How to Minimize Your Risk When Hiring a Web Development Team

p>Update: If you aren't up to reading this post, I hosted a webinar about the same concept. Watch it instead!

I’ve said it before and I’ll say it again: The web development industry is a weird and confusing space to be a consumer.

Unlike other contractor/customer relationships, our work is often not tangible. When you hire a contractor to rebuild your roof or your kitchen, you can see and know exactly what is going on. If your car is repaired, but still makes a noise, you can hear it and know that a problem remains. But the old cliché of “what’s going on under the hood” takes on an entirely new meaning with web development. Much of our work is invisible—in the client’s mind, it might as well not exist because you can’t see, touch, or smell it.

But it is there, making projects come to fruition and function as you hoped they would.

What makes the web development industry so confusing to the consumer is the number of variables it takes to create a new project. For the most part, consumers have no idea what it is they are getting. Even worse, they have no idea what questions to ask. This lack of clarity has resulted in a variety of negatives for professionals in our business—too many projects fail due to development teams of lesser quality competing at the same level as seasoned agencies despite not having the requisite experience or quality of work.

This has been even more common in the last three or four years as the commoditization of digital production work has taken storm. With the advent of offshore resources competing with local agencies via platforms such as UpWork, it has driven the true professionals that are localized to niche into a variety of businesses to stay away from the risk of commoditization. This leaves generalist web design and development agencies struggling to prove their value to consumers who are comparing their hourly rates against those firms located in China or India, where manpower is plentiful and overhead is minimal.

But the localized agencies have one thing going for them: They can actually succeed at doing the work with much higher success rates than their offshore partners. They can actually consult with their prospects and provide ideas rather than just work based on inputs or being told what to do.

This is the key theory that you, the consumer or potential client, needs to understand. So I’ll make it bold:

As budget increases, risk decreases.

That’s why you talk to one agency who will charge you $50,000 for a project you can get done in Russia for $10,000. To make this point even clearer, I’ve assembled this quick chart that details the concept.

As you can tell, the spectrum of consultants and developers range from offshore developers—teams located in China, Brazil, Russia, India, etc.—to the expensive Madison Avenue agencies and then onwards to tightly focused, niched agencies.

As a quick summary, I want to explain how I define these groups:

Offshore

Any offshore development team will typically focus on doing as they are told rather than contributing original ideas or concepts. With this arrangement, you’ll seldom have access to senior staff.

Projects can take a long time due to difficult communication—either language gaps or time zone shifts can make project management difficult. The largest risk to be aware of is the chance that your project completely fails. Price can range anywhere from $15 to $40 per hour, depending on the country.

Freelancer

A freelancer is defined as an individual who takes on one or two projects at a time. In this matrix, we’re assuming an onshore resource. Communication can be reasonable depending on the individual. Your largest risk with a freelancer is reliability—typically freelancing is a second job, meaning they may not always be motivated to work on your project after work, or there is the chance they get a higher-paying gig along the way which distracts them.

Project lengths can be quick or slow, depending on the workload the individual has at the time. There is no senior staff involvement because there is only one staff member, and the experience level can vary, though we see most freelancers having just average experience since most quality, experienced freelancers are usually acquired to be full-time hires by their best clients. Pricing can vary from $25 to $50 an hour.

Small Agency

A small agency would be a group of 2 to 5 individuals who handle 3 or 4 projects simultaneously. Typically, at this scale, they are a new agency that is growing or recently established. They may not have the ability to fulfill all services and may rely on freelancers or offshore resources themselves.

Senior staff involvement is very likely, as each agency employee would be involved. Your largest risk in this scenario is that the agency doesn’t have enough resources to work on your project. This can lead to project deadlines being missed or avoided entirely. Pricing can range from $50 to $100 an hour, depending on location and overhead.

Mid-Sized/Boutique Agency

This would be defined as an agency of 5 to about 25 individuals. I make this split based on how the dynamics of an agency change at the 25-employee level. These agencies can facilitate many of their services in-house. They may have offshore resources assisting, but at this scale, they typically will have stable relationships and not bounce from freelancer to freelancer.

