How to Choose a Software Development Company (an Unbiased Overview)

How to Choose the Right Offshore Software Development Company

Of all the great offenders of spam emails—from super slimming diet pills to the ones that promise to cure your hammer toe situation (complete with revolting photos!)—outsourced and offshore software development companies may be the undisputed leader.

A dubious honor, indeed. Which is exactly why you need a reliable expert to lean on.

However, statistics say that the outsourcing/offshoring market is expected to grow by 4% annually between 2012 and 2025, whereas New Research from Commit reveals software development outsourcing will grow 70% by the end of 2023.

So, while writing this article I draw on the expertise of not one but two! I spent hours interviewing TurnKey’s founders, Sterling Lanier and Boris Glants.

Before TurnKey was even a glint in their eye, they had tech startup called Tonic Health, which they eventually sold to the industry leader. Through those interviews, I gained a deep first hand understanding of the pitfalls they faced trying to grow a tech company with outsourced talent.

I used their experiences to write this unbiased overview of how to choose a software development company for you.

TurnKey has helped hundreds of software development companies navigate the rough offshore waters successfully. We can help you, too.

There are six areas to understand before you begin:

Why read more when you can just call TurnKey and let us handle it, right?

What are the different types of software development companies— and what do they do?

Well, there is no simple black and white answer to this question.  Personally, I found a lot of gray within the “offshore software development company” category in my research. There is a lot of gray area within this “offshore software development company” category. We’ve cleared the air a bit in a few recent posts, both here and here. But for the most part, the various categories break down as follows:

  • Outsourcing firms are project-based. When you have a certain product or app that needs to be built—or you have a whole function like QA or DevOps that you want someone else to manage—you contract the whole enchilada to an outsourcing development firm. They provide all the management and the people (and then they send you a big fat bill when the project is complete). Outsourcing is usually associated with higher volume and lower quality work.
  • Offshore software development companies are used for longer term needs. They’re called Offshore because—you guessed it!—they’re based outside of the United States or Western Europe. Offshore software development companies essentially rent software developers to you. Sometimes the firms help manage their teams, and sometimes that’s on you. Either way, most of the time, the developers are primarily loyal to their agency, which means they aren’t fully committed (literally or figuratively) to you. So you’re left to deal with limited flexibility and poor client service. Ugh.
  • Nearshore software development firms are the local yokels. Okay, maybe they aren’t right around the corner, but they are close by—generally based in the same or similar time zone as you, the customer. Nearshoring can refer to both Outsource (project-based) and Offshore (long term) models.
  • Finally, there is Yourshoring. This is the best-of-all-worlds approach—and it’s what TurnKey does all day, every day. Our model gives you the best of everything. You get the good stuff from Offshoring (access to talent, cost efficiency, speed to market, and more), but none of the pain that comes from dealing with Offshore software development companies (poor client service, lack of control, a team not tailored to the customer, and on and on). With Yourshoring, you can confidently choose a software development partner that aligns with your business objectives and delivers exceptional results.

There’s more to follow further on in this post, but here’s the gist: Unlike every other firm out there, TurnKey handcrafts fully dedicated software development teams that are built entirely around the needs of the customer.

It may not be rocket science, but it works: 

Teams that are embedded—both organizationally and culturally—produce much better software than teams built by any other approach. This is the Yourshore way.

Yourshoring software development - what is it? | TurnKey

Why should I be picky about which software development company to use?

Come on. You agonize over your shoes, and you don’t put just any baseball glove on your kid. When it comes to things you’re passionate about, you’re unapologetically choosy. And your product is your lifeblood—this is your company’s main source of revenue we’re talking about here. That’s why choosing the right software development company is critical. Get this wrong, and your whole company goes wrong. The stakes are that high!

Many customers fall into the budget strap trap, meaning they make a decision based on price alone. Sadly, the truth is that the old adage of “you get what you pay for” is never more true than when using a software development firm. The Offshore option is already much lower in cost than Nearshore development, so why would you try to haggle yourself into a 10% discount when choosing one firm over another? Those percentage points could mean the difference between a completely bland, average product and a truly great one. Take this to the bank instead: Don’t optimize around the wrong variable.

nearshoring vs offshoring

What are the most important factors to consider when hiring a software development company?

