A Complete Guide on Outsourcing Software Development

Avantika Shergil By Avantika Shergil  |  Jul 21, 2022  |  Outsourcing Software Development

A well-known research firm Statista quotes that the software development outsourcing market size grew from USD 45.6 billion (2000) to a whopping USD 85.6 billion in eight years. While this trend shows tremendous popularity of outsourcing software development projects, there are cogent reasons for the same. From startups to medium-sized businesses and large enterprises, everyone from every sector has been contacting an affordable software development company for building their digital product.

What is software development outsourcing?

Outsourcing simply means that you are finding software development outsourcing hubs at some affordable location (not the first world countries such as the US, UK, and so on) to build a customized tool as per your business objectives. In a way, you hire remote software developers from the top custom software development service providers who shall work on your project dedicatedly under your guidance or supervision.

Software development: In-house vs outsourcing

The primary reason for software development outsourcing is the price. While in-house software development team of professionals would cost you an arm and a leg, it is quite an affordable affair when you choose to outsource the project through remote software development. Offshore outsourcing development companies offer myriad advantages from cost to owning a team and also better control over your project.

Here is a clear comparison that depicts the wonderful advantages of outsourcing your software development project.

In-house vs outsourcing software development

Why should you outsource your software development project?

As a farsighted entrepreneur, you need to work on better prospects to expand or make your business grow. Bursting software development myths, it is imperative to know that outsourcing can also get you a superior quality product. For building outsourcing strategies, you need to go through several research and outsourcing guides. When you opt for software development outsourcing solutions, you not only save a large chunk of money but also set you worry-free from managing the team. Hire software development professionals and avail outsourcing advantages.

When should you outsource your software development project?

Businesspersons have the vision to build business strategies, verify them with market research, and ultimately, carry out a blueprint of their business operations before starting any venture in a full-fledged way. While most businesses are automated, entrepreneurs with farsightedness do not waste time and energy in making everything manual. Now, here are a few conditions that make outsourcing software development projects worth considering.

  • Budget constraint is the major concern
  • An in-house development team is not possible or feasible
  • Spending hefty amounts on infrastructure makes little sense
  • You have other business tasks in priority
  • Software development and deployment are needed at a great pace

These are the factors one should consider outsourcing the software development project.

Types of software development outsourcing models

One of the biggest benefits of software development outsourcing is its developers’ hiring models. While there is a clear difference between in-house and outsourcing, dedicated companies with experienced development team working remotely come up with highly affordable models to engage software programmers. Most companies offer three types of models to work with professionals on the floor.

  • Fixed model: the cost of building a digital tool is fixed
  • Time and material model: you pay as you use the resources
  • Dedicated model: the software experts solely work on your project, nothing else

Which software development outsourcing model is right for you?

Depending on the size of the project, complexity of the project, and your business objectives, hiring models are presented to you. Hiring models are one of the factors that decide your cost to develop software, and if you need it, business and technology consultants from offshore IT partners can help you choose one. Here are some general criteria you can adapt to fix a hiring model.

Fixed: When you have a limited budget and the scope of the project is clear, you can opt for a fixed hiring model wherein the software project has defined features and changes are not accepted. Still, if you want some changes, they would cost you extra.

Time and material: This model falls in between the other two, and is ideal for work that requires specific tasks to be done. Ideal for projects with roughly defined scopes, this model is ideal for enterprises who want to work as and when required.

Dedicated: Mostly considered the superior model, the dedicated hiring model for developers is an ideal way to hire experts or a team of experts to work on the project dedicatedly. Enterprise-level digital tools require constant updates and expertise -a dedicated software development team model just offers it.

Risks and challenges of outsourcing software development

Though outsourcing proves to be beneficial for software project development, every business and deal comes with some risks and challenges. Let us have a look at the risks of outsourcing software development.

Pricing: Though you have several software outsourcing models to choose from, getting a perfect time and cost estimate for software development outsourcing services is difficult.

False promises: In the threat of losing software development outsourcing projects, it is common that outsourced teams make tall promises to you on whatever demands you have before the project is kickstarted.

Code quality: One of the outsourcing software development risks involves getting an inferior code quality. It is always better to discuss it before you have any outsourcing software development contract.

Furthermore, in order to obtain major benefits from outsourcing your software development requirement, you need to mind some challenges.

Regular updates: While most outsourcing software development firms are safe, if you, unfortunately, fall into a mediocre company’s hands, the biggest challenge is to take updates from them. Hence, the project’s whereabouts are unknown.

Software stack: Another challenge for a buyer is to assure the tech stack for software development is standard and licensed.

Methodologies: The software development methodologies followed should be standard, but assuring it is difficult again.

Communication: The communication depends on which software outsourcing country you have chosen. In some nations, communication is a problem with hired teams.

Where to outsource the software development project?

