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December 14th, 2015

Outsourcing Mobile App Development May Be Worth The Money

66% of mobile development stays in house.

The majority of mobile app development is takes place in-house, with companies preferring to access internal resources rather than contract out to third parties.

A recent report from Forrester Research said that while outsourcing an app build was increasingly prevalent among decision makers, mobile development projects were often entrusted to workplace-based teams. One third of all projects are handed to external mobile or tablet teams, with companies focusing on apps that can be used by both employees and customers or business partners.

For businesses that want to control the path of a project, keeping it within a walled garden is a logical move. The problem is that keeping your blinkers on and ignoring other options in a fast paced and dynamic app economy might not always be the best way to go.

The Risks & Consequences of Poor App Quality Learn how poor app quality can lead to lost revenue and a damaged brand Get It Now

Making The Most Of Experts

In a survey of 1,611 global services decision makers, 37% said that they had used a third party to build a mobile or tablet app for employees. Around 38% of people interviewed by Forrester said that they hired a specialist firm or agency to build customer-facing apps, a decision that was predicated on the skills and expertise that these developers could offer.

 

forrester_tp

According to the report, the cost of building an app is one question that is constantly asked by companies that are embarking on their mobile journey.

Forrester said that the answer is relatively straightforward—how much do you want to spend. App development costs vary depending on what the company wants to achieve and how complex that app needs to be, an important consideration that can be overlooked by any firm that just wants to have an app.

With over 3.4 million active apps (and close to 4.9 million apps over the life of the app stores) cumulatively spread between the App Store and Google Play Store, it seems bizarre to think that there are still some enterprises that are just dipping their toes in the mobile water. Apps and mobile have a symbiotic relationship and the number of companies that don’t have an app would make a very small list.

Cost Of Development Varies By Location

App build rates vary depending on where the developer is based, the experience they have and the size of the team working on the project. For example, the report said that mobile design could account for anywhere between 10% and 30% of an allocated budget. Designers in established markets in North America and Europe can charge as much as $300 per hour but these skills are critical to the overall success of the project.

See Also: 5 Things Developers Need To Know About The Future Of The Apps Economy

ContractIQ, a firm that sources third-party developers for companies that need software development, released a study in April 2015 about the various rates development studios charge across the world. The U.S. is definitely the most expensive while Indonesia was the least expensive.

Source: ContractIQ

Source: ContractIQ

The level of experience is also subjective, said Forrester. Decision-makers said that third party mobile app developers should have at least three years experience, although the age of a developer was no longer a factor. Millennials have grown up in a mobile world and it is not unusual to find developers aged less than 30 charging premium rates for their work.

Companies who want to work with small to medium sized developers to reduce costs could find that size doesn’t always equate to how much the overall build will cost. Forrester said that boutique developers are charging twice as much as larger app specialists, mainly because they don’t have the overheads or resources of a larger firm. At the same time, these smaller teams can be more agile and innovative in their build—one more reason why they feel they can charge more.

A global app vendor with over 20,000 employees may charge $44 per hour for design, $33 per hour to develop the app and $29 per hour to test the app, Forrester said. A smaller company—one with less than 20,000 global workers—prices the build on a different scale and has hourly charges of $71, $60 and $56, respective.

forrester_cost

Source: “What Does It Cost To Source A Mobile App,” Forrester Research

Location is something else to be factored into the equation. Offshore rates are around 33% to 55% of onsite or local alternatives, but mobile app development is not just about where you are, the report said. Developers in cities where the cost of living or working is high—London, San Francisco, New York—will charge up to three times more for a project purely because they live in a region that is expensive.

IDEA: The Key To The Development Lifecycle

Companies should use the IDEA cycle to move their app forward—identify, design, engineer and analyze. Internal resources don’t always follow this approach, but third parties or outsourced developers know that they have to provide value for money and ideas from the word go.

