How outsourcing could be the difference for your SaaS company
26 November 2019
3 Minute Read
With the continued strong growth in the SaaS (Software as a Service) sector, and Gartner predicting global SaaS revenues to hit US$85 Billion by the end of 2019, it’s not a surprise to see an increasing adoption of the SaaS model.
As this growth continues and more businesses move to a SaaS delivery method for their applications competition is increasing. Not only for market space, but for the skills and people you’re going to need to scale and meet the required growth. As anyone who has tried to build a team will know, finding the right talent can be hard, time consuming and expensive.
For many successful SaaS businesses outsourcing is an important commercial reality. Partnering with the right company can be essential in building long-term success during times of fluctuating growth. If you are considering whether to outsource, here are some reasons why you should.
Faster and Improved Delivery
Applications never sit still; they’re constantly evolving and improving. Companies need to apply new features, on-going patches and updates in a timely and cost-effective manner. In order to deliver what the market wants when it wants it, there needs to be real-time collaboration between engineering, product, sales, and marketing. Continuous delivery and deployment are extremely important; however, they can also become a difficult task to implement and keep up with for internal teams.
Outsourcing can greatly assist delivery by leveraging the knowledge of sought-after experts. These specialists can implement and manage continuous and automated deployment processes and can help to identify potential problems well in advance of deployment ensuring that new software and its updates are completed on-time, are stable and reduce risks.
Instead of scaling up an internal team, which can be expensive and time consuming, outsourcing provides SaaS companies with an on-demand team, with the skills and knowledge that sometimes can’t be called upon internally.
Supporting rapid growth while managing costs
One of the biggest challenges to SaaS companies is managing the growth rate most need to meet to continue to prosper. The competition in the SaaS industry has increased rapidly and with that the demand to improve and extend the capabilities and services of applications.
According to consulting firm McKinsey, if a software company grows at 20% per year, then there is a 92% chance it will cease to exist in the future. In addition, if a software company continues to grow at 60% per year, its chances of surpassing 1 billion in revenue are still only 50%.
Company growth can be affected by a number of factors, from external ones, such as product adoption and market size to internal factors such as product development, budget constraints and team capabilities.
With the increasingly competitive nature of the SaaS industry, it is incredibly difficult for companies to gain the budget necessary to hire the sort of large, highly skilled internal development teams required to compete. Determining whether or not a full-time employee is needed for a project can be a very costly mistake if you find after two months, they are no longer necessary.
Outsourcing can significantly reduce the burden that managers face during the SaaS development process in sourcing and hiring the right people. A highly skilled outsourced team does not require the sort of onboarding and on-the-job training that typical in-house developers require. They can be utilised to deliver only when required, proving support and knowledge for the tasks and roles where an internal team is not experienced enough.
Having a highly specialised group of software and DevOps engineers sitting in-house ready to go is a luxury most businesses do not have. Many times team members find themselves performing tasks that distract them from revenue-generating priorities. Outsourcing is an ideal way to leverage the experience and knowledge that may be required in a cost-effective manner.
Preparing for success
Success usually means one thing, growth. As a SaaS company begins to grow so does capability requirements. This inevitably means that infrastructure requirements will change and need to scale, however this can also be a timely and expensive process.
The success of your growth will always be determined by the effectiveness of your infrastructure. If your infrastructure can only support 5,000 customers, you have already capped the maximum revenue your product can earn.
However, if you can continue to grow infrastructure in direct correlation to projected uptake growth, then you can continue to grow profits – understanding that your IT infrastructure should not be higher than your sales.
Many SaaS companies struggle with understanding scalability and how to measure it. This is where using an outsourced team can greatly assist. Leveraging external knowledge and expertise can help to quickly build out new IT infrastructure as needed, scaling automatically as required to support real-time growth. Once built outsourced teams can provide continuous support to manage, monitor and secure your application, whilst in-house teams can concentrate on development, sales and customer engagement.
The scalability that outsourcing allows provides SaaS companies flexibility and knowledge not afforded when scaling internally.
Can you adapt quick enough to survive?
The SaaS industry is growing at a rapid pace. Customers are increasingly adopting a subscription-based pricing model to satisfy growing IT needs within limited IT budget. Established enterprises are also responding by embracing the ‘as-a-Service’ business model. The result is a business environment that facilitates competition amongst SaaS companies while the market demand continues to increase.
Outsourcing can be a defining factor in those that get ahead of the competition. If you’re not updating your applications capabilities, it’s most likely your competition is. Being able to grow, deploy and scale in a seamless process will be a critical factor in those that succeed.
Partnering with the right outsourced team can ensure that none of these success factors are ignored. The ability to call on essential resources, skills and intellectual property, not always available in-house, is not a just nice-to-have, but now a necessity of the modern SaaS industry.
We have helped many SaaS companies scale and grow by building and managing their cloud infrastructure so they can focus on what they really want – build and grow their business. Find out how other SaaS businesses grow:
- Watch video - Growing your SaaS business with AWS
- Read case study - Attaché - How moving to AWS and automating deployments boosted the growth of a multi-million dollar SaaS Accounting & Payroll Software
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There were 106 new features and/or services launched during the week of re:Invent 2018. We wanted to offer a more practical hands-on review of the new services.
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