaaS product to be developed quickly and in a cost-effective manner by outsourcing its development or if you have the ability to invest more time and financial resources into using an in-house team.

Benefits	Outsourced	In-House
Save on overhead expenses, avoid costly commitments.
Ability to prepare for the launch by focusing on other aspects of the business.
Promise of being able to get started and launch quickly.
Significant likelihood of dedication and passion from the team.
Ability to pivot the project with ease.

At Geekbears, we offer the best of both options. You can not only keep costs low and timelines short with our software development agency, but you also gain a true partner that’s dedicated to your success. Our diligence to our work shows in our client testimonials, as we’re known for offering strategic advice based on our robust experience and working proactively with clients at every step of the project.