Small Software Development Companies

When it makes sense to hire Small Software Development Companies

These days, many companies offer software development outsourcing services under various terms & conditions. As a savvy startup founder, you need to be aware of this and understand that a side effect of having more choice is the difficulty in ultimately deciding which software development vendor(s) to partner with. So it is essential to establish meaningful selection criteria to make an informed and self-directed decision about software development companies you trust to partner with.

Partnering with sizeable multinational software development outsourcing companies in the UK or anywhere else in Western Europe isn’t always the best idea, not only because they are comparatively expensive but because they lack a customized approach to their projects. And nominally best software companies are not always the best for you. There is an alternative to partner with smaller software development agencies which can often be far more efficient than large organizations. 

Before starting your search, decide what kind of IT services and software solutions you need to receive, as it will influence your search criteria for software development companies. Do you want to work on custom software or order an off-the-shelf one? After you know what option is the best for your business needs, choose a developer hiring model that would perfectly fit you. Let’s dig deeper into that.

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Custom software development vs. off-the-shelf: what is the difference

Custom Software

Custom software development services are personalized services provided to clients based on their needs and wishes. Its features and UI/UX design, depending on the target audience, project budget, business processes, product development timeline, and other aspects. Keep in mind that development costs will be higher as the product is developed individually for your business; however, you may need to build a software product both for your internal needs and customer usage, adding just the necessary features. Although it takes more time and resources than the ready-made solutions option, it’s worth the wait.

Pros of hiring a custom software development company:

It is adapted to business.  You can choose a software development company that worked before with the clients in your niche, whether e-commerce, fintech, real estate,  blockchain, healthcare, or SaaS. It will reduce onboarding time and their introduction to your area requirements. Additionally, you suggest necessary features and bring changes during the development process

Unique product. Your software has the functionality based on your and your customer needs and pains. That way, you provide them smooth user experience and bring additional value to your product.

Flexibility and Scaleability. You don’t depend on product changes that the third party implement (software owners). If your business is growing, you want to add new features, integrate automation solutions, or change UI design. If you are not sure about some functions, the developer may build an MVP or prototype at first, and then you can test and decide on the final version.  

Cyber Security. Safety is the top priority for most businesses. That’s why building custom software reduces the risks of cyber-attacks and takes preventive measures. Off-the-shelf solutions are more prone to hacker attacks in this case.


Costs. Costs for custom software will be higher than ready-made solutions. However, it will benefit you in the future. It includes expenses for hiring a development team. Keep in mind that costs vary based on the project’s complexity, back-end, and front-end features, the developer’s years of experience, knowledge of programming languages, frameworks, and libraries, and location. Developers’ rates for some technologies will be higher than for others, e.g., React and Angular will cost a bit more than NodeJS or VueJS; the same goes for Scala and Java. 

Time. Depending on the project’s complexity, it may take weeks or months. You will need to hire a development team, build the product and test it with Quality Assurance and Beta Testers groups before going to market.

Off-the-shelf software

Off-the-shelf is a ready-made software that you can buy, download, integrate with your platform, and use based on your subscription plan. You certainly heard of some or used before as it is Microsoft Office, Oracle, SAP, antivirus software, CRMs, and APIs. Such solutions can be a huge advantage for companies when they don’t have time to develop their software. The business can also use ready-made solutions while developing their ones.  As this kind of software focuses on mass-market, it has more features to cover everyone’s needs what causes poor product design, as some functions or navigation doesn’t benefit your team or customers. In addition, be ready for constant updates and product changes. If you want to provide your customers with creative solutions, learn if the software you choose has customization options. 


Fast implementation. If you need a solution right here and now, it will be the best option for you. You may still need your in-house developers to integrate the software with your platform, but it is not always the case. You will still need to educate the staff on using it, but it’s still easier than building custom software, right?

High Quality. As most solutions are enterprise software, top service providers guarantee the high quality of their products. Even if you have a bug, they provide excellent customer support to deal with your issue. 

Free trial. It may be both advantage and a disadvantage. We will explain why. You may use the solution for some time and decide if it fits your business needs. It’s a pretty good deal as some solutions are costly. However, if it doesn’t work, you will need to spend time searching for an alternative and repeat everything.


High Fees. Most providers work with monthly and annual subscription plans; they may include a few basic to premium plans options. Most of all, some plans don’t include additional services, integrations, or customization. In addition, when your business grows, you will need to purchase a more expensive plan and keep in mind that your subscription fees may increase when the third party decides on it.

Features gaps. You may find yourself in two scenarios here: whether you have an overlay of functions with other tools you use, or you will not find some necessary parts for your business. 

Hiring a Development Team Based on Employment Type

When you know what software development is the best for your business, let’s proceed with different hiring models for the employment type. Most of all, when you decide to hire a developer, you will go for the most common hiring models: 

  1. Freelancing
  2. Staff Augmentation
  3. Outsourcing
  1. Freelance

If you are looking to hire a developer for short-term tasks to take out some backlog from your in-house team, then this option may be the best for you. You may hire an experienced freelancer from such platforms as Upwork, Toptal, and Freelancer

Although this option looks appealing due to the low hiring costs, there are a lot of risks of data leaks and freelancers simply disappearing in the middle of the project or missing some crucial deadlines. That is why it is an excellent option to cover some minor tasks, but we would not recommend hiring freelancers for mobile app development, as it requires a high level of commitment. 

