The giants like Apple, Netflix, and Meta have slowed recruiting down; some are massively laying people off. You can feel the downturn in the air. Inflation is rising, everything is getting more expensive. Covid-19 did its thing, and then the war in Ukraine came on top of that. The average crisis cycle takes around 10 years. The last one was in 2008, the one before in 2001, which suggests we all must prepare for more challenging times.
This post won’t describe the definition of recession or economic cycle. You can read all about the reasons for recession in the Sequoia Report. Instead, you’ll find here tips on how to prepare for a crisis. When a problem occurs, we need to refocus, arrange priorities and calculate risks. Nowadays, everything is essential. You need to be vigilant of every front. So how do you exactly reduce risks and costs in software development?
What is the perfect billing model in a time of crisis? T&M vs. Fixed Price
The crisis is not about surviving. It is an actual opportunity to grow 5 -10x faster than others. What will help you achieve that? Flexible manipulation of costs, putting money where it is most needed and cutting where it is needed less.
In a nutshell, Fixed Price applies to projects with requirements defined upfront, which do not change in the process. The client agrees with the contractor on the project cost and date of completion. The contract regulates all the changes and adjustments, which are usually added after the completion date.
In reality, software development involves a lot of changes, and it’s super hard to estimate that final timing. This is where the T&M system steps in. It enables to estimate all the project details in the process. In T&M mode, the client can participate in the most significant meetings at every stage of product development. They can make comments and introduce changes. Of course, everything is agreed upon and estimated on the go, but the client’s approval is needed for each additional cost.
Which mode is safer for the client in recession? Consider the scenario in which the scope needs to be reduced or the project needs to be stopped because of incorrect initial assumptions. The T&M system is safer as it means outsourcing, or “renting” the team. In short, it pays for the team’s time and consumed materials (e.g. servers, tools, etc.). Outsourcing means the team can grow or downsize depending on the client’s needs. It is much more flexible in terms of the development pace and cost!
Outsourcing as an effective cost-cutting tool
In a crisis, we are often forced to cease operations, which means being able to cut costs in 30 days. The modern mode of project execution comes here in handy. When you send an inquiry to Codigee, we inform you about the actions you need to take. It’s up to you to what extent you use our services. You decide whether you need the whole team or just a part of it. Let’s take a look how it works.
Let’s assume you need to create an app for your e-commerce. You’d need a product owner, a project manager, a tester, two backend and one frontend developer. You handle product management, project management, and testing on your side. That’s where we come in with our team of developers. Month to month, you can decide how big you need the team to be. When outsourcing with Codigee, the team size is fully flexible!
Outsourcing vs. hiring, how much does it cost?
|Additional costs (days off, taxes, insurance, benefits)||provided by Codigee||On your side, on average it’s about +20% to the salary|
(Macbook, monitor, adapters, mice)
|provided by Codigee||Once every two years, ~$5000|
|Motivation, professional development||You just need to take care of the motivation from the project side. We provide competence development and good atmosphere in the team.||You take care of their professional development, general motivation.|
|Notice/termination||30 days, via the Codigee representative||The dismissal conversation and the whole emotional burden of it is on you.|
|Recruitment, team expansion||All the recruiting and competence checking is handled on our side. As simple as that.||Recruiting a good dev can be a torture for beginners. Recruiting companies take ~10% of dev’s annual salary, it can eat up a whole budget. If you want to hire someone on your own, you need to think about the cost and time contribution. And how will you check their technical competence?|
|Conflict management||What if you don’t get along? Report it to us, we’ll sort it out, or find another person.||Feedback conversations take up whole lotta of time. |
Need to fire someone after all? Recruitment starts all over again.
|Actual cost||Fixed cost to predict, ~$9600 monthly.||The actual cost is hard to predict. About $5800 monthly for development, plus recruitment costs of about $5000 per employee, arranging equipment – another $5000. Not to mention all the other benefits and energy spent on keeping employees in and performing.|
When outsourcing, you also have the support of founders and other experts from the software house. You may not see it at first glance, but we sit together in the office! We can easily talk about our challenges and solve issues in joint effort. And we use Slack!
Recession is here – why work with Flutter?
If you need a mobile app, Flutter is the cheapest and most effective option. Read our articles and compare:
And what about native apps? Is Flutter better? We’ve already observed a trend where customers, who come for native technologies, often don’t know about the existence of Flutter. So when we or our partners from the other software houses introduce them to this environment – a decision to switch to Flutter is made quickly. The developers themselves, who started programming in Dart (the language that supports Flutter), don’t want to return to their native languages. In short, it’s a win-win situation for the customer and for the developers.
Why do clients choose Flutter?
- It’s cheaper.
- The product is built faster.
- It’s easier to find a developer (and popularity continues to grow).
- It is more reliable (it works the same regardless of the system version).
- It has cheaper maintenance.
We will clarify more explicitly it with new articles. Stay tuned.
If you don’t know how to hire or organize a development team and don’t have experience with software development then working with a software house can be much cheaper than creating an in-house team. Secondly, we have recession times, so it’s much safer to have the possibility to immediately reduce/extend costs. Furthermore, you avoid unnecessary thoughts about problems and exhaustive layoffs.
Do you want to discuss the recession and IT solutions?
Let’s talk, feel free to book a meeting.