Just before we get to that, watch this video with Sterling, TurnKey’s CEO, and Tucker explaining when offshoring is right for you – trust me, it will make your day!

TurnKey’s founders have been there like you, bleary-eyed and laden with caffeine.

In fact, back when they were building their own SaaS-based software companies, they hired a bunch of different offshore software development firms to help them create their product. Sterling and Boris are the first to say they made a lot of mistakes and endured a ton of pain (which is why they built TurnKey, so you never have to suffer).

In all their dealings with offshore development firms, they found that the following eleven key factors made the difference between working with a good offshore development company and a horrific one:

# 1. Approach to Client Service:

Sadly, good customer service is a lost art in the offshore software development business. Many firms are unresponsive (even at the executive level), often taking days to get back to you, especially if a problem pops up. You need a partner who champions your success and always acts in your best interest.

Ask yourself this: Can I get the cellphone number of the CEO and can I call them at any hour of the day? If the answer is yes, continue. If the answer is no (which it most likely will be), cut bait and run.

Before you take off on your run, grab your phone. You’ll need it so you can dial TurnKey for help.

# 2. Shared Understanding of Business Goals:

Many offshore firms may understand your technical requirements, but we found that few really understand your business needs or what you’re trying to build at the macro level. You need an offshore dev firm that catches your drift—not one that is hopelessly adrift.

# 3. Dedicated Teams

There’s one more catch to know about how to choose a software development company right.

If an offshore firm tells you that your team will be fully dedicated to you, take it with a million grains of salt. It’s just usually not the case.

I worked for 5 years in outsourcing before joining TurnKey and have seen first hand how much overhead work developers in those companies are delegated. So when searching for a firm, probe hard around how the agency will guarantee that the entire team is 100% committed to you and your product.

benefits of dedicated teams

# 4. Best-in-Class Talent

The Offshore development landscape is like a big bell curve. You’ve got really low-level talent on one side, a vast majority in the middle packed with pretty average talent, and then a small minority on the other side that has the top 3% of talent (Spoiler alert: TurnKey is the leader of this top minority group!).

Ask your offshore development firm what process they use to ensure you get only the best of the best on your team.

# 5. Custom Recruiting

Most Offshore firms claim to have found the perfect talent for you, when in fact they’re just clearing their bench—and forcing you to use the developers they give you whether they’re a good fit for your needs or not. Unacceptable.

Look for firms that build teams from scratch using developers that are handpicked in the marketplace to match your needs to a T.

# 6. Talent Retention

It doesn’t matter how good your people are if they churn and burn at the pathetic industry-wide average of 40%. Partner with Offshore dev companies that have robust talent retention and management programs in place and watch that 40% dwindle to the single digits.  

A key tool we use at TurnKey to combat churn is our Remote Retention Index Program – a proprietary retention tracking framework. This program provides clients with insights into individuals’ and teams’ current work situations, giving a fly-on-the-wall perspective.

Program process flow 1536x524 1

From this data, TurnKey creates a personalized remote retention strategy for each team member that is focused on providing guidance and keeping them highly motivated, which significantly reduces churn risk.

# 7. Access to Different Regions

Many Offshore firms only operate in a single region. But if you have varied needs, you may benefit from a variety of regional options. Geographic flexibility is the key to finding the best solution for your specific software development goals and objectives.

# 8. Customer Case Studies and Reviews

Ask clear questions and wait for clear answers. We speak from experience—when we ran our own software companies we often found ourselves with fast talk and crappy developers. It’s not fun.

Pro tip: Don’t take anyone’s word for it—always interview the developers yourself.

Case studies: R1, iScribe, Salad | TurnKey Labs

# 9. Salary Transparency

99% of Offshore software development firms keep what they pay developers a secret which makes motivation and incentivizing impossible for you. Don’t feel bad about asking—and don’t stick around if they won’t share this information with you.

# 10. Security

If you are doing Offshore development the right way—that is, the teams are embedded in your broader development organization—then this shouldn’t even be a question you need to ask, because everyone will be working within your security infrastructure and protocols. Ask anyway.

# 11. Cost

We encourage you to look at this from a different angle. Worry less about how low you can get the cost and instead focus more on what you’re getting—or not getting—for your money.

Cost of Churn | TurnKey

What are the key benefits and challenges of using offshore dev talent?

