Let’s suppose that you are the owner of a business that has created the idea of a successful software product which is going to disrupt the market and make your business successful and very profitable. The idea and the forecasted growth flow have been analyzed and considered viable. The time is now to look for a software development firm that would build your software. Why would you go for outsourcing this task to an outside entity rather than building your software on your own? We have tried to answer this question in one of our previous blog posts, so feel free to read what we think about it at DIGIS.
In a pair of words, outsourcing is an option if you don’t have sufficient resources in-house to complete the task and achieve the goal.
But outsourcing companies can be different like any other vendors: they can be of different sizes, have different levels of flexibility, and also differ in a variety of other ways.
The problem you may face is which size to choose: a small development firm, a medium-scale development agency, or a large transnational development corporation.
We have tried to highlight key points and provide a brief list of pros and cons peculiar to an outsourcing software development company of each size.
So, let us go!
Before starting to discuss which size is the best, let’s first define which software development companies are considered small, medium, and large, respectively.
We have made some research and found out that different rating or listing resources classify software development agencies differently.
The most reliable and accurate classification of companies by size belongs to BBVA, a multinational Spanish banking group based in Madrid and Bilbao, which is one of the world’s biggest financial institutions.
In this light, a small business is a company employing not more than 49 employees with the turnover under EUR 10 mln. Medium-sized businesses have from 50 to 250 employees and run assets costing less than EUR 50 mln. Finally, large businesses are those whose employees numbers and turnover/assets figures exceeds the mentioned ones. According to the latest trends, it is also customary to define micro-enterprises which are businesses employing less than 10 persons and having total assets or turnover under EUR 2 mln. However, due to the fact that certain software development projects can cost way more than EUR 2 mln, we won’t consider micro-enterprises in this post.
Small Outsourcing Software Development Companies
These are those companies that have 49 or fewer employees. According to the Upwork’s stats, such companies charge lower prices for their services, thus being a good option for tight project budgets.
Their other advantages are:
- High enthusiasm: Hoping and needing to attract clients, Small Software Development Companies in most cases do more they have been asked to, in order to satisfy their clients.
- High flexibility: Low number of employees make these companies extremely flexible in terms of their organizational and other processes modification to meet the clients’ needs.
- Low prices: Small companies often lack professional experience and this makes them offer their services at lower prices in order to get their own piece of the pie.
- Limited scalability due to limited resources: low number of employees makes small companies unable to increase the team size as soon as needed.
- Insufficient knowledge of business processes: because of a poor past experience of work with large enterprise-size clients, small development companies mostly don’t understand standard procedures and processes of cooperation.
- A pig in a poke: since the size of the company is small and clients don’t hurry to sign contracts, small companies are not known among potential employees and little known among potential customers.
- High financial risks: Small companies can sometimes “ghost” if their project fail and they have no resources to fix the situation. This, in its turn, may lead to undesired losses for the clients who outsourced their software development projects to small companies.
Medium-Sized Outsourcing Software Development Companies
As we have already defined, these are companies employing from 50 to 250 specialists. These companies have sufficient technical expertise and human resources to run software development projects both for large business clients and for startups. Mid-sized software development companies can easily complete various standalone tasks and do the entire Software Development Lifecycle activities.
- Past record of work with clients of any scale: Mid-sized development companies can service both enterprises and startups and have accumulated sufficient knowledge of various processes and of their usage.
- Stable financial position: These companies sometimes used to be small but managed to survive and grow. In the course of their evolution, they have earned not only the experience and expertise but also money so they have a reserve to feel solid and confident.
- Brand recognition: Successful past record of work with multiple clients is a good proof of the mid-sized companies’ professionalism and skills. It also serves as an additional attraction for software engineers who wish to work for a reputable company.
- Sufficient degree of scalability to cover the clients’ needs: Mid-sized outsourcing companies employ sufficient numbers of talented and skilled software engineers so they are able to quickly respond to the clients’ changing needs.
- Established and polished business processes: Unlike the small companies, this category of outsourcing software development vendors have adopted well-elaborated business processes, which, at the same time, are not so rigid as those of large software development corporations. This fact makes mid-size software development agencies more agile and client-oriented.
- Limited expansion opportunities: relatively low number of employees make it sometimes very difficult to set up a big team consisting of 10 or more software engineers, without withdrawing them from other projects.
Large Software Development Enterprises
These companies have from hundreds to thousands of software engineers and can easily service dozens of clients simultaneously and successfully. However, due to the huge and obscure structure and complicated processes, they are not very flexible.
- Virtually unlimited resources for scaling-up: Since they employ large numbers of professional software engineers, they can easily increase their teams in size or set up new teams.
- Respected and reputable brand: Since these companies have a well-known employer brand, a lot of developers wish to work for them.
- Profound knowledge of enterprise processes: Being huge corporations themselves, these companies are fully familiar with the processes used in large enterprises and with the peculiarities of working with them.
- Ability to manage global projects: Having an extensive number of in-house specialists, these companies are able to run massive projects that require multiple experts involved.
- Extensive past record and domain expertise: The larger the company is, the more projects it has and the more areas it covers.
- High cost of the services: Being a reputable and well-known brand, a large software development enterprise charge quite tall prices for their services.
- Non-uniform quality for different clients: Running multiple projects and working for multiple clients in parallel, it usually quite a challenge to ensure the same level of quality for all of them. Some projects and clients may suffer worse quality products and services.
- Increased bureaucracy and mazy communications: The ugly side of becoming a big corporation is unavoidable complication of the processes and coordinations, what leads to the loss of flexibility in all aspects.
Where Does DIGIS Belong and Why Are We the Perfect Software Development Vendor?
DIGIS now employs more than 80 but fewer than 250 software developers, so by this attribute we are certainly fitting into the mid-sized software development companies category.
In the course of 10 years in the Software Development Industry, DIGIS has worked with all types and sizes of businesses, from incumbent startups and up to huge Fortune 500 corporations. After winning our first enterprise-grade client and successfully completing the project for this client, we have never stopped on our way to improvement and advancement. We kept on polishing and improving our processes, refreshing and upgrading our skills and knowledge, and accumulating and refining our expertise.
At the same time, we refused to lose our uniqueness and identity what usually happens when a business jumps from the mid-size category into the large scale one. We wanted to preserve the atmosphere of a nearly family business where all assets are treated equally. We wanted to preserve the climate of friendship and support that helps us cope with the most complex challenges and problems. And we managed to preserve all this, despite becoming an international entity – we have 2 offices: the HQs in Cyprus where our top management sits, and the R&D Office in Ukraine, Odesa where our awesome software engineering talents perform their magic, fulfilling the most off-standard requests of our clients.
As regards our clients, they wear coats of different colors in terms of their size, operation industry, presence market etc. We completed projects for such giants as Energias de Portugal, PwC, Blablacar, Roomster, and at the same time we love our once starting their adult life clients such as Tagmarshal, Parkopoly, Connected2Fiber etc. Our expertise and knowledge of various business processes help us feel free in these waters.
Having refused to gradually lose our unique spirit, we also preserved our price rates, so we are able to service a wider range of clients. This hasn’t reflected on the quality of our services for sure, and our success rate on Upwork is a good proof thereof.
Wrapping up this post we would like to say that if we were to choose an outsourcing vendor to develop our software, we would go with a mid-sized company like us, as it is more reasonable in terms of cost of the development, degree of flexibility, level of trust and attitude, and level of quality, of course.