SaaS is the largest segment of the public cloud services market, with global revenue generated by SaaS companies expected to reach $113 billion by 2021. It’s an exciting time with plenty of untapped potential. Companies with $7.5 to $15 million in annual recurring revenue (ARR) are among the fastest growing.
Both new entrepreneurs and established companies often need to hire a SaaS application development company to help them grab a chunk of this massive market.
There are a few services that you can outsource without too much fear or anxiety. SaaS application development isn’t one of them.
Hire the wrong company and you could end up with bug-riddled software that puts you back at square one.
In this article, we’re detailing vetting criteria that you may not have thought of previously, or that you didn’t know was available.
What is a SaaS development company?
A SaaS development company offers software-as-a-service application development, billed monthly or at a flat rate per project. Many SaaS development companies build web apps, desktop apps, and mobile apps for their clients.
There are SaaS development companies all over the world. Offshoring is common to help save on the cost of development. The level of quality and skill in development companies varies greatly, as does the level of management of the service.
Some companies provide only software developers who clients must manage through the process of prototyping, backlogging, developing, and launching a functional software product. Most companies, however, will offer some form of project management, though it might not include DevOps and quality assurance.
Why do new businesses hire SaaS development companies?
There could be several different reasons why an entrepreneur who is new to the SaaS world might choose a SaaS development company. These motivations can also overlap.
No time to develop a SaaS product - Many SaaS entrepreneurs are seasoned veterans of other industries and they might have another business to run, or less often they still need to keep their day job.
No skill to develop a SaaS product - There are many nontechnical founders who choose not to take on a technical cofounder because they either don’t want to share equity or they can’t find someone with the right set of skills.
Looking for full management - Most new SaaS entrepreneurs see the benefit of working with a company who offers management and development, so they’re not stuck managing developers (especially if they have no experience).
Why do established businesses hire SaaS development companies?
New entrepreneurs aren’t the only ones who hire SaaS development companies. Established businesses often work with external companies to satisfy a variety of needs.
Adding a SaaS component to an existing business - A company may already have products and services on the market, and might be adding a SaaS product to their offers. They most likely wouldn’t have an internal development team and wouldn’t be prepared to manage one.
Building a SaaS for internal use - Oftentimes, companies are building a SaaS product for internal use by their employees. When they calculate the costs, it doesn’t make sense to build the product in house.
Internal development team is at capacity - For established companies whose revenue comes largely from SaaS, they tend to have a huge problem with hiring. Their internal team is always swamped and they can’t hire fast enough, so they need to outsource certain features or products (such as an API).
No desire to hire - Sometimes established companies might need a SaaS product for their employees or their customers, and even though they could afford to hire an entire development team (not just software developers, but DevOps engineers, QA testers, and a product manager too), they don’t want to take on the long term commitment of hiring.
Wants to keep new SaaS app team separate - Let’s say a SaaS company is established with enterprise customers in a certain industry, and they want to create a similar product under a new brand name but for SMBs in a different niche. Their leadership team may decide to outsource this new product development because they simply want to keep it separate and not take their team away from the core product. Essentially, the company wants to keep their investment in this new product clean, and not mix the two offers when it comes to internal capacity.
As with the new SaaS entrepreneurs, a CMO, CTO, or other c-suite executive from an established company can have multiple overlapping reasons for outsourcing SaaS application development.
What to look for in a SaaS application development company
Now that you understand a bit more about the motivations for hiring a SaaS application development company, let’s take a look at the features of the service that you’ll be searching for.
If you’re hiring a SaaS development company because you have no time to manage developers (and no experience), then obviously the level of management provided is going to be one of your top deciding factors for which company to choose.
From our experience, these are criteria are the ones that both new entrepreneurs and established businesses benefit from the most.
Fully managed team with all the necessary skills (not just development)
Not all management services are created equal, so watch out. Check that your development company doesn’t just manage the developers, but that they manage the product. That’s the key differentiator.
