21/06/2023 15 min read

Software Development as a Service: Tech on Demand

Today, saying that we’ve entered the digital age seems cliché; Digital and mobile have been so ingrained in our lives that it has become second nature even for businesses. Companies are in constant search of innovative solutions that will help them get a leg up on the competition. They find ways to deliver their product or service to customers as quickly and as efficiently as possible—when they want it, where they want it.

It’s no surprise, then, that the software as a service (SaaS) model has grown to be one of the largest markets in the tech industry, reaching almost $200 billion in end-user spending worldwide. Together with SaaS, the software development as a service (SDaaS) model has also gained traction due to the overall complexity of software development and maintenance. This article will focus on the latter, but the former warranted mention because there is a common confusion between these two models.

SaaS is a software distribution model that allows users to access applications via the cloud. On the other hand, SDaaS is an outsourcing model that allows companies to outsource software development requirements to specialized third-party providers.

What is Software Development as a Service (SDaaS)?


SDaaS is a model that allows companies to outsource software developers on demand to help create custom software applications. This outsourced team of developers is typically provided by an outsourcing company that offers comprehensive software development services, ranging from initial planning and design to development, testing, and ongoing support. By leveraging SDaaS, businesses can access a dedicated team of highly capable developers who possess the necessary skills and experience to deliver high-quality software solutions.

In other words, SDaaS is a solution that empowers a business to develop software with an external team of developers. A company looking to build an external team partners with an outsourcing company who works with them to find the talent they need. This is the service to which a company “subscribes” and for which they are billed a monthly or hourly fee. This pricing model is transparent and predictable, allowing a company to see the actual cost of software development and determine future costs.

What are the Different SDaaS Models?

Outsourcing companies offer different services as they try to cater their offerings to certain industries or business types. It’s the same case when it comes to SDaaS, and it’s important to distinguish between the two main types.

Service-based Model

The service-based model is preferred by most companies because it provides a host of services aside from software development, including technical consultancy, IT project management, custom software projects, and the like. With this model, the outsourcing company works with your business towards a common goal and is with you every step of the way—from the start of the project through its completion. The value most businesses find in this model is the type of talent they get to work on their software projects. Providers of the service-based SDaaS model have a pool of experienced professionals with a high level of technical proficiency, ensuring that you get a capable candidate regardless of a project’s complexity.

Product-based Model

This model differs from the previous one in that it provides a finished product. You provide your requirements to the outsourcing company and it finds people to work on your project. The specifics are laid out before the project starts and both you and the outsourcing company come to an agreement regarding timelines, deliverables, frequency of updates, and other details. Typically, this model doesn’t require you or the outsourcing company to work closely with each other as long as expectations are met. The product-based SDaaS model can be used to build software products for both the B2B and B2C markets. Since the software is developed by an outside party, a drawback of this model is the possibility of licensing issues and restrictions. However, they do provide software products that can be used out of the box.

Software Development as a Service vs. IT Outsourcing


While software development as a service has many similarities with IT outsourcing, three main differences stand out due to the way SDaaS is designed.

Faster Improvements

While IT outsourcing can be a stopgap solution when you need people to work on a certain project or one-off task, SDaaS focuses on building long-term working partnerships. However, SDaaS still retains the flexibility of IT outsourcing, allowing you to scale a team up or down easily when needed. This makes software development quicker and more efficient because new features can be easily added and new projects easily launched.

Predictable costs

At face value, IT outsourcing can seem cheaper, especially if you don’t consider the long-term drawbacks of this model. There can be unforeseen costs for the duration of a project since IT outsourcing costs aren’t fixed. As opposed to SDaaS, these costs can be hard to predict and their timing isn’t always ideal. On the other hand, because SDaaS is focused on long-term relationships, cost projections are more accurate and, more often than not, costs are fixed and agreed upon at the onset.

“After-sales” Support

With the SDaaS model, your external team stays with you even after the project is done to provide support and maintenance services. Aside from quality control during the project's duration, outsourcing companies typically provide a software warranty—the period of which depends on the contract you signed.

Benefits of Software Development as a Service

With the available technologies today, there are endless possibilities when it comes to what types of software applications you can create. Gartner predicts that IT spending worldwide will continue to increase in 2023 despite the economic turbulence. This proves that technology isn’t the hindrance to innovation; the reason why most software development endeavors fail is the process. If the software development team or provider doesn’t understand how a business operates, building applications takes longer and internal processes become less efficient.

SDaaS is designed to address these issues and brings with it several other advantages.

Economies of Scale

Companies achieve economies of scale by increasing production while lowering costs. In the case of software development, companies ideally need to create more than one software application. One-off software development projects can make do with developers with limited experience, but this isn’t a sustainable solution. In the long run, though, you will need advanced technical skills to provide a better experience for your users. SDaaS helps companies achieve economies of scale by providing an easily scalable team of expert software developers, allowing you to focus on resource allocation and project management.

