CEO at Relevant

Hiring Freelancer vs Agency for Software Development – The Startup Outsourcing Choice

On startups

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Finally you decided to start something on your own. You have a bright idea of a product and you are keen as mustard to launch your startup. There’s no time like the present to start working hard to make it successful. Only one slight hitch – you don’t know how to code.

If you are planning to learn coding – you are on a dangerous path. Don’t underestimate the difficulty of learning programming languages from scratch. Even though you somehow managed to get acquainted with the basics, development of a good piece of software is a challenging task.

You’d better focus on creating of your product’s strategy, establishing business connections, and penetrating the overcrowded market. Everybody should be focused on what they do best of all and leave software product development to professionals.

Whom should you trust to bring your idea to life?

If you want to give birth to a really successful startup, you need to hire professionals. Choosing the right contractor to develop your future offspring is a difficult pill to swallow, considering your limited budget and timeframes.

What should you consider in order to hire the right people and ensure your project’s success?

Universal panacea does not exist, same is for the right choice of whom to hire. Hiring in-house team for one-time product development is a wastage of money for startups.

Thus, you will have to make your choice between passing your development project to a freelancer or hire an established software development agency.

Both freelance developers and agencies for software development have their pros and cons, and you need a clear understanding of each option.

Who is who

Freelancer is a self-employed person who has a set of specific much-in-demand skills. For example, a freelancer may specialize in front-end development, UI/UX design or data analytics. Usually, freelancers are not committed to a particular employer on a long-term basis, and often have multiple clients at a time. They mostly avoid offices and work from homes, cafes, or famous downshifting spots.

Software development agencies are established teams of professionals that work well together. Commonly, the teams consist of developers, designers, business analysts, quality assurance engineers, and project managers.

Most agencies provide the services of full-cycle software development, from initial consulting to the product launch.

Key difference points between freelance developers and product development agencies:

1. Rates

Most freelancers set up lower rates than software development agencies. Moreover, you are not to pay any overhead costs, like office supplies, health insurances, dinners, or any other perks. Freelancers seem to represent a budget option.

This may sound appealing for your startup if you are on a short budget or awaiting money from investors, or if you need to develop just one specific feature. However, hiring a bunch of freelancers for different parts of your project may turn out to be quite expensive.

Agency’s services often cost more. Initially, higher rates may seem to be a considerable disadvantage, but the price greatly depends on the agency’s region. Hiring a company from the US or Western Europe will cost you an arm and a leg, while Indian agencies are offering absurdly low rates.

Image source: ContracIQ

The companies from Eastern Europe lie somewhere in between. Companies from the region offer highly skilled developers for reasonable costs, so you will not blow your dough. As agencies offer comprehensive end-to-end solutions, they represent invaluable quality/price ratio for a startup.

Also, with an agency you will save costs on your time, as you will not have to lead and micromanage several distributed freelancers.

Here you can find a compelling read about the best IT outsourcing countries.

2. Skills

Freelancers usually have professional expertise in one specific area. You should study their portfolio before hiring one to know exactly what he/she is best in. Sometimes freelancers position themselves as Jacks-of-all-trades, but we all know that one cannot master everything.

Freelancers are good to hire for some specific tasks or one-time projects. For example, if you want add some feature to your mobile app, or create a website on WordPress, hiring a freelancer will be a reasonable option.

You can pick up a perfect profile for every challenge on Upwork, Behance or GitHub.

With an agency you don’t need to find a separate specialist for every specific task. Agencies usually offer full-cycle software development services, including initial consulting (often free of charge), business analysis, UI/UX design, prototyping and business idea validation, development and deployment. Everything in one place.

You’d better leverage services of an agency, if you want to develop complicated product from scratch, like mobile or web app, loyalty system or CRM solution.

What is more, members of a team got used to each other, and developed their own ways to work productively and efficiently. In addition, software development companies face fierce competition, that is why they try to constantly develop and improve their workforce: they continually learn new programming languages, stay aware of the the newest trends and emerging technologies, share knowledge with each other, and deliver the most up-to-date solutions.

Before choosing your contractor, always check trusted resources like Clutch or GoodFirms to read other companies’ feedbacks and project overviews.

3. Schedules

Freelancers love freedom and that’s why they chose to avoid office life and rules. They set up their own schedules and decide upon the workload. Freelancers usually work for many clients, so get prepared for the situation when they are not available when you need them. For example, if you want to make a quick add-on to the project, your freelancer may have already started working for the next client, turned sick, or went for vacation.

Image source: Roadmunk

Their working schedule often depends on when the inspiration comes: sometimes they work during regular hours, sometimes at night, or even weekends and holidays, and you’ll not be able to gain a full control over their schedule. Still, this flexibility can be really beneficial in case of urgent tasks.