The first-world countries would cost you a pretty penny in building any software product and, therefore, most businesses outsource their projects to third-world countries. Countries to outsource software development are generally with low currency rates which make local companies enable to offer their services at dirt-cheap prices. An online software development company directory can help you find the best list of companies where you can outsource your project at quite affordable prices without compromising on quality. The top cost-effective software development companies are from the below-mentioned countries –

  1. The Philippines
  2. India
  3. Ukraine
  4. Argentina

How to choose an offshore development company?

Though software outsourcing benefits for industries are many, selecting a professional offshore development agency is not an easy task. The agencies are sitting thousands of miles away and you need to rely on a couple of factors that they show or highlight.

In third-world countries, offshore software development startups and companies grow like mushrooms, and to choose a genuine one requires you to thoroughly check the credibility of the company. Here are a few criteria that can help you choose the best software development outsourcing company.


Reasonable prices: Though in most cases, outsourcing software development cost is less, you still need to verify the prices by enquiring several offshore companies.

Domain expertise: Check for the authenticity, portfolio, projects done, and case studies of your niche. Confirm the software development vendor you choose must have expertise in your field, domain, or industry.

Licensed tools: The quality of any software tool depends on its functionalities. Assure yourself that the remote company you hire uses licensed tools.

Safety assurance: Software application development should be secure and safe from the developers’ end. Apart from NDA from the list of documentation for software development outsourcing, assure that they follow all stringent safety measures during the software project’s life cycle.

No language barrier: Your software outsourcing partner should have no language barriers. Outsource to an experienced team that speaks the international language fluently.

Post-sales support: An external outsourcing software development service provider should get you the best post-sales support because in most cases, after the sales, the company’s response is sluggish.

Features of the best software development company

Outsourcing to a software development company is a herculean task that you should perform carefully. There are several reasons why outsourcing software development fails. Thus, you need to mind the above-mentioned factors in order to choose the best from the market. Here we present to you some of the features of the best software development company that will help you decide upon the right choice.


Business ethics: Business ethics makes to the top of the list of the best feature of offshore software development companies. Right from a fair deal to transparent business and unpadded bills should be the first thing to check for.

Modern infrastructure: Another feature your software development outsourcing partner should have is a modern infrastructure with the latest workstations and licensed tools. It all helps you a genuine digital product that works flawlessly.

Seamless communication: The software development life cycle has several milestones and you as a buyer should know the whereabouts of your project. Timely update and tracking of the project’s progress are important that comes through seamless communication.

Team spirit and dedication: Globalization has made outsourcing hubs expertise in diverse communities and expertise. A dedicated team of specialists should boast sportsmanship and professionalism in order to produce a top-notch product. A dedicated development company would possess all team members high on morale.

Tips and steps to outsource software development project

Once you are thorough with the above-mentioned tips for software development outsourcing services, you should follow proven steps to begin the process and finalize the business deal with your selected remote development partner.


Step 1:

The first step is to define your project which means identifying the software requirements after thorough research on the market and peers. You can take the help of a professional domain expert to carry out the best strategic model for your project.

Step 2:

Taking the help of an online directory of software development companies, you can search and select the best custom software development agency from the top outsourcing nations. Check the credibility (read the topics above) and some core criteria before selecting a software company.

Step 3:

Once decided, you should contact the sales team at software development company providing outsourcing service. Ask them to get in touch with you and explain to them your project thoroughly. If needed, you can also ask them for professional help as they may have business and technology consultant experts in various industries including yours.

Step 4:

It requires several meetings or calls to decide upon the software project. Several experts from various departments including sales check on the feasibilities of your project and suggest you a few changes if required. Ultimately, the project is defined and the software development cost is decided.

Step 5:

You may ask for various software development outsourcing models according to the budget you have specified. Get the best-dedicated software development team of professionals at the helm of your digital product.

Step 6:

Once the budget and the best team of software engineers are in place, the milestones are decided and communication tools are fixed. It is important to make sure that the progress of the software development life cycle shall be traceable to you as a project owner.

Step 7:

The project kick starts because, at this stage, the resources, milestones, and features (scopes) of the custom software development project are clear and unambiguous. The infrastructure and licensed tools are at work.

Step 8:

When the project is going full-fledged, it is important for you to check on every milestone or progress. Any gap or apathy in taking the feedback and tracking the whereabouts of the project should cost you a lot in the end. Have a keen eye on the milestones, every day.

Step 9:

At the end of the project, ask for the prototypes and dummy models to check their functionalities. If outsourcing software development services are based on a foolproof method (such as agile), then you do not have many worries about the development cycle.

Right from finding the right software development outsourcing company to negotiating outsourcing software development costs and assuring the best practices in the process of software development life cycle, this guide shall help you carry out the best business deal at the most affordable prices.

Avantika Shergil Avantika Shergil   |  Jul 21, 2022

An enthusiastic Operations Manager at TopDevelopers.co, coordinating and managing the technical and functional areas. She is an adventure lover, passionate traveler, an admirer of nature, who believes that a cup of coffee is the prime source to feel rejuvenated. Researching and writing about technology keeps her boosted and enhances her professional journeying.


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