Skillset Diversity

SDaaS provides companies access to a vast pool of world-class software developers. The people that work for you are handpicked according to your specific requirements. When you’re in need of a developer with specialized skills or in-demand expertise, an outsourcing company can help find the right talent from a country or location of your choice.

Quality Control

Outsourced IT teams, especially freelancers, typically have limited quality assurance protocols in place. It’s uncommon to find freelancers with their own QA teams, unlike SDaaS providers who can provide a dedicated QA team for you. The QA team is responsible for ensuring the quality of the final product through evaluating the development results of each development cycle.

Problem Solving

When building an ambitious software application or developing an innovative solution, you need more than just performers. You need a team that can help find new ways to implement applications so it can address current issues. While it’s important to have developers that are good at what they do, it’s also vital that they are critical thinkers and problem solvers. This will not only speed up development but help you discover new solutions to old problems.

A New Approach to Hiring

The process of hiring full-time developers is laborious and time-consuming, and it sometimes eats up more resources than expected. Working with an outsourcing company speeds up this process because they already have a pool of talent from which they can find the talent you require for your software development projects. SDaaS providers usually employ the Agile method so they can provide estimates for each development cycle. This significantly improves the workflow, resulting in quick turnaround times.

When to Use Software Development as a Service


If your company develops software, it can benefit from the SDaaS model, and it’s vital that you leverage available technologies and solutions to optimize your software development process. A recent survey shows that 72% of high tech leaders in the U.S., Canada, and Western Europe expect a growth in revenue in 2023. They also believe that they will be able to outplay their competitors, further stating that growth is possible if leaders can execute and respond to changes in the market.

If you’re wondering if the SDaaS model is for you, below are a few reasons why companies have taken the SDaaS route.

Multiple Tech Units

Companies with many tech units often need to scale up their software development team to help handle multiple tasks and projects at the same time. If you find yourself always looking for more developers, SDaaS is an excellent solution because it can provide you instant and constant access to the best talent across the globe. They are also more experienced when it comes to hiring and recruitment, which ensures a smoother and more efficient process.

Protection of Sensitive Data

If data security is your priority, SDaaS providers often have security protocols in place and understand the necessity of entering a formal agreement with you aimed at safeguarding your sensitive information. This may include signing NDA contracts, regular security audits, setting strict data access rules, and implementing other risk management measures you deem necessary.

Projects Lasting More Than Six Months

Since SDaaS focuses on long-term business relationships, projects that last more than half a year fall under its purview. It helps provide you a dedicated team that will become integral to the success of long-term development projects. SDaaS providers can help build your team and manage them for you for as long as you need, allowing you to focus on the project at hand and giving you the opportunity to come up with new ones.

SDaaS Key Considerations


When looking to develop software via the SDaaS model, the two main considerations are finding the right partner for your business and knowing the best practices for a successful SDaaS project.

Choosing the Right SDaaS Provider

  • Expertise and experience. Look for an SDaaS provider with a proven track record in software development and a diverse team of skilled professionals.
  • Tech stack. Ensure that the SDaaS provider you work with has expertise in the technologies and programming languages relevant to your project.
  • Communication. Effective communication and collaboration is crucial for successful software development. Evaluate the SDaaS provider’s communication channels, project management practices, and collaboration tools to see if they adhere to the same standards you use in your own organization.
  • Confidentiality. Data security is vital regardless of the nature of your business. Verify that the provider has robust security measures in place to protect your sensitive information.

SDaaS Best Practices

  • Set clear expectations. Clearly define your software development requirements and communicate them to the SDaaS provider. This will ensure that everyone is on the same page and working towards a common goal.
  • Take an “agile” approach. Embrace an agile development methodology that promotes iterative development, continuous feedback, and frequent deliveries. This allows for better adaptability and ensures that the final product meets your evolving business needs.
  • Communicate regularly. Establish regular communication channels with the SDaaS provider to stay updated on the project’s progress and address any concerns or queries promptly. Set regular monitoring and update discussions so expectations are always aligned and issues are detected as early as possible.
  • Discuss ongoing support and maintenance. Discuss post-development support and maintenance options with the SDaaS provider. It’s essential to ensure that the software remains up to date, secure, and optimized for peak performance even after it’s launched.

SDaaS as a Strategy

Software Development as a Service offers businesses a strategic approach to software development, allowing them to focus on core competencies and drive innovation while also reducing costs. By partnering with a reliable SDaaS provider, businesses can access expert resources, streamline their development process, and achieve their software goals more efficiently. Whether you’re a startup with a tight budget or an established enterprise looking to scale its operations, embracing SDaaS can be a game-changer for your business growth in the digital era.

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