Many companies already outsource technical work. Deloitte’s Global Outsourcing Survey found that 76% of global executives outsourced IT services through third-party models.
Hiring software talent is still hard too. The U.S. Bureau of Labor Statistics expects about 129,200 openings each year for software developers, QA analysts, and testers over the next decade.
For growing SaaS companies, outsourcing SaaS development is one way to add development capacity without waiting through a long hiring process.
But more shipped work does not always mean the team has more real capacity. If product context stays shallow and developers keep changing, internal teams can spend more time reviewing, re-explaining, and fixing work than they planned.
This guide looks at what outsourcing SaaS development usually involves, the main models companies use, where the setup often breaks down, and what to check if you want it to work over time.
Quick context on outsourcing SaaS development
Outsourcing SaaS development means hiring developers from outside the company to work on the product.
The work can be structured in a few ways:
SaaS companies usually do this for simple reasons. Local hiring is slow, engineering talent is expensive, and the roadmap cannot wait for a long recruitment process.
The work that gets outsourced can cover most of what an internal team would do, including:
main outsourcing models for SaaS development
There are three models that cover most outsourced SaaS development arrangements. They are not interchangeable. The differences between them shape what kind of capacity you actually get.
Project-based outsourcing
In this model, the company is paying an outside team to complete a specific project. The work has a clear start and end point. Once that project is delivered, the relationship often ends too.
This can be a good fit for work like a marketing site, a specific integration, or a one-off internal tool. It usually works less well for ongoing product development because the team is focused on finishing the project, not building long-term product context.
Staff augmentation
In this model, a company adds outside developers to its existing team for a set period. Those developers join standups, get assigned work, and work alongside the internal team.
This gives the company more support than project-based outsourcing because the developers are closer to the day-to-day work. But the setup is still often temporary.
Dedicated or embedded teams
In this model, developers are hired to work with one company for the long term. They are full-time, part of the team’s daily workflow, and treated like part of the product organization.
The company manages the work day to day. The hiring partner handles employment, compliance, and payroll. Because the developers stay longer, they have more time to learn the product, the customers, and the way the team works.
The first two models can work for specific needs. The third is usually the better fit when a SaaS company wants outsourced development to create real long-term capacity. The model matters because it affects whether developers stay long enough to build real product context.
Where outsourced SaaS development usually goes wrong
The team builds what was asked for, but not what the product really needs
A developer who does not know the product well will usually follow the written instructions closely. The problem is that the written instructions are not always complete. So the feature gets built, but the team still has to go back, explain more, or redo part of the work.
Developers change, and the team has to explain the same things again
Some outsourcing setups move developers in and out too often. When that happens, the new person has to learn the product and the context. That takes time.
The feature works, but the code makes future work harder
A feature can be finished and still make future work harder. This happens when a developer is focused on completing the task in front of them without enough understanding of the bigger product. The result may work for now, but the internal team often has to spend more time fixing or cleaning it up later.
The rate looks fine, but the team still loses time
The hourly rate is only part of the cost. If a CTO or senior engineer still has to check everything closely, explain the product again, and rewrite requirements before each new feature, the team is not really saving much time.
What helps outsourced SaaS development work better
What works here is not complicated. It is usually the same kind of setup that helps local hires do good work.
Be clear about what the developers are there to support
Do not just give them tickets. Give them a part of the product to focus on. A developer who works on billing or the customer dashboard over time can build real ownership. A developer who only picks up whatever is in the sprint usually will not.
Teach them the product
Use the first weeks to show them what the product does, who it is for, and what problems it is meant to solve. Walk them through recent changes and explain why they happened. Show them past decisions too. This part gets skipped a lot, but it matters. It is often what helps a developer notice problems before they turn into rework.
Keep the team as stable as you can
Outsourced development works better when the same people stay long enough to learn the product well. A developer who stays for two or three years will know the code, the users, and the team better than someone who changes every few months. That kind of stability usually comes from full-time employment, proper benefits, and clear contracts.
Give them enough context to make good calls
Developers need more than tasks. They need to know what the product is for and what the team is trying to improve. Share customer research, support issues, and roadmap thinking. When developers have that context, they usually ask better questions and need less repeated guidance.