Hourly costs can run anywhere from $100 to $200 an hour, again depending on location and overhead. The largest risk with a mid-sized agency is usually around scope disagreements, which is where you may have a divergence of opinion about what is and isn’t part of your project (more on this in a bit).

Large Agency/Madison Avenue

This is defined as an agency with more than 25 employees, typically located in an urban zip code. Rates will typically eclipse $200 an hour for web development, design, and administration services. Senior staff will be hard to come by, except during the sales process.

Project timelines can be the longest here due to the amount of personnel included on each project. Also, plan to have your team change, as turnover is high at large agencies since employees often move from one agency to another. Your risk is the lowest, and the biggest risk is budget overruns as projects evolve.

Niched Agency

A niched agency can best be defined as an agency that specializes in either a particular industry or in a specific discipline. These agencies can vary greatly in size—an extremely tight-focused agency may only have 4 or 5 principals. Or if the need exists, they could have many more.

These agencies have the highest level of experience, with senior staff often spearheading or having personal involvement in projects. They will most likely be thought leaders in the space, and have a large amount of content they share, as the sales process is consultative in nature. Your biggest risk is being confused as to whether their focus fits your project or not. If it doesn’t, they may refuse to work with you.

To make this easy to understand, we’ve created a nifty chart for you to reference:

Web Development Risks & How To Avoid Them

Now that we’ve defined the biggest risks with each agency type, let’s dig a little bit into specific scenarios that can arise and how you can work to avoid them.

Avoiding Poor Work Product Quality

This is the largest risk factor, especially when working with developers on the low end of the budget scale. The worst outcome possible can result in a complete loss of the project and your money.

I’m going to be blunt about this point: Most projects that fall into the “complete failure” category do so because the customer didn’t know precisely what they wanted and failed to understand that freelancers or offshore agencies are only going to do what they are told.

Let me expand on that.

Offshore development teams are not product specialists. They don’t often provide feedback, criticism, or constructive ideas about how things should work or what would work best.

I find that this is due to two reasons. One is cultural. Many cultures around the world are not adept at pushing back or providing negative feedback. Secondly, the model for freelancers and offshore agencies is to rack up additional hours. They know that to do this, it’s easier to just do as they are told without question, accrue billable time, and if the project fails, they have an excuse available: “We did as we were told.”

Finally, offshore teams have almost zero understanding of our cultural phenomena. Relying on an offshore team to design your product, whether it be a complex application or a simple website, typically will not result in a cutting-edge experience, but rather an embarrassment for your company.

Not all the blame belongs to the development team, however. The client is at fault too, probably to a larger extent. The fixation on hiring the cheapest partner led them down this path. But ignorance as to what the experience would be like was the icing on the cake. Most clients who have never undertaken a project before simply don’t know what they don’t know. They fall into a trap of believing that they have a true partner, when really they just have an order taker.

So how do you avoid this?

First, accept that going down the path of a freelancer or offshore team means you will be taking on significant risk. There is a very high likelihood that your entire budget could go completely out the window. Acceptance of that fact will allow you to strategize possible avoidance techniques.

Secondly, understand clearly that these teams are not product managers or designers. You have to do that yourself. This means you need to have a sense of not only how you want the project to work from a user perspective, but also how it will work under the hood. We’ve seen so many projects be completed or nearly completed by offshore teams, only to be scuttled because they were built in such a shoddy manner.

By the way, the clients that we’ve seen in this situation aren’t just small businesses or start-ups, but major corporations as well. So don’t feel bad if you fell victim of this scenario—it happens all the time!

Finding a Reliable Partner

Another risk you may run into on the lower budget tier is reliability. This is a major issue with freelancers, but can also happen with other small agencies as well.

To summarize how we define reliability: Reliability is how available your resource is to handle your requests in a timely and professional manner. Because the nature of running a web development team is hectic and scattered at best, this is a challenge for smaller agencies and freelancers who don’t have overflow resources available or enough help on staff.

