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A Closer Look at the State of Software Development Companies in 2021 and Beyondby@techreviewer
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A Closer Look at the State of Software Development Companies in 2021 and Beyond

by TechreviewerApril 24th, 2022
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At the end of 2021, Techreviewer has compiled data from several software development companies about the market state, results of 2021, and their plans for 202w

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Techreviewer.co is an analytics hub sharing top software companies’ rankings and reviews. At the end of 2021, our team has made quick research on the software development companies about the market state, results of 2021, and their plans for 2022.

The overall number of companies that participated in the research is 100+.

Participants’ Overview

Companies Size

Companies Size


Most of the companies are eithersmall (32.86%) or medium (35.71%) agencies with up to 100 employees.

Companies Headquarters

Companies Headquarters


**38.6%**of all companies have just one office.

The companies are headquartered in different countries including the following ones:
62.4% of companies have business development offices in other countries mainly in the USA, UK, Canada, and development centers in India, Ukraine, Belarus, Russia, Poland.


Specialization

Specialization


Only **11.43%**of the companies don’t define any specialization in their activities. **35.71%**define their specialization in everything.

**40%**of the respondents define their specialization in the field of technologies.

Much fewer companies define their specialization based only on domains or business types they work with (2.86% and 8.57% correspondingly).  About 16% of companies use a mix of parameters to define their specialization.

Core Tech Stack

Core Tech Stack


As mentioned above, many companies define their specialization based on the technologies they use. Here is the overview of the core tech stack of the respondents.

Services Provided

Services Provided


Most of the companies provide full-cycle development services covering basic needs and requirements.

The most popular services provided are web development (83%), custom software development (80%), mobile development (73%), design (67%), and QA (64%).

The trending services in the fields of AI/ML (Development, Consulting) and Cloud (Services, Migration, Consulting) are provided by less than 10% of the companies.

Solutions Developed

Solutions Developed


The most popular types of solutions IT companies make are eCommerce (70%), SaaS (67%), Business and Enterprise software (64/63%), and Startups MVPs (61%).

English Knowledge

Most of the IT companies have their development centers in India, Ukraine, Belarus, Russia, and Poland. The communication with the clients is done in English. Consequently, the level of English knowledge is becoming crucial for delivering the projects.

Usually, the level of English of managers who are the key contacts to the clients is much higher than that of the developers.

C1 level (40%) is the most common level of managers while 57% of engineers have B1-B2 levels.

English level of Engineers

English Level of Managers

Certifications

Only 40% of the participants mentioned that they have tech certifications. The most common ones are the following:

Certifications

Other certifications mentioned:

  • Web Analytics Certifications
  • Magento Certifications
  • Cisco Certifications
  • Aruba Certifications
  • Cybersecurity Certifications (CCSP, CEH, LTP, etc)
  • Healthcare Certifications (CHP, CHPSE, CPHIMS, CPC, etc)

Work with Partners and Subcontractors

Work with Partners and Subcontractors


Almost 60% of the companies work as subcontractors of other IT companies.

20 of the companies address freelancers if they need any additional help with the projects.

Preferable Cooperation Model

Preferable Cooperation Model


Dedicated team and Time and Materials Models are the most preferable ones for IT companies. Only 16.4% of the companies prefer working on the Fixed Price model.

Sales & Marketing Overview

Hourly Rates

Currently, most of the IT companies charge from 30 to 60$/hour - 58.6%.**15.7%**charge less - from 10 to 30 $/hour.

Most small and mid-sized IT companies charge up to 60$/h. Only **18%**of such companies charge more than 60$/h.

IT companies sized more than 100 employees have higher development rates - 46% of companies charge more than 60$/h (vs 18% of small and mid-sized companies).

Average sale rate per hour

Hourly Rates of Companies Sized 10-100

Hourly Rates of Companies Sized 10-100

Hourly Rates of Companies Sized 100+

Hourly Rates of Companies Sized 100+

Minimum Project Size

Minimum Project Size


Most IT companies are ready to start working on projects of 10-20K USD size. However, the companies sized 100+ employees are more inclined to 20-30K USD sized projects.

Minimum Project Size of Companies Sized 10-100

Minimum Project Size of Companies Sized 10-100

Minimum Project Size of Companies Sized 100+

Minimum Project Size of Companies Sized 100+

LTV

LTV


Even though a starting project check of the projects is 20-30K USD, the LTV of most projects is from 30K to 100K USD which is at least twice as bigger as the initial check.

