What to Expect When Working with a Development Studio?
Whether you are a startup or a big enterprise when developing a tech product, you are often faced with the question: “should I hire a development studio or do it internally”?
In today’s competitive hiring environment there are more jobs available than developers. It’s only one of the reasons why more and more companies choose to partner up with an external tech provider. If you and your business find yourself in a similar position right now, this article is for you.
Hello, I’m Piotr— Business Development Lead—and I’ll be your guide today. I’ll walk you through all the aspects of starting a cooperation with a development studio; what to expect and how to prepare.
Before we dig into what does the cooperation with an external provider entail, first, let’s quickly think if it’s the right path for your business. Perhaps, hiring a team of engineers internally would be better?
The fact is, there’s no simple answer. Usually, it’s less expensive to have an in-house team, because of the margin you pay the agency. Having said that, you need to keep in mind that the IT market is very scarce. It might take you a lot of time to hire experienced engineers with the exact skills you currently need. Don’t forget, in today’s market it also costs quite a bit to keep the good engineers around (and I don’t only mean their salaries).
Speaking of specific skills—good agencies have the right resources and are capable of kicking off the project right away (or relatively soon). Big development studios (40+ people) have plenty of experience with building a product from scratch and can provide a holistic service in different technologies. They are also more flexible, able to scale up or ramp down, depending on your current needs.
So, you’ve decided to go for an external tech partner. You found some agencies that caught your eye in terms of their previous experience and approach to business. Here comes the first step of any agency cooperation: discovery. This is where you and an agency establish all the prerequisites of the process:
- what kind of value do you want to offer your users,
- how do you want your product to deliver that value,
- how long the project is going to take,
- what kind of skill-set is needed,
- who are your team members,
- when can they start.
The estimated budget simply represents these factors.
Of course, it’s impossible to predict the exact cost of a project, which is why development studios tend to prepare a price range, taking into account most of the possible project scenarios.
Once both sides agree on the scope of the project, they move on to discussing the hourly rates for the engineers, gathering the team and engaging them in common conversations. This allows the client to check if the agency is the right fit.
Generally, deciding on an agency can be very difficult, especially if you’re not a technical person yourself. Keep in mind, it’s not entirely about the price— it’s about finding a match for your business, a tech partner. These things are hard to measure, so I’d suggest investing quite some time in good research and discovery phase first. Compare the offers, talk to potential partners face to face (if possible), thoroughly check their expertise and referrals.
Most importantly, trust your gut! During negotiations, you should feel taken care of and understood. You should feel like you can trust the agency and that they’re genuinely interested in the project. If they don’t care about your business—you’ll be able to tell soon enough.
The cooperation should be based on bouncing off ideas, staying up-to-date, establishing a clear workflow, and trust. A good agency will be keen on showing you their work regularly. They will be willing to self-improve. They will be brutally honest because, as your partners, they care about your product as much as you do. A good agency understands the market, can advise you on different scenarios and work with you to ensure the product’s success. A good agency will challenge your ideas—to your benefit.
At Polidea, we always invite our clients to take on the role of product owners who are responsible for making business decisions. We encourage them to follow the Scrum methodology, attending demos, standups, and updates, staying close to the project. On the other hand, we take responsibility for tech decisions, presenting possible scenarios of a project and their outcomes, letting our clients have the last word. If they don’t come from a very technical background, we make those decisions for them in their best interest.
Most of our clients are quite tech-savvy, possibly because we showcase our skills through open source activities, which is not that popular among other development studios. Plus, we deal with niche technologies, like BLE, embedded, or developer tools for cloud, which naturally attracts more clients with an engineering background.
Time to sign the contract! But…at what terms?
Imagine, you’ve been working on your product for 6 months. Suddenly, long before the release, your competition brings the same solution to the market. What then? Would you change your Unique Value Proposition? What if you’ve done the user testing and your users don’t like the product? Do you change features or scrap the project altogether, losing most of your money?
Tech industry is a living organism. It’s constantly changing and evolving: another groundbreaking solution, the “next big thing,” a new startup etc. It’s essential to keep up and be adaptable, making hard business decisions.
This is when a so-called Time & Material based contract comes in handy. It allows you to be flexible and react to emerging risks and possible changes fast. With this cooperation model, the end-price is based on an actual time spent on a project multiplied by an hourly rate.
A Fixed-Price contract, on the other hand, assumes a final price and a fixed scope of work before the project even starts. After spending some time working in this industry as a salesperson, I have much understanding for clients who prefer the straightforward terms of Fixed-Price. The idea of knowing how much you’re going to spend on the project is very tempting. Sadly, it’s also not very realistic and can be risky for your business—the scope always changes, because the circumstances tend to change. It’s impossible to foresee the future, no matter how hard we try.
Which model should you go for when working with a development studio? At the end of the day, it depends on where your priorities lie. Time & Material gives you space to decide what’s important and take the best possible direction on-the-go, whereas a Fixed Priced based model leaves you with change requests that tend to be extremely expensive.
Hiring a development studio is definitely a great way to start your project fast. Make sure you find one that’s the right business partner, not just a software provider. Listen to your gut feeling! Do you feel taken care of? Can you trust them? Remember—this cooperation should be about transparency and communication. I’m also a strong advocate of the Time & Material contract—it gives you way more flexibility than a fixed scope, and allows you to adapt to the market fast.
If you have any questions about working with a development studio get in touch!
Business Development Lead