Best Practices

How to Not Waste Money When Outsourcing an App

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If hiring an in-house team of developers is out of the question, you’re left with the option of outsourcing. Thankfully, you’re not alone as IT outsourcing is now an increasingly popular trend. The question is, how much does outsource app development cost? 

In 2019, IT outsourcing generated $66.5 billion globally. Clients turn to popular outsource destinations like in Eastern European and Asian countries to get their apps built. Ukraine, particularly, is a popular favorite destination, with its IT services industry expected to hit $5.7 billion in 2020.

The popularity of app development outsourcing is partly due to the lower net salary of IT developers in Eastern European countries. Besides, clients do not need to take on the burden of hiring an in-house team of developers.

Still, engaging an external IT firm to build a mobile app requires considerable investment.

In this article, I’ll guide you through the factors that influence the app development cost and what you ought to be aware of before engaging an IT vendor. 

Top Factors That Influence App Development Outsourcing Cost 

If you’ve been researching for the outsource app development cost, you’ll find that there isn’t a standard rate offered by the IT vendors.

That’s because it isn’t possible to set a fixed figure. Various factors come into play when determining the cost of outsourcing mobile apps.

outsourcing app development

Geographic Location

It is a known fact that hiring IT developers in the US and Western European countries are costly.  Furthermore, the talent pool in those countries is quite limited. If you’re outsourcing to a seasoned developer in the US, you’ll be charged at a rate of $100 per hour on average. Meanwhile, engaging a developer with similar skills in Ukraine will only cost you around $35 per hour. 

Outsource to India and you’ll be billed in the range of $15 - $40 per hour. In China, IT developers charge $22 an hour on average. While the lower outsourcing rates are indeed attractive, you’ll need to consider cultural and language differences when working with different countries. 

App Type and Complexity

The estimates of how much it takes to outsource app development also depend on the app type and complexity. A simple, standalone app with standard templates and no backend, could take around 400 hours to complete.

If you’re building an app that requires custom features and requires backend communication, it could take up to 800 hours before it’s ready. Include complex animations, 3rd party integration, and real-time features and you’ll have a highly-complicated app that could take 1,500 hours before its done. 

Besides time spent working on the apps, factors like tech-stack availability also affect the final cost. For example, complex SaaS requires a custom-made admin panel, which could cost an additional $5k to build. However, social media apps can make use of the standard admin dashboard by paying a monthly subscription of $50. 

Here’s how a simple, moderate and complex app compares to each other in terms of cost, timeline, and resources.

Purpose of development

Are you building an MVP or an early-stage Proof of Concept (PoC)? Depending on the features that are included in the app, you’ll be billed differently. An MVP, which has all of the basic features will be more expensive than a simple PoC. 

Urgency

If you’re anticipating an exceptionally tight deadline, be prepared to pay more when outsourcing. The IT vendor needs to allocate extra resources to ensure that the app is developed within the shortened timeline. 

Supported Platforms

Building a single platform app is cheaper than building an app that targets multiple platforms like iOS, Android, and web browsers. 

Development Approach

The choice of native, mobile web, hybrid, or cross-platform development also affects the allocated resources, and thus the outsource app development cost.

Complexity of UX/UI design

There’s a great difference in building an app like Whatsapp and a mobile game like Fortnite. The former has a clean and minimalist interface while the latter requires complex 3D modeling and a game engine. Therefore, expect a heftier price if you’re building an app that demands complex UX/UI.

Back-end infrastructure and connected APIs

Some apps may look simple on the phone, but they have a complicated backend infrastructure. For example, a VPN’s backend needs to encrypt and route data between multiple data centers, while the frontend is a simple app. As the complexity of the backend grows, so does the cost.

The same applies to the number of connected APIs. Apps that use an external payment gateway, mapping, streaming, geolocation, and other APIs are more costly to build.  

Inclusion of additional branded visual elements

If you’re using branded visual properties in the add, you’ll need to fork out more for royalties or licensing fees. 

How are app development cost calculated?

Even with the same requirements, different vendors may furnish you with different costs. Sometimes, you may find that the initial cost is different than the final cost. 

At Uptech, we give flexibility to our clients by providing different types of collaboration models. Depending on the chosen model, the cost may vary. 

outsourcing app development

1. Fixed Price

With the fixed price model, we’ll operate strictly within the agreed budget and the scope of work, unless there is a force majeure.

For clients, the fixed price model offers fixed expectations on the potential expenses. However, it lacks flexibility where the client is still required to pay the fixed amount even if the scope is reduced during development.

Usually, we’ll implement the fixed price model only when there are an approved design and strict requirements from our clients. We don’t recommend startups to choose the fixed price model, as app requirements tend to change very quickly in the initial phase.

2. Time and Resources

There is more flexibility with this model, where you’ll only pay for the time and resources spent. This is ideal for startup owners as no fixed charges are imposed on our clients.

While this model supports the fast-changing requirements of a startup, it is a poor estimate of the final spending for the app development. Your expectations of how much a slight tweak in design may differ with the actual resources committed by our team.

However, Uptech will always provide an expected cost as a guideline.

3.  Dedicated team 

In this model, we assigned a dedicated team to develop your app. As a result, you’ll have better focus and fewer meetings compared to other outsourcing models. 

However, you’ll be required to pay for the monthly salaries of the hired team. For example, we could be charging $45 for a  developer. A month of service will cost $7,200 assuming that we’re allocating 160 hours of work per month.

It will be your responsibility to assign tasks and coordinate work with the team. Even if the team is idle, you’ll still need to pay the monthly salary for the agreed duration.

This model is recommended for mature startups or outstaff projects.

What should you know before outsourcing app development? 

Even if you’ve got the best deal from an IT vendor, you’ll still need to be prepared before kickstarting the app development. Preparations help avoid possible issues.

Here are a few tips for smoother outsourcing.

  • Adopt the lean startup philosophy. As a startup, you can’t afford to be tied down by unnecessary burdens. Find out what the lean startup is all about and put it to practice in building the app.
  • Learn how to get genuine, unbiased feedbacks by using the techniques in The Mom Test.
  • Spend some time to go through helpful materials at YCombinator.
  • Test your idea as soon as possible. Speed is crucial when you’re running a startup, particularly if you’re in bootstrap mode.
  • Find partners/co-founders who offer complementary skillsets. It helps to avoid being blindsided in areas that are not your forte.
  • Know your target audience. Else, you’ll be wasting time and money in building an app that has no takers.
  • Conduct market analysis and check out what your competitors are offering. 
  • Ask appropriate and case-based questions. You’ll get better feedback on the strengths and weaknesses of your app. 

Ready to outsource your app to offshore IT vendors? Make sure you have these ready.

1. A full description of your product specification, which includes

  • Vision: target audience, user needs, product’s novelty;
  • Scope: you describe everything that you want this application to do for each role(multiple user roles: super admin, restaurants, and consumer):
  • List the required features such as login, registration, order, how to order, reset password functions, etc. 
  • Decide if you’re building a native, hybrid, web, or a cross-platform app?

2. Vision of your design. Send us mockups of the product’s structure (in written form or screened from existing apps). For example, if you need Tinder’s swiping feature, be explicit when communicating the requirements to us

Summary 

Like I’ve mentioned, it’s impossible to put an estimate on the app outsource development cost without going through the requirements. Also, you shouldn’t choose an IT vendor purely based on price. Track records, skills, team, and cultural similarity increases the likelihood of completing the app within or below your budget.

We’ve helped various clients in getting their apps developed and we believe we’ll be your ideal outsourcing partner. 

Feel free to send us your app requirements for a better cost estimate.


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