Lead generation channels in 2021

Lead generation channels in 2021


The most popular lead and project generation channels in 2021 were Network, Clients’ references, Direct Sales, and reputation management websites.

Why Clients Choose

Why Clients Choose


2021 Achievements & Changes

Company Size

Company Size


The high demand for software development services resulted in companies' growth in 2021.

55.7% of the companies have faced the size change in 10-30% and 21.7% - up to 50%. 4.3% of the companies managed to almost double their size.

Only about 8% of the companies either remained the same in size or decreased.

Bigger companies managed to grow more - up to 50%

10-30% Growth Rate Companies

These are mostly companies of 10-49 and 50-99 sizes.

10-30% Growth Rate Companies

30-50% Growth Rate Companies

30-50% Growth Rate Companies

50-100% Growth Rate Companies

50-100% Growth Rate Companies

Rates Сhange in 2021

Rates Сhange in 2021


2021 was a year of very high demand for IT services that resulted in at least 10-25% rate growth. Only 20% of the companies remained the rates the same as in 2020.

Rates Change of Companies Sized 10-100

Rates Change of Companies Sized 10-100

Rates change of Companies Sized 100+

Rates change of Companies Sized 100+

Plans for 2022

New Markets Entrances

New Markets Entrances

Most of the companies plan to expand their services to the EU, the UK, the USA, and Canada regions.

33% of all companies plan to enter Scandinavian markets as well as Asian ones (50% of companies sized 100+ employees named this region as a priority for 2022).

New markets of Companies Sized 10-100

New markets of Companies Sized 10-100

New markets of Companies Sized 100+

New markets of Companies Sized 100+

Hourly Rates Growth Plans for 2022

Hourly Rates Growth Plans for 2022


Even though IT companies increased their rates in 2021, 70% of companies plan to continue rates increase in 2022.

However, these are mostly small and mid-sized companies. 41% of the 100+ employees companies plan to remain the rates the same vs 24% of 10-100 sized companies.

The most expected increase will be in the range of 10-25%.

Hourly Rates Growth Plan of Companies Sized 10-100

Hourly Rates Growth Plan of Companies Sized 10-100

Rates Growth Plan of Companies Sized 100+

Rates Growth Plan of Companies Sized 100+

Tech Stack Changes

Tech Stack Changes


Most of the companies don’t plan to change or expand their tech stack - almost 46%.

The most popular “candidates” are Python (10%), GoLand (8.57%) and Vue.js (8.57%)

Tech Stack Changes Plans of Companies Sized 10-100

Tech Stack Changes Plans of Companies Sized 10-100

Tech stack Changes Plans of Companies Sized 100+

Tech stack Changes Plans of Companies Sized 100+

Key Marketing Challenges

Key Marketing Challenges


Based on the research, IT companies foresee the following sales and marketing challenges in 2022.

In Conclusion

In conclusion, we won’t make any general references to the state of the IT market in 2022 or make any predictions about the future. There are many reliable pieces of research you can find from Accelerance, Statista, etc.

We would like to gather several interesting insights from our research that can be discussed, considered, and used in your business.

Top insights to think about:

  • Most IT companies have started to define their specialization, but only 10% of the companies specialize in the types of solutions they make or business domains they work with. What is your specialization? How is your team different from the competitors?
  • Most of the companies provide basic IT services with the most popular technologies on the market and only a few of them are planning either to add new emerging services or technologies into their portfolio. Will your business benefit from adding emerging technology or product?
  • There is a big gap in English knowledge between managers and engineers while the most preferable cooperation model is a dedicated team where the involvement of managers can be limited. What are you doing to improve your team's English level?
  • LTV is usually at least twice as big as an initial closure amount. What’s the difference between your deal closure and LTV? Do you upsell well?
  • Clients’ references and networks are the most popular way of getting new projects. However, new lead generation channels search is the biggest challenge for 2022. What new lead generation channels will you test in 2022?
  • In 2022 companies will continue increasing rates. What will be your strategy here? Will clients demand additional services for paying more?
  • Asian and Scandinavian markets are becoming a priority for big companies to enter in 2022. What’s your regional strategy?

Are there any other insights you found valuable from this research? Need any additional information?


Let us know via email[email protected] and we will add these details into our future research.


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