Benefits Of Outsourcing Software Development: Agency-to-Agency Model

If you are a software agency looking to expand your operations and take your business to the next level, outsourcing to other agencies can be a game-changer. By partnering with an agency, you can benefit from their resources to scale your team, take on more projects, and improve your overall efficiency.

That's not all. Working with other agencies provides a valuable opportunity to learn from their experience and expertise and establish lasting connections that can benefit your company for years. This collaboration might open doors to fresh ideas, methods, and viewpoints that you have not previously explored. 

Based on our own experience of working with a dozen EU and US-based agencies, we will discuss the essential benefits of outsourcing software development: agency-to-agency model and how this partnership can propel your company to grow.

Increased Capacity

One of the major advantages of working with another outsourcing agency is the potential to increase capacity without increasing overhead expenditures. This means you won't have to worry about the additional costs of hiring more developers, such as office space, health insurance, and other benefits. Working with another agency means you have access to a tool of professionals only when you are in need.

This increased capacity might be a turning point, giving you an opportunity to scale the team and take on more challenging projects that you previously were not able to handle. So, by leveraging the experience and resources of the partner agency, you can expand your services and portfolio.

Keeping Up With The Demand

How many times have you received a request on a specific technology stack that you had to decline because you didn’t have the expertise in-house? As your agency continues to grow, it is natural to face projects that require expertise beyond your team's core competencies. However, partnering with another outsourcing development agency can help you bridge this gap and offer top-tier service to your clients.

For example, if your current or potential client needs something done on Laravel and your developers’ main stack is Node, instead of turning down the project or struggling to find a suitable developer, partnering with a Laravel development agency can be the perfect solution to deliver the best possible service to your clients fast and efficiently.

This approach not only allows you to take on more projects but also strengthens your company’s reputation as a one-stop shop for software development. By building collaborations with agencies that complement your strengths and fill in your knowledge gaps, you can offer a more extensive suite of services to your clients and establish your position as a go-to provider in the industry.

Avoid Spending Too Many Financial Resources

The biggest pain every agency owner knows all too well is bench management. The benefit of outsourcing software development: agency-to-agency model is that it helps solve that pressing financial issue. 

As an agency, it’s a common thing to run into a bench period, where a software engineer is hired but not assigned to any ongoing project. Let's say you have a senior Laravel developer working on a specific project. Once that project is finished, the developer is no longer billable, yet they remain on your company's payroll. This might result in a huge cost burden because you are paying their salary and benefits without any corresponding revenue. This can be a significant drain on your finances, especially if you're paying high salaries for senior developers.

One great solution to this problem is partnering with agencies for project-based work. By collaborating with them, you can bring in additional resources on an as-needed basis without the long-term commitment of hiring additional full-time staff. This approach can save you money on bench developers while it also lets you scale up or down fast with the changing project demands.

It’s worth mentioning that many companies try to tackle this challenge by hiring freelancers. However, the issue with hiring freelance software developers is that they may not always be available when you need them. Besides, finding a new one can be time-consuming and expensive due to the extensive screening and interview process.

So by collaborating with a partner agency, you gain access to a talent pool of developers with a wide range of expertise. This means that you can quickly find a developer with the right skills and start working on your project in just a week or two without overspending your time or money.

Boost The Project Margins

In some cases, agency-to-agency development outsourcing can come with the sweet added benefit of increased project margins. However, this depends on where your partner agency is located. If you are based in the EU or US, chances are very high that in some regions, there is a significant price arbitrage between the rates you pay for a certain seniority of staff and the rates they charge for a candidate with a similar background. Even though Southeast Asia has been a go-to destination for a while, in the last decade Eastern Europe has proved itself to be an excellent, cost-efficient option, closer in time zones. The IT sector in this region is booming, and one thing they won’t have in the nearest future is a shortage of professionals.

Plus, a lot of agencies in this region are already working with international clients, and their staff has worked with big enterprises, so you can be sure that the experience and communication compatibility is there. So while the price arbitrage is noticeable, it doesn’t happen at the cost of the quality of professionals and the work delivered.

Ultimately, the price arbitrage is translated into boosted project margins that generate more revenue over the long term.