Tech world14 min read

What is a Software House? - profile photo

Gareth Smith

Head of Sales

What is a Software House?

The term “software house” was coined for software development companies to distinguish such companies in the IT landscape developing software and hardware products. Fast forward sixty years later and we still use the same term. However, the world-class, reputable software houses of today can be distinguished by their truly consultative nature and digital transformation expertise including mobile app development or web development. For this reason it is critical for companies involved in digital product development to understand that not all software houses are built equally. Read on if you don’t want your next digital product development to be a failure.

A brief history of the Software House

From the 1960s and 1970s, the term “software house” became a way to describe companies that exclusively or primarily engaged in software development. These companies would create a wide range of software products, including operating systems, application software, and utilities for various computer systems. While other terms like custom software development company or digital product agency have appeared, the term software house is still used today and reflects the early days of software development and the separation of software and hardware in the computing industry. However, as technology advanced and the demand for specialized expertise grew, dedicated software houses emerged as pivotal players, offering a diverse range of services beyond the capacity of individual enterprises. This evolution marked the birth of software houses as collaborative hubs of innovation, shaping the digital landscape we navigate today.

Different types of software companies

These varied types of software companies with software solutions collectively shape the contemporary digital landscape, each offering a distinct array of solutions to cater to the diverse needs of the market. Software product companies develop products for individual or corporate utilisation, software services companies bring expertise in understanding specific business, user and technology requirements and creating customised digital products like web apps and mobile apps which integrate with existing systems, and cloud-based software companies deliver accessible and scalable cloud services crucial for businesses navigating the digital era. Together, they form an integral part of the infrastructure supporting businesses in leveraging the advantages of the digital world

Software Product Companies

A product-based company often develops business software or consumer software as a service, i.e. Software-as-a-Service (SaaS). Product based companies use custom software development to deliver software applications to users over the internet on a subscription basis. Unlike traditional software products, they try to reach more customers by providing individual customers with applications that are purchased and installed on individual computers or servers. SaaS companies provide a range of services and applications, from business and productivity tools to specialised software for various industries. The single license software or subscription model allows users to access the latest features and updates seamlessly, without the need for manual installations or maintenance.

Software Services Companies (Software House)

A software house, often referred to as a software service company or software development company, is an entity that specialises in providing custom software development including mobile app development and web development using dedicated development teams. Unlike product-based companies that primarily focus on distributing software products and selling standalone software, a software house is more service-oriented. Depending on their professional approach, a software house offers a diverse set of services, including custom software development, system integration, application maintenance, consulting, and other software-related services tailored to meet the specific needs of the client. These managed services are so called because a project manager will often take responsibility of the application development from start to finish.

Outsourcing Companies

While software houses also provide experienced software developers to close the skill gaps under a staff augmentation model outsourcing companies specialise in IT professionals to augment a client’s existing in-house team. In this model, the outsourcing company acts as a talent extension, allowing clients to scale their workforce without the complexities of hiring full-time employees. Under staff augmentation, the outsourcing company identifies, recruits, and manages developers based on the client’s specific skill requirements and project needs. The client retains control over project management, while the outsourcing company handles administrative aspects such as payroll and benefits for the augmented staff. This model offers flexibility, efficiency, and cost-effectiveness, as clients can access specialized skills on-demand without the long-term commitments associated with traditional hiring processes. Depending on the company’s policies, they sometimes act as a staffing agency.

The essentials of a reputable software house

The number of software houses on the market is staggering and can be a little overwhelming for companies looking to outsource their digital product design and development. However, if you know what to look for, it will help decide if outsourcing your project to an experienced software house makes sense or not. Here are 6 things to look for in modern software houses.

1. Understanding of business requirements

For a large enterprise, the investment into a digital product can be costly and affect existing, well-established processes, and getting it wrong can be disastrous. It is important that a software house understands your business objectives and applies various business analysis techniques to identify the business goals and turn them into tangible development tasks. 

2. Prioritising User Experience

The first step in traditional product design involved identifying a market opportunity. Modern “design-thinking” suggests identifying end users’ pain points that can be solved. A reputable software house will use a hybrid version of both and ensure that the user experience is able to satisfy the business objective.

