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May 26, 2022
June 14, 2021

How to differentiate your software development company?

We regularly work with outsourcing companies that would like to get more revenue. For example, last year, we touched base with about 500 companies and reviewed the web pages of probably another 500 worldwide.

When we get more serious in the negotiations, we ask the first question: how are you different from any other company on Earth? Here are the answers we heard from every single company. Literally ALL companies. Maybe not every characteristic applies to everyone, but in some combination, we always see these factors being used to differentiate.

1. We are cheaper

Okay, you got me. This doesn't apply to everyone. A lot of companies fall back on this as a last resort. They know it rarely works, and when it does, you end up with a client you don't want to work with. 'Nuff said.

2. We work harder

That's probably on the top of the list. This phrase can come in different versions: we work long hours, we work on weekends if need be, we work more effectively. Meaning you get more delivered during an 8-hour workday than others.
The problem is almost everyone claims this. I have multiple angles to this statement.

  1. You can't deliver quality code if you work 10-12 hours a day. At least not for months. Maybe for a few weeks, but not constantly.
  2. There is always someone that will work harder or say that they work harder. This is not about stereotypes, but you can call any developer company in India at any time. Or just check the Chinese labor code for the weekly work allowance.

I know of developers that work 18 hours a day. Can you work that hard? Would you want to work that hard? I don't think that should be your competitive advantage.

3. We are a 5-star company on Clutch.

Ample proof that you provide quality work. But it's nothing outstanding. As of now, there are 125+ pages on Clutch listing 5-star companies (with scores higher or equal to 4.7). In the software development category alone. That is more than 3 750 companies.

If that wouldn't be enough, let me tell you something. The companies you want to work with do not even know that Clutch exists. As you know, we work with innovators on both sides. We understand what enterprises and digital transformation specialists at these companies see from the world.

They have no idea of Clutch. Even if they knew of Clutch, how would they select the best fit from over 3 750 companies? How would you? Why would you? Just the selection process is more time and effort than the project that needs to get done.

4. We are from ... (country)

Everyone is a patriot and knows why hiring a developer from that specific country is the best option. Some of these stereotypes have truth to them. You can find great developers anywhere, just like you can have great friends from any country. Based on the culture you come from, you will have different positive and negative traits you will bring to the cooperation.

Besides that, the world is divided into just a few countries by your clients. Europe (Germany and everything that is west of it), the rest of Europe, Asia, the Middle East, Africa, China, Australia (it's so far from everything that people remember it), maybe the UK, US, and South America. That's it. You might even face the following simplification in some particular cases: the US & the rest of the world. If you are lucky, they have no idea where you are located. It's rarely a good sign if they know, especially if you are from a small country.

5. We understand your business problems.

We see many companies capable of delivering great software with the additional benefit of helping the client figure out what would be the best solution. Unfortunately, you seldom meet these people, as their time is most likely considered more valuable than yours. You will have a project manager or a project manager from the principal contractor, and that's it. The rest is up to you to figure out.

Not to mention that this is hard to judge. Try to put on their shoes. Every second company tells this. And probably every company on the shortlist belongs to this category.

6. We are a small / medium / large / young / fastest growing / expert team / whatever

Yeah, we know. And again, this is not to say you are not. It's just not a differentiator. It's a nice feature, but without context, it doesn't add much to the conversation. I know why we work with startups: I can always reach the CEO, and our voice matters (shout out to, and Rene! We love you guys!). I never had a conversation where this was a factor.

7. Our quality is better than …

Again, how should I, as a potential client, judge this? By your referrals? By Clutch? If this even comes up, you are facing problems. The best clients don't take such statements at face value but decide that the shortlisted companies make one or two sprints together with their project team. This way, they can see the cooperation, commitment, interoperability in the processes, and during the code review, they understand the quality. And beyond that, those two sprints are also a great way to see if cultural fit and language barriers are a problem.

Some companies even use these sprints to stress test potential suppliers. But, again, this trend is just taking up; most companies don't care, and it’s not a differentiating factor.

8. We are in the "XY" novel technology space

VR, AR, Blockchain, Machine Learning. Unless you coded in space, like on the International Space Station, it's probably not something very unique. Even if your expertise is unique, it's not a solution to a problem. Companies pay other companies to solve problems. Not because of fancy technology buzzwords. Just look at how long it took VR and MR to find the space where it is useful. Or how machine learning and big data became a commodity. Companies are hoarding data as if it was gold just to figure out they can't use it for anything, and the investment to analyze data is probably more than the potential benefit, so they stick with hoarding. Companies looking for a unique skill set are not looking for problem solvers; they are looking for skilled resources. So again, you will end up as a subcontractor.

9. We are not an outsourcing company, but delivering solutions - being a subcontractor

Oh really? Do tell! Who do you work with? Ahh, you are subcontracting? Do you ever get in touch with the actual client? Do you know who the real decision-maker was? Or the size of the budget? Or why they started the project in the first place? Or are you in daily contact with the actual users of your development project? Are you doing end-to-end projects, including UX and stakeholder management?

If not, how do you deliver a solution to the people you don't know, to the problem you don't know. In all honesty, a principal contractor will most likely tell you what to do, or not even you, your people. So you are selling developer days and not solutions.

Interestingly, the next step out of selling developer days is to deliver solutions, as you can read in our blog post here.

Adding salt to the wound, you cannot use the references, which will hurt your ability to score great deals more often than not. Of course, references in themselves are not differentiators, but building trust in an industry without references is quite challenging.

It's been a long and probably painful read if you are running a software company. In the next blog post, we will reveal our best practices and recommendations on how you can and should differentiate your company from the competition

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