Freelancers pose the largest risk. Since they are usually an individual, any number of things can happen, posing a risk to your project. In the 16 years we’ve been in business, we’ve seen everything from a freelancer who was disabled in a tragic car accident, taking all of a project’s source code with him, to another individual who decided to spend 3 months in Thailand with only a week’s notice. These are true stories and trust me, I have a handful more!

Remember, the reason people become freelancers is because of the first four letters of the word: F-R-E-E! Freelancers are typically highly autonomous individuals who like the variability of work and opportunities. A freelancer will always take a new, exciting opportunity versus sticking with an old project. Furthermore, if there is ever a personality difference, they can easily drop you and leave you wondering what happened. And believe me, even if the freelancer is a “friend of a friend”—it will happen.

Small agencies have similar issues. An agency of 3 or 4 people may have an amazing opportunity arise and have to put your project on hold, or at least give it less attention. They may even outsource it themselves—another scenario we’ve seen play out with less than desirable results.

The bottom line is that whether your business is a coffee shop with a website or a complex online-based enterprise, your project will not only need to be completed, but also be serviced in the future. Freelancers and small agencies are not equipped to handle maintenance or ongoing support. And oftentimes, they have trouble with the initial project as well.

This risk can be mitigated by vetting properly, but not completely prevented. Unless you have 110% complete confidence in a freelancer or small agency, do a cost/benefit analysis and figure out what your future costs will be. This may be enough to justify increasing your budget and moving up the scale of web development teams.

Managing Scope Expectations & Budget Overruns

Scope disagreements and budget overruns…ugh! They are the worst. Agencies hate them as much as clients do. The last thing an agency wants to do is come back to a client and tell them that they underestimated the requirements of their project. Even worse is telling a client they didn’t understand the requirements at all!

Yet, unfortunately, this does happen all the time. And to be fair, it isn’t always the agency’s fault. The client could also overlook (or conceal) a necessary component of a project until the last minute, resulting in additional costs and time to complete.

Luckily, there is a solution for this dilemma, and it only involves a small commitment in terms of both time and financial resources. This miraculous process is referred to as discovery and architecture.

(At NPG, we require all new customers to undergo a discovery and architecture session. We’ve written many blog posts in the past about this concept, so feel free to browse our blog and have a look for yourself. )

In a nutshell, the purpose of discovery is to properly analyze your project and produce a written, comprehensive specification to which all parties agree. With that process completed, everyone can be in agreement as to what the deliverables will be and how they will be completed. This also can assure a set budget and a proper waterfall project.

Now, this is not to say you won’t come up with additional ideas in the future for new features and additions to your project. This is totally reasonable. But at least when that discussion arises, you will still have an original specification that you can use as a starting point to discuss either swapping features or what additional budget your new addition will require.

Agreements prevent disagreements, and a proper specification and architecture will allow you to have peace of mind that you and your vendor are on the same page. Much like a building can’t be built without blueprints, never commit to a project without knowing precisely what you are getting and how it will be built.

As a side note, it’s rare that a freelancer or small agency will even perform a discovery process. The resources that it takes to undergo this process usually mean it makes little sense for them to take on the risk of not getting the work. Agencies definitely will charge you for the process, but rarely make any significant profit on discovery. For this reason, expect smaller players to be uninterested in participating in such a process.

Finding a Partner Versus an Order-Taker

I alluded to this point above. The largest discrepancy between the low tier and the highest tier of our web development spectrum is the amount of actual constructive, valuable feedback you receive.

On the low end, offshore resources and freelancers are not in the business of giving you advice as to how to achieve goals and objectives. They simply take orders. The mid-tier agencies will start to bridge the gap towards being consultative, but you have to be careful while vetting agencies to find the right partner who will actually be helpful.

Larger agencies definitely provide you creativity and feedback, which is why you pay a premium. They have large teams and guarantee success. The best large agencies can actually create concepts for you based on top-level requirements you send their way.

Again, this is why you pay a premium.

