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Outsourcing vs. In-house: Why do brands prefer outsourcing mobile app development?

September 30, 2016

An interview with Vivek Menon, VP of Sales & Marketing at July Rapid.

When you download a mobile app from your favorite brands, you’d likely assume it was that company’s internal team that built it. They all have ample internal resources to work with, including robust engineering teams. They have the money to pay for top-tier talent and hire more as needed.

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Still, some of the best brands rely on mobile development companies to build their portfolio apps. But why? Though they may not be strapped for cash, wouldn’t it be a better business investment to leverage their existing internal resources?

We spoke with Vivek Menon, the VP of Sales and Marketing at July Rapid, to shed some light on the business case for major brands outsourcing their mobile experiences. He breaks this down by the 3 types of companies who generally do so:

1. Top non-tech brands

2. Major tech companies

3. Emerging startups

Depending on which category they fall into, there are strong business reasons to outsource this effort.

On large, non-technology companies:

Vivek Menon: The DNA of the brand you’re referring to is important — if you’re a non-tech brand, and let’s say you’re a sports company, media company, or entertainment company, what that means is that those things (sports, media, entertainment) are your core — not technology.

And we’re living in the digital age. It’s impossible for the technology arm of a non-technology company to keep up with the pace of tech innovation. What began as a simple browser-based experience has eventually moved into core native app experience and then expanded into Omni-channel experiences that now have integrations with very core back-end systems and APIs that come in from multiple backend platforms. And that’s only as of now. It all changes so quickly.

This is where you’ve seen the evolution of software as a service — big companies likely go to something like a Salesforce for their CRM systems. Salesforce offers their customers the value of not having to buy the platform, but license it instead, and customize it to their needs. So when you look at how technology has evolved in a space like CRM systems, what you then realize is that there are specialists in the market who are the best at doing what they do. However hard a retailer or sports company might try, if they want to build the best mobile experiences, they need to build the best technology team at the organization. So, to constantly able to walk the talk on the technology side of things, they need the speed of a studio that can quickly ideate and let them know the best practices that are happening within the technology space. That can only be done properly by those who are living and breathing it on a daily basis.

On large companies that are technology focused:

Vivek Menon: Even many of the largest tech companies are not mobile-first. Their focus is on the specific products or services they have at the organization. Take Oracle. They’re a database company — they build their business for storage, for database-related work. When it comes to mobile, there are going to be product extensions, and to create that story they need partners.

Generally, because things change so quickly with mobile and companies operate on ambitious timelines with their existing goals, they’ll be in a time crunch to execute on a particular mobile experience. Sure, they have mobile teams, but those are already working on 10 other things for the business and it’s often just easier to find a mobile studio that understands front-end UI to get them this experience faster. Once whatever it is has been developed, often it makes sense to build their teams internally to take it from there. Mobile studios don’t play to become the CTO arm for these sorts of companies forever, but they accelerate the speed with which these major technology companies can offer mobile experiences to their customers.

On emerging tech companies:

Vivek Menon: These are a totally different beast. They’re cool, they’re new, they’re young — and they don’t need the consultative experience that non-tech brands need since they are out there to disrupt and change the status-quo. And if they’re mobile-first, they’re looking for team extensions. They’re not looking for studios to build the entire thing and manage it, but instead to help them in a resource crunch.

If they’re not mobile-first, they’re generally looking for front-end UI help. They already have a core team focused on building the web product, and realize it doesn’t make sense for them to focus on mobile because they’ll only be doing it once. They outsource it to create the simple iPhone and Android app, and don’t touch the backend.

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And regardless of company type, it makes sense cost-wise too — as of this writing, Indeed.com reports that the average cost for a single mobile application developer in San Francisco is $138,000. And that’s just the salary — recruiter fees, travel expenses, relocation costs, job advertisements, sign-on bonuses, visa sponsorships, and the cost of the time teams already invest in finding the right fit are also expenses that need to be factored in with every single hire (a 2015 report from Glassdoor Economic Research indicates that the average interview process now takes 23 days.) Teams are also dynamic with many moving parts, and mobile app studios like July Rapid have already built up such scalable teams for their needs. So when it comes to mobile, app studios give companies a peace of mind so that the companies can focus on what it is they do best.

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vivek
Vivek Menon is the VP of Sales and Marketing at July Rapid, an app studio headquartered in Burlingame, CA. July Rapid has built over 1,000 apps with customers that include the NFL, CNN, ESPN, and CBS.