  1. Staff Augmentation.

Staff augmentation is a model in outsourcing software development, which means temporarily hiring a full-time contract engineer already employed with a dev house. This developer will become a member of the in-house team for the lengths of the project.

Even tho, this hiring option is a temporary solution, it is safer than freelancing. Also, the client is responsible for team and project management instead of a vendor, so they can directly monitor the work of developers but not depend on the project manager or Scrum master from an outsourcing software development company. The developer is fully dedicated to the project and doesn’t have side gigs from the original employer. There is almost no risk that a vendor will relocate a senior developer to another project, and your work will be done by junior without any notice, as it sometimes happens in traditional outsourcing. One more advantage of such a work partnership is that you can terminate the contract at any time in comparison with in-house employment.

Of course, choosing your partner, you should check the third-party reviews and dig some information about them. You may hire a development team for your application development via the YouTeam platform. We vet each dev shop we work with and offer a broad professional talent pool from Latin America and Eastern Europe. Moreover, you will interview and choose each developer by yourself while we support you through the whole hiring process. 

  1. Outsourcing.

Outsourcing is quite similar to the staff augmentation model. However, suppose you opt for traditional outsourcing. In that case, you will hire a whole dedicated team of developers with product owner/project manager/Scrum master, front-end, back-end developers, QA testers, and graphic or web designers. It’s a good option if you don’t want to get involved with the project and overlook each workflow detail.  However, it may be more expensive due to the team size, vendor location, and other unexpected costs. Anyway, if you go for outsourcing or staff augmentation models, you don’t need to worry about office, insurance, benefits, and bonuses for developers as the vendor covers it.

Regarding outsourcing software development, popular destinations like Ukraine and Poland offer options similar to the staff augmentation model.

Reason to hire a small software development company

When you know the model of hiring you will go for, let’s finally move to the part where we discuss the most critical reasons why small software development companies can, in many cases, be more effective technology partners than large multinationals.

1. Rapid work execution

Unlike bloated, bureaucratic large corporates with multiple layers of management, smaller firms often offer more flexibility and are noticeably more proactive and collaborative with their clients. Besides, they can make decisions and deliver business outcomes for their clients significantly quicker. That is possible because smaller teams create far fewer defects than their larger counterparts.

2. A tailored approach

Small software development houses being more product-oriented, are not organizations that produce huge volumes of code. They can often step outside of the project and propose a better overall customized solution rather than just being concerned with the number of billable hours they’d be able to charge to keep their shareholders happy. Furthermore, smaller software development companies will often seek to minimize the number of development hours in early releases to test the client’s collaborative relationship and improve the clients’ overall likelihood of success!

3. Significantly lower price for high-quality resources

It’s not a secret that top software development companies charge their clients not only for an actual job done but also for their brand. When small outsourcing, partners will set less but work harder.

Based on our calculations, hiring near-shore outsourced resources saves employers 20-30% on an annualized basis, compared with employing Western European, American & Australian professionals of comparable skills and experience. It can add up if you’re planning a substantial team expansion.

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We are in the process of launching a calculator to demonstrate the savings across a range of different technical professionals, taking into account all of the hidden costs of hiring new software engineers in Western Europe. Notwithstanding, it makes intuitive sense that substantial savings can be made in most cases.

4. More flexibility with human resource allocation

Boutique software development firms can take a more dynamic and flexible approach to resource projects. If required, they can transition developers from other projects to yours. Sourcing talent this way is much more challenging in large companies because they often have more rigid hierarchies. Another key advantage of outsourcing, in general, is that employers can source high-quality talent for six months or less with good conscience and without any risk of contravening any unfair dismissal regulations.

5. Direct involvement of top management

When choosing a small software development company, you can often directly collaborate with top management, not just delivery managers who often lack business experience. In this way, you will get helpful insight and valuable tips on your project from executive experience in administrating businesses. The good news is that you won’t pay extra for it.

6. Deeper Specialisation

It often makes sense to hire software development firms based on having done similar projects to your project. If the firm has in-depth experience in relevant areas, they can save learning time and avoid mistakes. Smaller software development firms can often offer more profound expertise concentrated within their core technical and executive team.

7. Mindset and culture of a startup, not a large enterprise

Success is often dependent on partners being on the same wavelength. Smaller software development houses are better placed to empathize with your startup needs because they operate from a similar business perspective. At the same time, large enterprises are often quite disconnected from the realities of a startup. When the company you chose shares your vision and values, it’s a  sign that you will be aligned on the aspirations for the collaboration also.

8. Greater sense of responsibility

It is important to note that your project will often represent a significant account for smaller software development companies. As such, smaller firms will pay more attention to your project and treat you with more respect. In contrast, large corporations aren’t likely to consider your project as a key or strategic account, and your project may be marginalized.

Partnering with small software development companies can have a lot of advantages over partnering with large corporates on small projects. One of the main advantages, overall cost savings, can be achieved without increasing risk or compromising on the quality of the output.   

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Written by
YouTeam Editorial Team

We love featuring verified solutions to outsourcing problems and coverage of remote work trends. We want our blog to be a source of inspiration for tech entrepreneurs and product people who are looking to build distributed development teams across continents.

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