“Identify the mobile moments and context; design the mobile interaction; engineer your platforms, processes, and people for mobile interactions; and analyze results to monitor performance and optimize outcomes,” said Forrester.

So how much does it really cost to build a mobile app? As noted above, you might as well ask how long is a piece of string. Depending on what you need to achieve, budgeting for app development is an inexact science.

usaid_appdesign_flickrcc

Canadian mobile app developer Crew has a handy interactive guide that allocates spend depending on what type of app is being built. Based on a development cost of $60 to $100 an hour—the U.S. market rate, according to Crew—companies should be able to answer the following questions:

  1. Do you want Android, iOS or both?
  2. How will people log in or access the app?
  3. Do people have to create a personal profile?
  4. How will the app make money?
  5. Will there be a rating system?
  6. Is the app mobile only or does it connect to a website?
  7. How pretty should the app be?
  8. Does the app need an icon?

Seems simple, right? Answer those questions, get a rough idea of price and build an app. Forrester’s report suggests that a deeper dive would be a more prudent option … because every mobile app is different and not everybody wants to go the same way.

“When sourcing a mobile app externally, expect the bid prices to vary widely depending on what stage in the mobile journey you are at,” Forrester said. “It’s also critically important to make sure you are getting a team that has the right skills to deliver the outcome you expect.”

Two-Pizza Teams

Most mobile app teams are small and have between five and 10 people working on an app at any one time—Forrester calls them “two-pizza teams”—and take an agile approach. In other words, they are flexible and keen to collaborate, a distinct advantage for any company that either can’t access an in-house resources or wants external experience.

Successful mobile apps are not just about the amount of money that has been thrown at a project but how the resources available have been utilized, especially when the flavor of the month changes on a daily basis. Mobile requires an ongoing commitment and finding the right team for the right price is just the start. Outsourcing an app development project doesn’t mean that a decision maker loses control, rather it shows just how committed a company really is.

Lead image: Image: “Rene Jaun talking about accessibility of iPhone,” by Flickr user visualpun.ch, Creative Commons

Middle image: Top image: “USAID and Partners Run App Design Challenge for Social Change” via USAid Asia, Flickr, Creative Commons.

  • Outsourcing is definitely worth idea to get IT services.

    • Marcell Gogan

      Why?

  • Marcell Gogan

    The cost of development is constantly changing, you can’t trust one website. Here the same website-calculator https://www.otreva.com/calculator/ but with other prices and brand new articles http://savvyapps.com/blog/how-much-does-app-cost-massive-review-pricing-budget-considerations https://yalantis.com/blog/how-much-does-it-cost-to-develop-an-app/

  • Nice article, Cost of development application is different as per location but main concern point is also developing quality application. Thanks for sharing this article.

  • Alexander Sokhanych

    Hi,
    Hrere is also great article about VR app development cost https://thinkmobiles.com/blog/how-much-vr-application-development-cost/

  • Petter Tchirkov

    Outsourcing is not so easy as you can think. Yeah it has got a lot of advantages but it really depends on an outsource team.
    https://thunderrise.com/blog/how-to-outsource-app-development. Here are good tips on how to choose an outsourcer

  • Helen

    Thank you for your article! There are a lot of information on this topic here http://idapgroup.com/blog/how-to-hire-app-developers/

  • Robert Davidson

    Nowadays, most businesses have realized the need to have an application, as it can help them build a better relationship with their clients and attract new ones. Of course, before choosing a company to develop it, you should ask yourself a few questions like the eight you have stated in this article. And it’s always advisable to hire a bespoke apps development company, because it’s not only about having an app – it should be built professionally and in such a way that it is both easy to navigate and functional enough. Of course, as you’ve stated, the cost of the project depends on various factors like how many people will be working on it, in which country they are located, whether the app is for iOS, Android or both. As a whole, it is considered that the IT services in the USA are typically the most expensive, while these in Europe offer the best correlation between price and quality of services.