Agencies always have established schedules and workflows. Teams work 9-to-5, and overtime when necessary. Also, as soon as one developer becomes temporarily unavailable, they are immediately substituted by another one within the team. Well-tuned workflows in established teams help members stay organized and meet deadlines.

Just make sure you share the same time zone or have enough overlapping hours to get in touch with the project managers, make some adjustments, or communicate about the deliverables for your startup.

4. Quality of work

There are many highly skilled professionals among freelancers, still, some of them focus only to get the work done, receive their payment, and move to the next client. Sometimes they want to finish their projects as quickly as possible, as more clients mean more profit. For some freelancers quality is not a priority, so you have to be really careful when choosing a contractor for your startup.

Studying their portfolios for relevant projects, looking through their portfolios on Behance and Upwork and reading feedbacks will be helpful to find the person with the good reputation and solid track record.

On the contrary, long-term relationships with their clients and professional reputation are the main focuses for software development agencies. They concentrate on quality, rather than on quantity, that’s why they put all their time and efforts to build trust.

They strive to deliver as high-quality products as possible in order to exceed their clients’ expectations, get positive feedbacks and have the clients back for development of their next products.

For example, if you hired an agency for your mobile app development, and something went unexpectedly wrong, the team will move heaven and earth to fix the bugs.

Moreover, agencies are capable to provide comprehensive solutions for startups, from the initial idea and design to front-end and back-end development.

5. Management

Have you ever managed software developers? This is not an easy task. While onboarding a freelancer, you’ll have to bring them up to speed, get them acquainted with all the basics, reporting, and deadlines. No other person but you will have to control them and evaluate the quality of their deliverables.

An extra freelancer may become an overhead to your startup team management, as they will require your additional time. As well, it will be hard for you to supervise a software development process, if it is not your area of expertise.

Moreover, if you are hiring several freelancers for different parts of the project, they will have to get used to each other and learn to work together efficiently. And, it all costs you time.

Agencies always have their in-house project managers, so you will not be responsible for management, and will be able to focus on your core tasks: strategy, marketing, growth. Also, agencies provide a possibility to scale a team if necessary: reduce the number of developers to eliminate overhead, or add more people to speed up the product’s time-to-market.

Project managers will be also responsible for meeting the deadlines, anticipating any possible glitches, and smooth introduction of changes. Also, when you are hiring an agency for your startup product development, you can be sure that the team have worked together before and have developed their own algorithms of efficiency and productivity.

6. Legal Issues

Freelancers are natural persons, that is, private individuals. They work as independent contractors or separate entities, and usually cover all legal issues by themselves. For example, they are paying their taxes and do accounting on their own.

You will have to sign a civil-law contract with your freelancer, or no contracts at all. Still, it’s always better to protect your confidential information and delicate matters, and sign an NDA (non-disclosure agreement) with freelancers.

Agencies are legal entities. But, you will not have to worry about contracts preparation and conclusion. They will take care of all necessary documents and agreements required to start cooperating, as they often have their in-house legal departments with lawyers and accountants. Just read carefully what you sign.

7. Maintenance

Freelancers complete the project and then move to a new client. That’s the most typical situation. It may be hard for you to approach them after the product launch to fix some bugs or make further adjustments to the final product.

Even in case of highly skilled developers, some code updating and bug-fixing will always take place. In addition, freelancers usually require extra payments for any after-launch works.

When hiring a freelancer, you should always specify the possibility of future maintenance in advance.

Surely, you are concerned about the future of your startup. With an agency, you may expect a product maintenance, which means bug fixes and updates, development of additional functionality, and constant product’s support. Also, you will be able to return to the team, who developed your product and know it like the back of their hands.

Who should your startup choose?

After considering all the pros and cons of freelancers and software developments agencies, you may discover that there is no definite answer whom to choose for your next startup product development. Ideal choice does not exist.

Freelancers are convenient to hire for a specific project or task that requires the skills they’ve mastered. While hiring a software development agency works better for complex long-term projects. The more complicated the project is, the larger team is required.

At the first glance, freelancers may seem much cheaper than agencies, but they will require more of your time for their management. So, hiring an agency may be more saving in the long run.

Also, always remember to check your chosen contractor before hiring. Carefully look through their profiles, portfolios, read case studies and testimonials before giving them your first task to make sure you found that right one.

If you want to start a complex project, Relevant dedicated engineering team will come in handy. We, as a Ukrainian outsourcing company, provide full-cycle software product development for startups, and help them with their projects from A to Z. Reach us for more details about the dedicated team model and product development.

Tags: remote teams
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CEO at Relevant
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