Written by: Jim Wrubel Published on: Sep 2, 2021 Last updated: Sep 2, 2021
Tools used in this recipe
If you're an early-stage founder with an idea for a software product or app and looking to raise money from venture capital groups, one issue you will run into is that most investors will not fund a startup unless the founders have product development skills. However if you have the ability to self-fund product development to get to your MVP, hiring a firm can be a good way to develop an MVP that you can use to communicate your vision and get early traction that you can use to hire a product development team directly. And for startups that have reached the scale phase, augmenting your core team with outsourced talent can be a cost-effective way to improve your velocity.
In this Recipe we'll describe the information you'll need and the things you'll need to consider to hire a software development firm. We'll use Clutch to help identify a short list of firms that fit your criteria.
Should I hire an individual contractor instead of a firm? While on the whole hiring a single developer on contract can be less expensive, hiring a developer means you are responsible for vetting them during the hiring process and reviewing / approving the work they do while on contract to you. You also risk losing momentum if they decide to take a vacation, since there's no one to backfill them. If you are comfortable with taking on these risks that's fine, but we would generally recommend early-stage founders hire a firm rather than a single developer.
Things to consider before you get started
- What's your budget for the project? Keep in mind that the upfront costs of software development aren't the only costs.
- What technologies are 'musts' for you? If you're just starting out you may not have a preference for a specific technology stack. If you're augmenting an existing team, you'll want to search for firms that have experience with the technologies you already have in place.
- Who will maintain the solution after delivery? Your plans for development should also include plans for ongoing maintenance and enhancement. Many software development firms prefer to do initial solution development vs ongoing maintenance because it's more profitable, but you'll need to plan for how your software will be updated after your MVP is live.
Questions to ask potential development firms
- How strong are the communication skills of the people I’ll be working with? There can be significant differences in English fluency among different companies and even in different regions. Given how critical your product is to your business and the fact that startup companies often iterate quickly and frequently in their earliest stages, you’ll want to be sure that language barriers aren’t a problem.
- Have they done this type of work before? This is a great question for anyone you’re planning to hire. See if they have a reference not only for the type of product you’re looking to build, but ideally in the same industry. One benefit of searching globally for a development partner is that you get a lot of choices, so there’s a better chance of finding a company that’s worked on a project similar to yours.
- Can they provide all the support you need? If you are building a product you will need more than just software developers. If you aren’t able to provide expertise in visual design, user experience, QA, and project management, you’ll need a partner with those capabilities in addition to software development.
- Can I afford them? As an early-stage startup you can only go as far as your initial funding takes you, so make sure you can find someone in your price range. Working backwards, talking to some of these firms can give you a better sense of the funding you’ll need to launch your product.
- Is the team able to work hours that overlap with your time zone, and how many hours? Many offshore firms will advertise that they work U.S. hours but don’t live up to that claim. Make sure if you need to schedule a meeting with them that you have the flexibility to do that when it’s convenient for you. You can also restrict your search to countries that have an overlap with U.S. time zones; there are a number of high-quality software development firms in Brazil and Argentina that you can explore.
- Will the team be splitting time with other clients while they work on your project? There’s actually a trade-off here. Having a dedicated team will make your work go faster, but if you have the ability to be flexible, many firms will be able to give you more competitive rates if you can be flexible on timing because it helps them allocate their team more efficiently.
- Will I own the work product they produce? Although it’s unlikely to be an issue, make sure that whatever contract you execute to get started clearly indicates your ownership of their work product. It’s worth finding an attorney to help you here if you have not evaluated these types of contracts before.
Using Clutch to identify candidate firms
Clutch is a special purpose search engine that focuses specifically on technology development firms. Start at their home page and click Find Firms.
Clutch organizes firms by category of expertise. For the purpose of this Recipe we're going to search for Web Development Firms, but Clutch covers a lot of categories so pick the one that most closely matches your needs.
On Clutch's Category page next to Web Development Firms, click See All. This will take you to Clutch's list of Web development firms.
At the top of the page are a number of filters you can use to narrow the list of potential vendors based on your needs.
Start by changing the Sort by dropdown from Sponsored to Clutch Rank to remove paid promotions from the top of the listings. Next we'll set a few of the most helpful options to narrow down the list of firms. Click All Filters.
Let's start by applying the most obvious filters; Client Budget and Industry. For the purpose of this Recipe we'll assume that we have a budget of $50,000 and want firms with previous experience working with Non-profits. These filters alone reduce the number of firms from nearly 40,000 down to 1,459 (as of the time of this writing).
You can further refine the list of potential firms by filtering on type of service. If you're looking for Web designers, you can apply that filter under Services. If you have a preference for a particular technology stack, use the options in the Programming & Scripting filter to further narrow your choices. Filtering for Web design firms that specialize in the Python programming language yields 62 results as of the time of this writing.
Once you have narrowed your list down to a manageable number, close the filter window and review the results. Each entry provides a number of helpful data points to help you compare them to each other.
At the top of the listing is the company's name and tagline. Its number of reviews and rating are also listed. As with any ratings system however, the fewer the number of ratings the less reliable the information will be. If you've signed up as a user on Clutch there's also an option to shortlist this firm, but you can also just use a pen & paper or other mechanism to track firms you want to contact.
The left panel shows additional information about the firm; whether it's verified by Clutch, the average cost of projects they typically take, their hourly rate, number of employees, and location. In the middle is a breakdown of service focus. In this example this company spends 50% of its time on Web Development projects. In general a higher percentage shows more expertise in a given type of work.
To the right is a quote taken from one of their reviews, and to the right of that are actions you can take such as visiting the firm's Website, viewing the detailed version of their profile, and contacting them through Clutch. If the firm seems promising we recommend viewing the rest of their profile and visiting their Website to learn more. For firms that have a lower rating but otherwise seem promising, you should look at their reviews in detail. Not all vendor-client relationships work out and you don't want to penalize a firm for a vendor who left a bad review because of incompatible expectations.
The information on both the overview and profile page are provided by the firm and are not necessarily reviewed for accuracy by Clutch.
On the firm's profile page you'll see additional charts showing the firm's areas of focus; the size of their clients, their industries of focus, and which technologies and platforms they leverage. The profile page also shows the firm's portfolio if they have provided one, and details of any customer reviews.
The information on the profile can be helpful in further narrowing your list. In the example company used in this recipe, while we applied a filter for the python programming language this firm only spends 10% of their project work using python, so they might not be a great fit.
At the very bottom of the page you'll find information on the company's legal status, including the source of any reviews.
Once you have developed a shortlist of potential firms, start reaching out to them to learn more.
How many firms should you reach out to at this stage? There's no specific answer, but reach out to as many as your time allows. Ideally you'll talk to at least 3. Often you will find natural breakpoints in the firms you evaluate, where there's a clear drop-off in fit after the first few.
You can use the questions listed in this Recipe as a mini-RFP, and you can also use the information they list in Clutch as a starting point for discussion. Ultimately you will need to pick a specific firm and engage in a contract for work, but the information in this Recipe will make this process more efficient.