On the niched agency side is where you will find the most positive impact in terms of assistance in developing your project. Niched agencies specialize in one particular industry or discipline. Provided you’ve found the right agency—which, in many cases, is easy as niched agencies are more likely to turn you away if the fit isn’t right—you can rest assured that you are in good hands and will have a partner capable of filling in the blanks for you.

So how do you know what you are going to get? The best indicator is the sales process itself!

On the low end, freelancers and offshore groups have almost no sales cycle. Send them your request and the answer is typically, “No problem.” They’ll start work almost immediately. A process with that little detail rarely leads to success.

On the mid-level, you have to evaluate what detail and depth they go into during the sales process. Are you talking to an owner or to a sales person? Are they echoing your requirements or offering constructive feedback from the very first conversation?

Even on the high level, where you are most surely going to deal with a business development or sales person, is that sales person being creative? Did they pull creative people such as designers or developers into your call? Was their pitch customized for you or off the shelf?

Finally, look at the niched agency and how they undergo their process. Niched agencies should have enough ammo to give you confidence before you even speak to them. Are they thought leaders? Do they have a clear vision and positioning statement? Have they created and shared valuable content with regards to their services? Finally, when you speak to them, is it a consultative conversation? And do they challenge you?

These are all key questions to ask when you speak to an expert. Remember, an expert will ask difficult questions and make you think. That is true collaboration—not just saying “yes” and “no problem” to every question or concern.

Be wary of anyone not recommending the discovery process, yet giving you a price after just one or two phone calls. You will never be sure what you are getting, but you can be sure they will try to do as little as possible to make the project meet your expectations.

Lowest Risk: Evaluating the Niched Agency

The lowest risk is always guaranteed by hiring the expert. Conceptually, this is true in almost any area where you need services provided. If you have a problem with your teeth, you see a dentist. And if you need a root canal, you see an endodontist—a specialist who only does root canals. The same exists with contractors, mechanics, and especially with digital services.

So how do you go about determining if a niched agency is right for you?

Typically, the niched agency is a believer in the consultative sales process. This means that their business development is centered around education as opposed to advertising. In the digital world, this is called “inbound” marketing, wherein you gain customers by attracting them with valuable content.

At NPG, we are dedicated to a consultative sales process that consists of educational resources available to our prospects, such as you reading this post. With that said, you can know by reading our materials if our services are right for you or not. Our positioning is clear and we support it with valuable content such as articles, blog posts, videos, and webinars, in addition to social media. All expert firms should have this level of information available. If they don’t, you can’t truly be sure they are an expert.

When debating reaching out to a niched agency, don’t be worried initially about budget, but do be honest about what your budget is. Niched agencies handle the same types of projects over and over. Despite being on the higher end of the budget scale, they can work faster than generalist agencies on projects because they are a bit more selective about the work they take to ensure the fit is right. So, a niched agency with an hourly rate of $200 or more can work on a project faster and more affordably than a small agency with an hourly rate of $75.

Also, a niched agency will take the time to not only properly perform a discovery process, but also to educate you along the way. The sales cycle is slower, more detailed, and always involves the principal. Niched agencies would rather sell 5 perfect fit projects per year versus 20 generalist projects.

Keep that in mind when evaluating different agencies—some are so hungry, they’ll say or do anything to win the business. The niched agency may actually push back and dissuade you if they sense the fit isn’t perfect.

Conclusion

Let me wrap this post up by telling you that you’ll never have zero percent risk. There are just too many variables within the digital world. Worst of all, unlike other professions, there are more tools and pathways for digital developers to take than you’d care to imagine. After all, there is only a few ways you can apply a roof or install a toilet.

Building digital solutions means there are thousands of options and scenarios that may exist as a methodology. Choosing the right partner can be frustrating and obviously introduce a high level of uncertainty.

It is up to you, the client, to minimize that risk as much as possible.

That means if you are evaluating small agencies or freelancers, thoroughly vet the resource and accept that you are entering into a risky proposition. If you are evaluating a mid-sized or large agency, protect your budgets by planning in advance. And when hiring the niched player, pay attention and learn during the sales process. These steps, combined with some common sense and ingenuity, will increase your chances of success during implementation and beyond.