At this stage, you might feel that finding the ideal offshore software development partner will be as painful as a root canal. However, rest assured that dedicating time to this process will pay off in the long run.

Numerous benefits come with this approach, including:

  • Access to specialized talent that you don’t have in your local market
  • Much lower cost overall when compared to hiring the same talent in the U.S. or Western Europe
  • Easier scalability over time as well as agility—you can spin up new teams based on the evolving needs of the business
  • Greater speed to market for your product development efforts

But as we outlined above, there are many common challenges too, such as:

  • Teams aren’t fully dedicated to you, which means you are not in control

  • Teams aren’t custom recruited exactly to your needs—you get whoever is on the bench

  • High churn of talent (40%!), making it difficult to maintain product velocity

  • Lack of salary transparency, making it difficult to motivate your team

  • Poor customer service and responsiveness

offshoring demand

How does TurnKey magically transform Offshoring to Yourshoring (and solve all your problems in the process)?

The astute reader (we’re talking about you) may recognize that all of the points above foreshadow something big: TurnKey has a model that’s better than all the rest (humble brag).

As former software startup founders, Sterling and Boris got burned so many times by offshore firms that they stopped looking for the ideal remote development firm—and created it themselves instead.

Hiring a Dedicated Application Development Team: Your Ultimate Guide | TurnKey

They decided to call our model Yourshoring to reflect our focus: TurnKey gives YOU all the best parts of Offshore development—a buffet of specialized talent, high speed, low cost, and easy scalability – with none of the stale bits.

This is YOUR team—fully dedicated to you. These are YOUR developers—custom recruited exactly to your needs. This is YOUR culture—your teams are embedded inside. This is YOUR vision – your team is working on your roadmap. This is YOUR ideal location—your team is based where you need them, from Eastern Europe to Latin America. This is YOUR combined success.

And then add in TurnKey’s famous white glove customer service and award-winning talent retention program and you’ve got a perfect solution for optimizing offshore software development.

Still have doubts?

Here’s a real world example of how we have helped others.

Ivy Energy, a venture-backed company, faced the challenge of scaling their software engineering team to support the ongoing development of their SaaS platform. To accelerate their staffing process, they partnered with TurnKey. 

The results have been impressive, with an average of 2 candidates presented for technical screening per position, and an average time of just 23 days to fill each position.

This efficiency speaks to TurnKey’s ability to identify and present qualified candidates for consideration ASAP. Furthermore, TurnKey’s offshore team played a leading role in the development of a new platform that replaced Ivy’s previous platform.

Their expertise and architectural improvements made the new platform more scalable and easier to maintain, setting Ivy up for future success.

Case studies: Sertifi, ResNet, Headspace

This demonstrates the value of partnering with a trusted partner like TurnKey to effectively scale a software engineering team and drive product development forward.

Remember – this success story can be yours!

Some final thoughts…

"...where the work can be done outside better than it can be done inside, we should do it.”
Alphonso JacksonFormer United States Secretary of Housing and Urban Development

When you’re ready to choose an offshore software development team, you don’t want to play darts in the dark and hope nobody gets hurt. Get clarity, ask questions, and use your budget wisely.

Nowadays, as investors become pickier and funding is even harder to secure, the stakes are too high to trust your software development to the average offshore development firms. Don’t pay for frustration and put your trust in someone you can’t even get on the phone. Instead, let TurnKey show you a better way to select the right software development company that aligns with your vision, goals, and project requirements. Make an informed decision to ensure your software project’s success.

Whew. So many good ideas. You ready? We are, too. Call TurnKey and let’s bang this thing out.

Heres why clients choose TurnKey to create their software development innovation centers 1
How do I hire an Offshore development company?

This one is easy: Call TurnKey. We are the team you can trust, delivering top-notch talent who produce exactly what you need.

What should I look for in an Offshore software development company?

Your Offshore dev firm should be transparent, easy to contact, be able to source (and keep) the best talent, and responsive to your questions, needs, and issues.

What is the best country to outsource software development to and why?

This depends on what your product is, what your timeline is, and what your specific needs are. Do you need someone who speaks your language and can absorb your culture? Do you have a niche product and audience? Where does your budget top out? Do you need access to highly specialized IT talent? All of these things can dictate where your talent should be based.

January 8, 2024

TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.

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