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Custom Software Development Company 2022 Trends

Written by 
John Jensen
VP of Sales
Custom Software Development Company 2022 Trends
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It's 2022, and the current state of the custom software development industry has gone through many changes in the last few decades. In the beginning, there were only two ways to go about building custom software. We will be reviewing these changes and providing a detailed picture of the elements you need to look for when hiring a Custom Software Development company.

Table of contents

The beginnings of custom software development outsourcing

A few decades ago, the only way to develop software was to hire full-time employees. This involves putting together a team of developers, project and product managers, and quality assurance professionals. A whole internal team manages the process, and the company takes care of everything, from conceptualization to launch.

Eventually, vendor partners emerged to offer offshore development services, typically in India. C# and Java development shops began outsourcing work for enterprise clients in the SMB space on a flat fee or retainer-based pricing model.

Offshoring allowed smaller businesses to start developing applications and enter spaces on the go-to-market strategy that they were not typically capable of before, and the industry began to successfully move away from the rigid in-house model it had relied on previously.

The barriers with early software development outsourcing 

However, offshoring presented three main challenges.

First, offshoring presented a big language barrier. Miscommunication introduced problems in the development cycle. 

Second, cultural barriers prevented the teams in the US and those offshore from effectively cooperating and collaborating with each other. 

Third, time zone discrepancies presented problems in coordination. Offshore developers worked when their counterparts and their customers in the US were sleeping, and their customers worked when the developers were sleeping. This meant there was always a delay in communication, and when communication did happen, things were misconstrued.

Even improvements upon the offshore model, like syncing up the work schedules of shops in India with clients in the US, or having developers that speak fluent English, don’t fully solve the problem. And the industry has begun to move away from the fully offshore model entirely.

Current trends in custom software development outsourcing, the nearshore approach

The compromise companies in the US have struck is nearshoring, in which US-based companies hire developers --- often including entire development teams --- in Latin America. The nearshore software development delivery model offers a solution to most of the issues presented with the offshore software development model. 

The nearshore model has similar time zone benefits as working with onshore or internal development shops. The language issue and the cultural barriers are diminished since the region is closer to the US.

Nearshore software development provides access to a large talent pool of skilled developers at approximately 50% of the cost of hiring domestically. You can read more about the factors that affect nearshore software development rates on our blog.

Nearshore software developers often speak fluent English due to their experience in working with US clients and have been brought up in Agile methodologies, allowing them to seamlessly integrate into modern-day development systems and processes.

What to look for in a custom software development partner

When selecting developers for staff augmentation, there are some nonstarter requirements that you should have when partnering with a firm. 

You should be able to interview nearshore developers before any Statements of Work are signed.

Your future partner should be able to let you review the profiles of their available developers to understand their skillsets. You should also be able to set up a one-on-one interview either with yourself and the developers or with a member of your development leadership, much like you would when hiring an internal employee.

This helps you not only understand their technical ability, but also their soft skills, communication style, and personality fit. 

All vendors should provide a risk-free trial period to allow you to evaluate nearshore developers within your current team and to swap them out without any financial risk or penalty.

The company offering a nearshore solution should offer a risk-free trial period in case you’re not satisfied with the developers provided. Even if an interview goes well, you often won’t be able to tell if a developer is a perfect fit until they're onboarded to a team. Risk-free trial periods allow you to evaluate developers’ abilities within your team environment, without financial risk. If a company doesn’t offer one, don’t sign with them.

Any nearshore developers should be fully immersed in your existing development process and workflow.

Everything you’re doing before you onboard the nearshore team member should be able to continue with no hiccups.

The new team member should be able to adapt to your communication channels, whether that's in Slack, Microsoft Teams, or Skype. Everything that you do for your full-time employees internally should be a process, procedure, or habit the nearshore member should be able to adapt to. You shouldn't have to change anything, and the process should be as seamless as possible. 

You should pay on an hourly basis tracked down to the second worked, not on a retainer or flat-fee basis.

You should be able to get daily detailed reports on the stories that your external developers worked on, and it should be tracked down to the second. This will allow you to only be billed for the actual hours, minutes, and seconds that were worked. 

If any vendor is offering retainer or flat-rate pricing for monthly resources, that is a big red flag in 2022. If a developer takes a day off or is sick, you’re still on the hook.

Instead, make sure you’re paying for time and materials — nothing more.

You should have a dedicated US-based point-of-contact from the vendor with scheduled check-ins as needed.

We typically find that having biweekly check-ins is the best method. It can be fifteen minutes, twenty minutes, or an hour — whatever you feel is necessary. Additionally, all of the resources working in your project and team should be able to speak English and communicate in the same style as your team.

The software development companies you’re considering should have the best processes to hire the top talent, and they should be 100% transparent.

Hiring the best talent isn’t easy. The best companies have a well-defined process to reach, hire, and retain talent. When looking for a nearshore software development firm, you should be aware of and, if possible, involved in the hiring process. You should be able to ask the vendor to perform coding challenges in a specific language, both on the front and back ends to make sure they’re providing the developers with the right skills you need to achieve your goals.

You should also be able to use an industry-standard platform for those coding challenges like Hacker Rank or Code Signal, and you should be able to understand how these vendors evaluate the developers that they hire. 

At FullStack Labs, we lay all of that out in a completely transparent way on our website and our staffing playbook. All of our developers go through the same hiring process, whether they're in the US or they are nearshore resources from Latin America. 

Those are some of the attributes and capacities an ideal vendor should have in 2021. If they don’t, that should raise suspicions. 

Wrapping It Up

No matter how large or small your project is, or whether you need full development or simple staff augmentation, your vendor should be transparent and willing to share the details of the work from the first engagement to the development of the software and every other step before, between, and after.

At FullStack Labs, we involve the client early in the process, sharing developer profiles early on to allow them to make go or no go decisions as they go through our process. That is something that we go above and beyond kind of the ideal standards in 2022 and where we see the industry heading. We're happy to answer any other questions that you may have.

John Jensen
Written by
John Jensen
John Jensen

As the VP of Sales at FullStack Labs, I’m focused on helping organizations achieve operational efficiency and lower costs by partnering with our “Dream Team” of designers, developers and engineers. For the last six years, my passion has been helping organizations understand where their existing software and projects are falling short and identifying the best processes/solutions. The result is significant savings of time and money, as well as the mitigation of risk of failure on mission-critical priorities that have the biggest impact on the business. When I’m not researching the market or engaging with new clients, I like to relax with my daughter, and listen to music on vinyl.

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