Having software developed in India or elsewhere in Asia: a practical guide for SMEs

Why SMEs look to India and Asia

Finding good developers in the Netherlands is slow and expensive, and many SMEs do not have enough work for a permanent team. India has one of the largest pools of software engineers in the world, a long track record with European and American clients and widespread business English. Vietnam has built a strong software and testing sector, and the Philippines is popular for support and back-office work alongside development.

For an SME, the real attraction is usually not only price. It is getting a complete, experienced team in weeks instead of months.

What does it really cost?

Rates in Asia are generally much lower than Dutch rates, but comparing hourly rates is misleading. The total cost of a project includes:

• Specification: the time you spend explaining what you need. Vague requirements are the biggest cost driver.
• Management: reviews, questions and coordination across time zones.
• Rework: fixing what was misunderstood.
• Risk: what it costs you if the project stalls or you have to switch suppliers.

Fixed prices per milestone make costs predictable and put the risk of estimating with the supplier, where it belongs.

India, Vietnam or the Philippines?

India’s time difference leaves a comfortable overlap of several hours in the Dutch morning. In practice the right team matters more than the country.

Three working models

Fixed-price project

Best for a clearly defined result, such as a customer portal or an integration between two systems. You agree on scope, milestones and price upfront.

Dedicated team

A steady team works for you month after month. Suitable for ongoing product development. You manage priorities; the supplier handles staffing.

Staff augmentation

Individual developers join your own team. Only works if you already have someone who leads development.

Six common pitfalls

1. No acceptance criteria. “Build an app” is not a specification. Define per milestone what “done” means.
2. Paying upfront. Pay per accepted milestone, preferably via escrow.
3. IP not transferred. Under Dutch law, copyright only transfers by a written deed. Arrange it in the contract.
4. No access to the code. Insist that code lives in your own repository from day one.
5. Single point of failure. One developer who knows everything is a risk. Ask for documentation and a team.
6. Silence instead of questions. Build in short, regular check-ins so problems surface early.

A step-by-step plan

1. Describe the business problem first, not the technical solution.
2. Shortlist 2–3 teams with relevant references, preferably from European clients.
3. Talk to them by video and ask how they would approach your problem.
4. Start with a paid pilot of 2–4 weeks with a clear deliverable.
5. Evaluate: quality, communication, initiative.
6. Continue in fixed milestones, with acceptance before each payment.
7. Arrange IP, source code, data protection and exit in the contract from the start.

Do it with a Dutch contract

Contracting a supplier in Asia directly means foreign-law risk and limited options if things go wrong. Read our guide on outsourcing under Dutch law. With Needspan you sign with our Dutch company, your payment is staged per milestone and a local consultant keeps the project on track.