3. Emphasising quality

High-quality code in software development is essential to delivering a great experience to your end users. It is necessary to work with a software development firm (or software house) that has a robust and consistent quality assurance process and holds itself accountable to using best practices. As part of providing custom software solutions, ensuring documentation is comprehensive and up-to-date is critical in extending the lifetime of your custom software.

4. Agile management system

Agile software development using frameworks like Scrum has become the norm in the software development lifecycle for good reason. The collaboration and flexibility required between the software development agency and the client throughout the development process allow priorities to change which is achieved by an agile approach. It is important to regularly align what the highest business value will be during each “sprint” which is facilitated through sprint planning sessions, daily standups and demo sessions. When everyone is focused on the highest priority at all times, you can be assured your software development budget is being allocated in the best possible way.

5. End-to-end service

A reputable software house will not only have software engineers with vast commercial experience and know-how, they will have all the support roles to make a web app or mobile app project a success. From the beginning this includes business analysts, product design experts and architects that can translate your business needs into development tasks; UX/UI designers who can take those requirements and prototype your product in pixel-perfect mockups representing your brand’s tone and reflect the functionality that meets your business goals; DevOps, QA Engineers, Project Managers, Scrum Masters, Analysts, Architects to support the development process and a well-defined way of support your product when it is released. 

6. Transparency

Not only is it important to have multiple, clear channels of communication through each stage of your project, it is vital that there is open and honest communication at all stages of development with your software house. The team you work with must be willing and able to make suggestions and find solutions if there is a better way for an outcome to be achieved. Do not fall into the trap of hiring a team that “does what they are told.” Transparent collaboration is the key to successful software development.

What services does a modern software house provide?

Navigating the complex landscape of digital transformation and custom software development necessitates the expertise of a software house with experienced software developers capable of understanding diverse business requirements. A reputable software house offers a range of services, covering the entire software development lifecycle.

Product Discovery

Identifying a hole in the market or a significant business opportunity requiring a custom piece of software is usually the starting point of most product ideation. However, the danger of not aligning that opportunity with solving the actual pain points of the end user could be a very costly mistake. A reputable software house will place importance on business analysis to understand the business, user and technology requirements. They will understand each customer profile, identify different value propositions, challenge proposed business models, benchmark other products in the market with a goal of ensuring good product-solution fit to maximise the potential success of bringing a new digital product to the market and identify the best distribution strategy. 

UX/UI Design

Turning the into business requirements and then into a functioning digital product requires expertise in understanding business problems, user flows which will be intuitive to the end user. This includes creating the user flows, information architecture and wireframes, then creating a design system, pixel-perfect mockups and a prototype of what is to be developed. This service is critical in the development process for both web development and mobile app development projects especially if the goal is to increase engagement of your end user.

Mobile App Development

Mobile app development encompasses both native and cross-platform approaches. Native app development involves creating applications for a specific operating system using the native programming languages (Swift or Objective-C for iOS, and Java or Kotlin for Android). On the other hand, cross-platform development utilises frameworks like Flutter or React Native to build apps that can run on multiple platforms, streamlining development efforts and potentially reducing time and costs.

Web App Development

Similar to mobile app development, web app development embraces diverse approaches to meet user requirements. Developers use technologies like Vue.js, React and Angular to create feature-rich and responsive web applications. Currently, Vue.js is appreciated for its simplicity and empowers the creation of dynamic user interfaces in the development of large-scale web applications. Progressive Web Apps (PWAs) add a layer of sophistication, offering offline functionality and an enhanced user experience. Most application need a web-available admin panel which is also part of web app development 

Backend Development

Back-end development is a critical aspect of mobile and web app digital products, where technologies like Node.js, PHP or Django manage server-side operations, handling data processing and business logic. RESTful APIs play a pivotal role in establishing seamless communication between the front and back ends, enabling efficient data exchange. These back-end technologies facilitate the storage, retrieval, and manipulation of data, ensuring that the application functions seamlessly and delivers a cohesive experience to users. Additionally, they contribute to the scalability and responsiveness of web applications, providing a robust foundation for the dynamic and interactive features that users expect.


Integrations are essential for modern mobile and web applications connecting seamlessly with diverse tools like cloud services, payment gateways, CRMs and other third-party tools. The ability to integrate with cutting-edge technologies, including ChatGPT and other NLP tools, enhances applications with advanced language processing capabilities. Sometimes expertise is required to use out-of-the-box solutions to achieve key features of the product. This ensures a well-connected and technologically sophisticated software ecosystem, meeting the diverse needs of users and businesses.

Quality Assurance 

QA engineers play a critical role in the testing processes of software engineering and are paramount to ensure the reliability and functionality of software applications. They systematically assess software performance, identify potential bugs, and validate that all components operate seamlessly. Beyond traditional testing methodologies, our QA engineering services embrace automation tools and frameworks to expedite the testing process and enhance overall efficiency. With a keen eye for detail, our QA engineers rigorously verify that software meets quality standards, providing clients with assurance that their applications are robust, reliable, have quality code and is ready for deployment.

Other essential support

In the software development lifecycle, support roles like Project Managers (or Scrum Masters), System Analysts, IT Architects, and DevOps specialists are indispensable contributors. Scrum Masters adeptly orchestrate agile methodologies, ensuring efficient collaboration and project delivery. System Analysts translate business requirements into actionable directives for development teams. IT Architects strategically design system architectures, optimising performance and scalability. DevOps professionals streamline the development pipeline, fostering collaboration between development and operations teams. Together, these support roles weave a cohesive and efficient framework, enhancing the overall success of software development endeavours.

…but do you need a software house?

In the IT industry, software houses still have a very important part to play with their expertise in developing tailored solutions and IT solutions. They are crucial partners for corporate clients and businesses seeking efficient, scalable software development and amazing software. However, exploring the option of building an in-house team brings forth a unique set of considerations and benefits, allowing for a closer alignment with company culture and greater control over the development process.

Advantages of In-House Software Development

A number of advantages arise when considering hiring your own internal software development team, including:

Alignment with Business Culture

A development team embedded within your organisation ensures a deep understanding of your company’s vision, objectives, and cultural nuances. This alignment often translates into bespoke software perfectly attuned to your business needs. The resultant software becomes an extension of your business culture, seamlessly incorporating your values, expectations, and ethos.

Direct Control

The establishment of an in-house team provides unparalleled control over the entire software development process and to leverage a company’s internal expertise and industry knowledge. Acting as the captain of your own ship, you steer the priorities of your unique business processes, guide tasks, and maintain a direct line of communication for swift feedback and decide on all aspects of the software release. This level of control accelerates decision-making, facilitated by the proximity of all stakeholders within the same physical or time zone boundaries which you may not get using service-based software companies.

Ease of Communication

In-house teams streamline the communication processes, eliminating the complexities of IT solutions associated with different time zones, cultural variations, or language barriers commonly encountered when working with external service-based companies. Communication becomes direct, swift, and highly effective.

Disadvantages of In-House Software Development

While the in-house model brings notable advantages, it’s essential to acknowledge its drawbacks. Here are the key disadvantages that warrant consideration:

High Costs

Establishing and maintaining an in-house software development team can incur significant costs, extending beyond salaries to encompass benefits, workspace, equipment, and training expenditures. Attracting and retaining top talent requires a substantial budget, coupled with ongoing investments in training to keep the team abreast of the latest technologies.

Slow Time to Market

In-house development may entail a longer time to market compared to outsourcing, influenced by factors such as team assembly, training, and the development process itself. In a swiftly evolving tech landscape, this extended timeline could mean missing out on early market entry and forfeiting potential competitive advantages.

Recruitment Challenges

Recruitment hurdles in the IT industry may arise, especially in regions with a scarcity of tech talent. In conjunction with the complexities of mobile app development, the recruitment process itself can be time-consuming and expensive, posing challenges in securing skilled software developers.

Determining the viability of in-house software development against hinges on specific needs, available resources, and long-term objectives. A comprehensive evaluation of these advantages and disadvantages is imperative for informed decision-making. Ultimately, the goal is to select a strategy aligning with your business objectives, maximizing the probability of success.

Contact itCraft

itCraft is a software house specializing in custom software development for mobile app development or web development to design and develop business or consumer software using a modern development methodology to build client’s trust to drive real business improvement. If you have a custom software development need, please reach out to us at - profile photo

Gareth Smith

Head of Sales

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