A company that manages the product end-to-end should carry it through launching and beyond. To do so, they’ll need to have other talent on board besides developers, such as:
Product managers - Unlike project management which might just be about processes and procedures, product management is devoted to the product. A product manager doesn’t only keep developers on track with deadlines, they also make sure that what is being built meets customer demands.
QA testers - Quality assurance testers handle both manual and automated testing to make sure that every software feature is performing as it should in every environment that customers might use, including different devices and OSes as well as product states.
DevOps engineers - Managing cloud infrastructure is a very different skill than coding, and unfortunately too many development companies don’t offer it. DevOps engineers help keep the software safe and fast for customers to access in the cloud.
Try to avoid something like this happening:
“I had attempted to save money by managing programmers myself. By the end of it, it still broke all the time, had tons of bugs and was just not usable.” - Michael Spencer Signly
Flexible, with no long term contracts
The company you work with should not only offer every skill it takes to create a successful product, but they should also have flexible options that allow you to access the talent you need when you need it, even after the bulk of development work is done. You should be able to remove and add resources as you need them.
There should also be no long term contracts. Unfortunately, we’ve seen what can happen when someone is stuck in a contract with a low quality development team.
Besides, really great teams shouldn’t try to force you into a contract anyways. They’ll know that you’ll keep paying if they do good work and build a product that customers will pay you for.
You know that you need technical talent beyond development, but what about nontechnical talent? What about business leadership experience? You may not have thought about vetting your SaaS development company for this sort of skill.
However, your development company will be helping you make all sorts of decisions over the course of your working relationship:
What features to prioritize based on customer needs
What should go in your MVP product and what shouldn’t
What is a realistic timeline to launch
When to add additional features
Of course, you’ll want to have your own ideas about the answers to all of the above. But at the same time, you should also be able to lean on your development company for guidance.
It might be hard to vet for the level of business leadership by looking at a company’s website. You can look at their about page for information on the company founder or owner, and you can also look for services that showcase business savvy, such as a prototyping service designed to mitigate risk.
Strong MVP process
There are a whole lot of SaaS application development companies that would be happy to build you a robust product right out the gate. Instead of helping you narrow down the feature set for your MVP, they’ll smile and nod every time you mention a new feature.
MVP developers understand that the product you need to launch and start generating revenue should be as minimal as possible so that your company can become profitable much sooner. Most SaaS companies lose money for the first year. A too-big MVP can mean that you’re losing money for two years, or even longer. Essentially, if you spent too much to build unnecessary features in the beginning, it will take you longer to catch up.
The right mix of offshoring and onshoring
Offshoring can be a smart way to save money on development—but not if the software development company is providing you with low skilled, poorly trained developers who have no passion or pride for their work.
You should look for offshoring with quality control. The developers should be experienced, and as previously mentioned, their work should be fully managed and tested.
What does the “right mix” of offshoring and onshoring look like? At DevSquad, we offer Latin American developers, QAs, and DevOps engineers. Meanwhile, our product managers and VPs are all located in our office in Utah.
For you, the “right mix” might look a little different. Just make sure to never sacrifice quality for cost savings. Otherwise every dollar you saved goes to waste!
Skilled and experienced in the frameworks and languages that matter to you
When entrepreneurs and executives are ready to hire developers, they’ve typically decided what framework or language they want the code written in. For example, Laravel is a top PHP framework that can actually help developers save time on both coding and maintenance.
So don’t forget to check that the company has expertise in exactly what you’re looking for. If you’re unsure what your product should be built with, then talk with someone at an experienced company to determine what is the best fit.
How to hire a SaaS application development company
Now that you know what to look for, what’s next?
Follow these steps to increase your chances of creating a successful SaaS product and decrease your chances of ending up with a bug-riddled mistake.
Vet your SaaS idea
Talk with the company or companies you’re considering
Decide whether their process and services are a fit for your needs and vet them for all of the criteria detailed above
Begin work on the MVP (and only pivot based on customer feedback, never because you want to keep adding more features)
Communicate regularly with your point person and stay in the loop on issues that affect progress
Building a SaaS product? Take our free course.