Keep communication simple and steady
A weekly check-in is often enough. It also helps to have clear rules for async questions and written notes for important decisions. The goal is not more process. The goal is to stop small questions from turning into delays and to stop the same decisions from being discussed again and again.
This is what helps outsourced SaaS development work better over time. The team is more likely to build real capacity when developers know the product, stay long enough to learn it, and get enough context to do the work well.
What to check before choosing a SaaS development partner
If outsourced development looks like the right move, you do not need to check everything. A few things matter more than the rest.
SaaS track record
SaaS development is not the same as agency work, internal IT, or general software work. A partner that has built SaaS teams before is more likely to understand the product side of the job, not just the coding side. Ask for clear examples of SaaS clients and the kind of work they did.
Screening beyond technical skill
Coding skill matters, but it is not enough on its own. You also need developers who can communicate well, deal with unclear requirements, and explain their thinking. Ask what the screening process checks beyond technical skill. A partner that only tests coding can still send developers who do not know when to ask questions or push back.
Clear employment and compliance structure
If the developer is legally a contractor, the setup is closer to freelance work, no matter what name the partner uses. If the developer is employed through an Employer of Record, the setup is closer to a real hire. That affects retention, compliance, and how stable the role really is.
Long-term hiring model
Ask if the partner places dedicated long-term hires or rotates developers in and out. This matters because constant changes make it harder for developers to build product knowledge. A team that stays longer is more likely to become useful over time.
Fit with your workflow
The developers should be able to work inside your team’s normal flow. That means joining standups, planning, and code review instead of working as a separate vendor team. Ask how that works in practice and what the partner expects from your side.
Case study: Audr
When LevelUp built a development team for Audr, a UK SaaS startup, this was the main issue they were trying to solve.
Audr had already worked with offshore developers in India, Poland, and Eastern Europe. So they already knew offshore development could work. They also knew where it could go wrong. This time, they wanted developers who would think about the product, not just write code from a spec. Their stated priority was “proactive thinkers, not just task executors.”
LevelUp built a five-developer embedded team in the Philippines. The team was hired as full-time employees through LevelUp’s EOR structure. They were screened for communication and judgment as well as technical skill. They also worked inside Audr’s day-to-day workflow instead of sitting outside it as a vendor team.
The results from that engagement were:
Scott, Audr’s CTO at the time, said:
“We’ve had really high quality candidates and they’re very quick to get candidates to us and they’re really helpful in terms of advice on local laws and culture. LevelUp just knows all of this.”
What made the setup work was not just the country or the rate. It was the structure. The developers were hired to work as part of the product team.
FAQs
Is outsourcing SaaS development worth it?
Yes, if the model is right. Outsourced SaaS development can create real capacity when developers stay long-term, work inside the team, and learn the product properly. It often creates more work than it saves when the setup is project-based, developers keep changing, and product context stays thin.
What is the best outsourcing model for SaaS development?
For most growing SaaS companies, dedicated or embedded teams are the strongest long-term option. Project-based outsourcing can work for short, clear builds. Staff augmentation can help fill a gap. But ongoing product work usually needs the stability that comes with dedicated hires.
How much does outsourcing SaaS development cost?
The cost depends on the region, the seniority of the developer, and the model. Embedded developers through an EOR partner in the Philippines often cost 50 to 70 percent less than similar hires in the UK or US. Project-based work is usually priced by project. Staff augmentation is usually priced by the hour or by the month. The bigger question is not just the rate. It is how much time the setup still pulls from your internal team.
What should I look for in a SaaS development outsourcing partner?
Look for a partner with real SaaS experience, a screening process that checks judgment and communication, a clear employment structure, and a model built for long-term hiring. The developers should also be able to work inside your team’s normal workflow.
The next step
Outsourced SaaS development can give a company real extra capacity. It can also create a different version of the same problem. The difference usually comes down to the model and whether the developers are set up to become part of the product team.
If your SaaS company needs more development capacity, LevelUp can help you build an offshore IT and software development team in the Philippines.
See how it works:
