Software Development Outsourcing: A Complete Guide

In the last couple of years, there’s been immense growth in software development outsourcing. About 64% of businesses outsource their whole software development process now. 

And why shouldn’t they? After all, there are several benefits that you can reap from outsourcing software development. Not only does it help in significant cost-savings, but it also provides enhanced product quality. 

This article will summarize everything that you should know about software development outsourcing, including-

• What is software outsourcing?
• How to outsource software development?
• Why should you consider outsourcing your software development project?
• The cost associated with outsourcing the software development project
• Benefits of software outsourcing, and, 
• Different types of software outsourcing models

Our main aim is to amplify outsourcing advantages for you. So, let’s get going.

What Is Software Development Outsourcing?

In simple words, software development outsourcing refers to the process where a company gets its software created by a third party. That is generally done by recruiting professionals from a reputed software development outsourcing company with ample experience and knowledge.

The software development outsourcing industry had a market worth of $109bn in 2021, and it’s expected to reach $147bn by 2027. These stats make it pretty evident that software outsourcing offers numerous benefits. 

That includes enhanced product efficiency, access to multiple talents and resources, lower costs, reduced risks, better quality, and more. 

Why Is There an Increased Demand for Software Development Outsourcing?

The requirement for software developers is rising worldwide. The quick technological growth has resulted in a higher demand for quality software development. Additionally, digital transformation has also accelerated the requirement for software project outsourcing.

As there’s a shortfall of in-house engineers, several companies are switching towards outsourcing software development projects to cater to their needs. Additionally, outsourcing provides companies access to a wider talent pool. 

For this reason, outsourcing software development has become a major ingredient in the digital transformation tactic of several businesses worldwide. 

Some of the software development services you can consider outsourcing include:

• Consulting: Offers tech advice to implement optimal technical stack easily for custom software requirements.
• UX Design: Offers UX and front-end design services and usability consulting for mobile devices, PC, and TV.
• Mobile and Web Development: Helps businesses get master-crafted apps and websites, authentic user engagement, and successful brand experiences.
• Software Testing: Offers an array of testing services to offer a reliable, efficient, and fast software product.
• Software Architecture: Helps in designing quick and efficient solutions for software projects of varied scales.

Why Outsource Software Development?

Without the trouble of renting workspace, assembling an expert team, and establishing new infrastructure, outsourcing is more cost-efficient than in-house software development. But that’s not it! There are other reasons to outsource software development. So, let’s dive in:

Access To Extensive Experience and Knowledge:

It’s no secret that outsourcing software development is an ideal way to balance the skill gap in the in-house team. That, in turn, enables you to concentrate on other important business tasks that need your attention. However, that’s not all. 

In fact, you only need to uncover a software idea, and you’ll have access to an entire package of design, development, and marketing services.

You can start the development based on your software product specifics, budget, and type. You can also create an MVP (minimal viable product) to check if your idea is viable and make changes if necessary. Here, the design specialists of the software development outsourcing company will assist you in coming up with an optimal MVP.

Project cost estimation, planning, UI/UX design, software development — a reliable outsourcing software development company, like eSparkBiz, can assist in everything. For this reason, we can bring together the most efficient project plan and design for any software product.

Access To a Wide Pool of Tech Talent Worldwide:

You’re not restricted by your current geographical location when you outsource software development. Your core criteria here is to determine the team’s professionalism and skills, irrespective they work near your workspace or not. 

Go through the previous customer feedback and portfolio of the outsourcing software development company. Browse the reviews and try the software products the company has already delivered. That’ll help you find the right team for your software product’s requirements.

No matter what location, the wide pool of talent will amplify the product creation process. When contemplating a partnership with a company on the other half of the globe, don’t forget to consider cultural differences.

Ideal Balance of Rates and Skills:

With software development outsourcing, it becomes easy to balance the team’s skills and rates. You have wide outsourcing options globally, with Eastern Europe and India considered popular software outsourcing hubs for software outsourcing.

The software outsourcing companies in these nations have proved that they offer quality services with an ideal balance of creativity and expertise. Besides, the outsourcing software development costs in India and Eastern Europe are lower compared to Western Europe or the US. 

Therefore, you can get premium-quality software at a relatively lower rate by outsourcing software development company in India, like eSparkBiz. We conduct feasibility analysis in our outsourcing process to offer budget and technological validation to our clients. Our experts offer proof of concept, create prototypes, and implement QA testing to lower risks in the early SDLC phases.

Allows You to Have the Best Professionals for Your Project:

Starting your software project by bringing your own development team can likely disturb you off the schedule considerably. Remember, to have a successful launch, you require not just good developers to write code lines but also DevOps for deploying the software. 

Besides, you require UI/UX designers, business analysts, QA experts, and copywriters. Your project might also need specialized skills like AI or virtual reality. However, searching for such a talent pool might consume much of your time. That’s where outsourcing software development helps. 

Reliable software projects outsourcing companies, like eSparkBiz, have a proper team of experts already in place. During the initial planning phase, the PM (Project Manager) proposes a team that can deliver your product and gives a time estimation.

Liberates You from Micromanagement:

Once you hire an outsourcing company, it’s the responsibility of the PM to coordinate and manage the software development process. The professionals look after all the matters associated with your software development and release. The PM is the main person you need to connect with for any problems that might arise.

You’ll meet the project manager at the initial stage of product planning. Once you approve the project estimate and plan, it’s the duty of the PM to maintain the agreed budget and schedule. 

The professional plans the sprints, sets deadlines, manages the schedule and delivery, and prepares feature demons. Any complaints, comments, suggestions, and changes can be addressed to the PM, who ensures they are taken care of.

Reduced Time to Market:

Software projects outsourcing can lower your time to market majorly. Working with professional software engineers who understand your project idea helps you develop the product more swiftly. You can even benefit from team extension across different geographic regions, which is important in today’s fast-moving business environment. 

Effective Communication:

The significance of proper communication within the team cannot be emphasized enough. Luckily, a software development outsourcing company has the platforms and tools for effective collaboration and communication already functioning. 

Creating a collaborative atmosphere for your software project would require minimum effort and time — a board on Trello or Jira, a project in GitHub, and a workspace on Slack. And that’s it! You are ideally all set.

When the team gets used to working collaboratively, all problems will be managed most effectively and quickly. Moreover, in a well-curated team, the PM will have less difficulty in discovering replacements in case of an emergency. 

Increased Flexibility:

During the product development phase, the project scope might either reduce or grow, resulting in quick change implementation. In this case, the initially chosen team needs to be scaled down or up. It is taxing to do this with the in-house team.

And those who have developed in-house teams know that it’s difficult to quickly get a new team member with specialized skills. 

You’ll typically have two options if you want to scale down the team. The first option is to release members and risk not finding a replacement having their skill set. And the other option is to continue paying the wages to retain them for future projects.

However, outsourcing software development can prevent these issues as the company generally has enough staff to meet your project requirement. Scaling down the team isn’t an issue for them. That is because they typically work on multiple projects simultaneously and can transfer the executive to another project when required. 

Software Development Outsourcing Models

There are many software development outsourcing companies to select from, with each of them following different techniques of working. Below are the major types of outsourcing models that businesses worldwide are leveraging and benefiting from.

Homeshoring:

Homeshoring involves you handing over your software development to a software team or a single developer in your own city/ country. It lets businesses leverage domestic companies for their software development project. 

This type of outsourcing model allows regular in-person meetings when working on a challenging software project. Though convenient, homeshoring, in some cases, could be expensive.

Nearshore Outsourcing:

This is the most famous outsourcing model. It allows you to outsource your software project to a vendor in a nearby country. The reason for nearshoring being famous is that it fits the bill when it comes to costs, skills, time zones, location, currency and language. 

For instance, an organization in the United States outsources its software development project to a vendor in Mexico or Canada. 

Offshore Outsourcing:

This model involves you outsourcing your software project to a vendor operating in a distant country. As per Deloitte, the cost is a major reason behind businesses outsourcing software development. Offshore outsourcing comes with cost benefits for businesses as you get skilled experts at a relatively lower rate than local talent.

For instance, the annual salary of a front-end developer in India $8,622, while its $55,192 in Germany. However, language barriers, different time zones, long delivery times, and customs issues could create issues for your business.

Also Read : Offshore Software Development: Detailed Guide

Onshore Outsourcing:

Here, the software development task, which has been offshored or nearshored, is shifted back to a company in the same nation as yours. Onshoring can be done for several reasons like a new collaboration opportunity or the need for an additional workforce in the project. 

Besides, it enables businesses to outsource their essential or non-essential tasks to concentrate on major business activities.

So, how to determine which of these is the right software development outsourcing model for your project? Organizations consider a major factor before selecting an outsourcing model: ‘Purpose.’

These are the software outsourcing models grouped as per the location of the outsourcing company. Now, let’s explore the ways through which your software project can be handled. 

Staff Augmentation:

In the staff augmentation scenario, the software development vendor adds the talent you need to your in-house team. The major benefit of IT staff augmentation is that you’ll get access to the best resources at scale. 

Though the vendor will finish the project and manage the daily running of your team, you’ll still have control over distribution responsibilities, hiring, etc. 

Project-Based:

In the project-based model, the software outsourcing company handles the entire software development process from scratch. This implies that the professionals will make every decision related to the project and simply send you the progress reports. 

Though this method is cost-effective, there’s still no room for scope adjustments during the development.

Dedicated Team:

In this scenario, your outsourcing vendor will bring together a dedicated team of skilled developers required for your software project. Additionally, the vendor will offer you completely dedicated resources to avoid confusion related to each team member’s skill set. 

This is a popular software developer outsourcing model for several organizations as it provides better customization and control.

What Phases Are Usually Involved in Outsourcing Software Development Model?

Irrespective of how challenging the software product truly is, it should be upgradeable, maintainable, and adaptable. That can be attained by strategically planning every step, from ideation to maintenance. 

The phases of SDLC (Software Development Life Cycle) vary from one software development outsourcing company to other. However, we have summarized it into six key steps to help you understand how it works.

Project Requirement Gathering:

After identifying a gap in the company’s software landscape, you must document the project requirement and have a complete understanding of it. That’ll help you decide and choose what kind of software developer outsourcing you need. It’s crucial to avoid jumping to any solution directly in this step.

The Design Work:

Once the project requirement for the software has been documented properly, you need to start with the design. During this step, you should decide whether your effort is spent best on creating new software or buying something already available. That might need a robust process like RFI (Request for Information) or RFP (Request for Proposals).

Developing:

In this step, the experts transform the outcome of the project requirement and the design stages into a working product. That can comprise several things like creating back-ends, front-ends, microservices, databases or several other components. This step aims to develop not just a working software but also a source code document.

Testing:

The testing phase involves the test analysts conducting a few validation checks to see if the software meets all requirements. That includes performance testing, functional testing, unit testing, security testing, and manual testing. The main goal is to ascertain that the developed product is robust enough to cater to the demands when operating. 

If the analysts find an error, they send the software to the developers for re-testing. The process gets repeated until the product is error-free.

Deployment:

The software, in this step, is finally rolled out to platforms and production environments from where it’ll be run. Such environments might be a cloud-based platform or a physical server in the business’s data centre.

Maintenance:

During the maintenance stage, the software is rendered to the developers who maintain it throughout its lifecycle. The product is updated regularly to enhance performance and meet the changing demands of its end users.

How To Outsource Software Development?

You cannot outsource software development effectively sans careful preparation. Creating a good outsourcing strategy marks the first and most important step in recruiting an outsourcing vendor to cater to your demand. 

So, how can one create that? Listed are some crucial things you should consider in your outsourcing strategy:

Define The Project Goals:

Each software project has several stakeholders: end-users, company leadership, customers, etc. However, not all will participate in each detailing of the software project. 

Every outsourced software project varies in nature. Thus, you might sometimes want to consider stakeholders outside the company or even people that’ll be affected directly by your final product.

You will likely want to also run past your ideas among other team members and, perhaps, other individuals from the industry. That’ll help determine if your software project has achievable, realistic, and well-defined goals. 

Make Proper Documentation:

The sole purpose of outsourcing software development company will be useless if you haven’t made a proper plan. Your outsourced partner will want to be aware of your requirement and budget. And that’s where having well-organized documentation in place will help you immensely. 

Define Your Tech Profile:

As software development outsourcing generally happens remotely, it’s important to determine that your outsourcing partner has an efficient tech profile. On this front, we highly recommend developing a resource checklist for your software project. 

In addition, data protection and security aspects shouldn’t be compromised, as data leakage isn’t uncommon nowadays. 

Bring In Skilled Engineering Leader:

Creating a software engineering team begins with an experienced leader who has immense technical skills and selects relevant tech talent to get the work done. A powerful leader can guide clients, manage remote teams, and protect from quality issues and improper team coordination.

The engineering leaders at eSparkBiz don’t just manage the team and the tech but also look after the client’s long-standing success. They ensure that their software development technique aligns with the client’s needs to offer the best results and achieve set goals. 

Handle Project Budget, Scope, And Duration in Every Iteration:

Project budget, scope, and duration form the foundation of software development outsourcing. Following the agile methodology makes managing the budget a shared chore. The software product owner handles the backlog while the sponsors agree on the final budget. The team works on the backlog and handles the agreed sprint budget.

How To Find the Perfect Software Development Outsourcing Company?

The right analysis and choice of software development outsourcing company are crucial for the success of your software and business. Hence, choosing a reliable offshore vendor is vital to finish the work per your standards and ethics. 

Below are some factors that you must consider before outsourcing software development.

Create a list of software development outsourcing companies:

A great way to know if a software development outsourcing company is the right first is by researching and listing all the potential vendors. Send RFPs to ascertain that the company can meet your expectations and needs. Moreover, speak with your business colleagues, contacts, and close friends to know if they’ve any recommendations. 

Ascertain easy communication with the outsourced partner:

Effective communication between the offshore vendor and you are of great significance when you outsource software development company. Request a meeting or call to check their communication skill and search for the right fit. 

Proper communication enhances quality. You could use tools such as Google Hangout, Skype, Zoom, etc., to make it easy for your team to work. 

Check the company’s reference portfolio:

It would be a nice idea to ask for the references of the software development outsourcing company’s previous clients. Contact the previous clients the company has worked with to get their feedback on the service quality.

Such references are useful but don’t forget to do your own research. Read the company’s past achievements and case studies to know if they’re experienced and have the technologies you require for your software. 

Explore Our Work

Don’t sacrifice quality for price:

Be careful of the software development outsourcing company that offers its services at ‘cheap’ or ‘rock-bottom’ prices. You shouldn’t neglect quality over price. Instead, check the vendor’s expertise in particular technologies, their past success rate and what service they can provide. 

Validate the company’s privacy and security policies:

When outsourcing software development, ensure you enquire how the company will protect your sensitive data. An offshore partner should have safe and secure servers for protecting sensitive data. Generally, an outsourced company follows strict privacy and security policies to protect and keep its clients’ data confidential.

eSparkBiz ensures that the sensitive information of all its clients stays safe by following the latest industry security policies. Our experts work to provide the best software product that’s free from any vulnerability or cyber threats.

Accreditation and certifications:

The offshore partner should be certified and accredited with the set industry standards. Validating the certification and accreditation of the custom software development outsourcing partner is imperative during the vetting procedure. That helps ensure security, confidentiality, and quality standards.

Don’t avoid the technology aspect:

Though there are several other factors to consider while selecting an offshore partner, you shouldn’t avoid the tech aspect. For instance, your software development outsourcing partner should support every programming language you require for your project. 

Besides, it’s crucial to determine whether their development method gels with yours. These days, the agile approach is a popular choice of several companies.

Focus on Scalability:

It’s said that no software project is ever really finished — and in most cases, this is true. For this reason, the best outsourcing vendors ensure they make a maintenance plan as per your requirements from the start. They ascertain that there’s always a strategy to guarantee the flexibility and scalability of your software once the development completes.

Remember, getting the right software development outsourcing company might take some time. However, the impact this collaboration can have on the success of your business helps make the research valuable. 

At eSparkBiz, we offer highly-skilled experts who deliver software products to organizations of varied sizes, from established firms to start-ups. We are led by the Agile development methodology, driven by technology and powered by talent. 

Things to Consider Before Outsourcing your Software Development

Outsourcing software development projects helps you access a flexible team that’ll work on project areas they’re most proficient at. However, there are certain things you need to keep in mind before outsourcing your software development. Below are a few of them:

Pick the perfect software development outsourcing company:

When selecting an offshore partner, ensure they possess the resources and skills required for working on your software project. Proper analysis of the company is vital for your business’s success. Hence, ascertain that you know the kind of software development technique they’re using. After all, not all custom software development outsourcing services are the same.

Set clear and realistic expectations from the very beginning:

If you don’t establish clear expectations with your outsourced partner right from the start, things might fall apart later. Despite immense trust and strong partnership, it’s still crucial to set clear boundaries for project areas each party is liable/responsible for.

Select the right software outsourcing model:

There are three main software development outsourcing models – staff augmentation model, project-based model, and dedicated team model. Each of these models has its own unique pros and cons. Hence, it is important to determine the difference between these three models and select one that best suits your requirement.

Proper communication and trust are vital:

To prevent unwanted issues in the future, regular communication with your outsourced partner is important. That also helps establish trust between both partners and smoothens the software development outsourcing process.

Take an active part in the software project:

Successful companies outsourcing software development stay active and involved with their outsourced vendor throughout the SDLC. That’s what helps them accomplish better outputs and succeed in the long run.

Staying patient is the key:

Outsourcing isn’t a short-term strategy. It’s a long-haul strategy that needs honest commitment on either side. Therefore, you need to be patient and ready to embrace a long-standing relationship and spend resources and time to make things work.

How Much Does It Cost to Outsource Software Development?

Estimating the cost of software developer outsourcing is tricky, as what works for one project might not work for the other. A few factors affect the outsourcing prices, such as the project’s type, complexity, size, and vendor location.

Also Read: Top Benefits of Offshore Software Development Company

However, here’s a brief guide that’ll give you an idea of the median salary of outsourced front-end developers across different countries.

The above table shows that outsourcing software development costs less in India than in the US and Australia. Due to their comprehensive skills and strong educational backgrounds, the software development companies in India have consistently proved their ability to deliver quality software products. 

Moreover, you can discover nearly all cutting-edge technologies here, like robotics, AI, modern mobile applications or custom application development.

Advantages Of Outsourcing Software Development

There are several advantages associated with outsourcing software development projects. Below are the top four:

Reduces Costs:

That’s one of the major reasons why organizations outsource software development. In fact, about 59% of businesses utilize software outsourcing as their cost-optimization tool.

But how is software outsourcing cost-efficient?

Getting an in-house developer can prove costly as you use resources for recruiting, training, onboarding, insurance, etc. However, software developer outsourcing can help you save on such expenses. Besides, you will not have to spend on office supplies and training them.

All of this allows you to concentrate on your business’s core competencies, which is a great way to boost cost efficiency. In the present competitive landscape, where demands and technology are evolving rapidly, outsourcing can be a deal-breaker for your organization’s success.

Access To Global Expertise:

Software outsourcing isn’t just about the cost. At times, you won’t be able to find the correct set of people for your project. That’s where software development outsourcing allows you to explore new talent globally to meet your needs. 

These outsourced talents have garnered high technical knowledge by working on different software projects. To handle these projects, they also access cutting-edge software development technologies. That helps them assimilate your software requirements quickly. 

Irrespective of how specialized your software project is, there are outsourced professionals to tackle it earnestly for you!

In addition, outsourced teams might follow the DevOps or Agile approach that help them be more efficient and productive. Such processes can also accelerate product market release, helping your business enhance its tech abilities at a quick pace.

More Focus on Important Business Processes:

Outsourcing software development benefits your internal tech team too!

Transferring your time-consuming software projects to the outsourcing partner can lower the workload for the in-house team. As the outsourced experts don’t need additional guidance, your staff can concentrate on other projects that help your business grow.

Besides, instead of pressurizing your internal team to manage projects they aren’t versed with, hire an outsourced vendor to handle it. That way, your in-house staff can concentrate on strategic objectives that align with their skill. Meanwhile, the outsourced team will work on developing a software product that matches your expectations and business goals.

Enhances Product Quality:

Software developer outsourcing often helps get an improved software product. How?

The outsourced developers have dedicated tech and resources for QA and testing to ensure you get a good final product. Besides, the outsourced team might also have new ideas to improve your software, resulting in more innovation. Moreover, they may even recommend fresh approaches to resolve existing business issues.

Though software development outsourcing has numerous advantages, a few risks are involved too. Let’s explore them.

What Are the Risks Involved in Software Development Outsourcing?

Below are the major risks you may face when outsourcing custom software development without a strategy. 

Language or Communication Barrier:

The communication barrier is one of the most common disadvantages of outsourcing software development. You might have to surpass issues like timezone differences, language barriers, and cultural conventions.

For instance, if your chosen outsourced team operates from the other corner of the globe, there will be timezone differences. And if they face an issue while you are asleep, they will need to wait a long time to receive your approval for any changes. That can hamper problem-solving speed and productivity as well. 

So then, how can you combat the communication gap?

Below are a few solutions:

• Encourage transparency with the help of constant check-ins with your outsourced team each week. 
• Learn about the potential language barrier and recruit a translator if required.
• Utilize collaboration tools such as Jira and Slack to handle your processes.

These solutions can also boost the trust between the parties involved and make your outsourcing run smoothly.

Security Risk:

Software development outsourcing involves you sharing sensitive data with the outsourced vendor. Therefore, if you do have a proper security policy and data access, it could result in data leakage. 

As per a study, insider threats account for a shocking 43% of cyber security breaches. Hence, securing access to all your sensitive networks and data is imperative. 

How can you protect your confidential information when outsourcing?

• Use performance tracking tools such as Time Doctor for monitoring your outsourced staff. That will help you stay updated with what they are accessing and doing. 
• Sign an NDA with the outsourced vendor before you share any data. That document restricts them legally from sharing any trade secrets.

In the end, keeping your data safe is all that matters!

Delayed Delivery:

Outsourcing software development projects could be challenging, especially when the software needs to be delivered on time! That’s because, without the perfect outsourcing partner, software project completion could be delayed.

Several outsourcing vendors promise to deliver the software on time; however, the absence of management might result in delays and problems. Yes, a few agencies deliver the product on time; but the quality should be good enough.

How can you ensure that quality product is delivered?

You can contact an outsourcing vendor for a small task initially. Create an agreement mentioning the deadlines, quality, acceptance criteria, and rates. And if you’re satisfied with the vendor’s performance, you can go ahead and sign an agreement for the entire project.

Code Quality Issues:

There is no perfect definition for low or high code quality. However, code quality can be loosely defined as an assortment of attributes required to be conveyed to the software outsourcing partner. And the two important attributes that cannot be avoided are maintainability and clarity.

Besides errors because of miscommunication, adhering to quality standards could be problematic if you don’t have coding proficiency.

For instance, you should know how the code is documented, formatted, and tested to have a bug-free software execution.

So, how can you take care of quality issues?

Here are a few helpful tips:

• Conduct meetings with your outsourced team regularly to keep track of their development efforts.
• Utilize tools that help with project management, such as Basecamp and Trello, for managing backlogs and logging bugs.
• Check if your software projects outsourcing vendor follows the right QA process with unit testing and code review.

These solutions can help you develop a software product with no errors or bugs. 

Sure, these risks could be challenging; however, you can beat them with a few proactive solutions listed above.

So now, if you wish to outsource software development, it is important to choose the perfect model, depending on your requirements. 

Outsource your Software Development to eSparkBiz

So, are you all set to outsource your software development project? Consider software development outsourcing in India – a premier outsourcing destination. India is a favorable choice for software outsourcing because of its low cost, enormous IT talent pool, robust infrastructure, round-the-clock services, and English language proficiency.

Another major benefit is that India has evolved as the pinnacle of software development outsourcing hubs worldwide. For all these reasons, many companies prefer IT outsourcing services from India. 

eSparkBiz is a leading Indian IT consulting company specializing in offshore software development outsourcing services. With over 10 years of experience and skilled software programmers, we’re the trusted choice of the world’s renowned organizations for custom software development. 

Since our inception in 2010, we have created a rapid-growing team of 200+ smart and bright developers. We aim to offer cutting-edge expertise and leverage the latest business processes to develop effective and innovative digital solutions for diverse industry needs. 

Come, partner with us today to get high-quality software development outsourcing services and gain a competitive edge over your competitors.

Harikrishna Kundariya

CEO, eSparkBiz

Harikrishna Kundariya, a marketer, developer, IoT, chatbot and blockchain savvy, designer, co-founder, Director of eSparkBiz @Software Development Company where you can Hire Software Developers. His 14+ experience enables him to provide digital solutions to new start-ups based on Web app development.