The Ultimate Guide to Outsourcing Software Development

In today’s rapidly evolving digital marketplace, outsourcing software development has become a common remedy for organizations wanting to defend against their competitors while remaining budget-conscious. 

Whether you are a start-up looking for an affordable app development option or a large organization planning to undertake various large-scale customized software projects, outsourcing provides flexibility, expertise and efficiency. 

However, as with anything else, outsourcing has its benefits, challenges, and traps.

This guide covers everything you need to know when seeking a software development partner—models of outsourcing, benefits of outsourcing, and finally, a guide to hiring a software development company.

What is Software Development Outsourcing?

Simply put, software outsourcing means hiring a team or company outside of your company to develop software for you, rather than relying on internal resources to accomplish software development.

Companies outsource for many reasons, including access to lower operating costs, specialized skills or expertise, and expedited time to market.

When considering outsourcing, several types or models of outsourcing exist, including:

• Onshore outsourcing – hiring a development company located within your own country;
• Nearshore outsourcing – engaging a software development company within close proximity to your company (ex: neighbouring countries);
• Offshore outsourcing – hiring development team(s) located in far distance countries typically with lower operating costs than your own;
• Staff augmentation – hiring external developers to your existing project team in order to enhance team capacity and/or skills.

Benefits of Outsourcing Software Development

Have you ever thought about why companies are increasingly turning to outsource software development? Here are some of the top reasons: 

Cost-effectiveness: There are very few open positions in a corporation that are more costly than hiring and retaining a software development team in-house. 

This includes the costs associated with labor, infrastructure and professional development and training programs. According to Deloitte, 59% of companies outsource so they can reduce costs.

Access to global talent: Do you need an expert in artificial intelligence or a blockchain expert? Working with a vendor for software development allows a company to access a pool of developers from a global standpoint – meaning you may find expertise locally that may not be available to you

Faster time-to-market: When you outsource development to a team, you can short product development cycles and reach the market faster than expected.

Focus on core business: Outsourcing development means that you can spend your limited resources on measuring and developing you business strategy, while an expert on software development deals with the technical burden.

Scalability and flexibility: Outsourcing allows you to scale up or down as project requirements change There are no strings attached when working independently as a vendor.

Related Read: Guide to Hire Dedicated Developers for Software Development

Software Outsourcing Models: Location-Based and Pricing-Based

When considering outsourcing, you’ll need to identify which model is suitable to achieve your company’s business objectives. Let’s go through this methodically: 

Location-Based Models

• Onshore outsourcing: Onshore outsourcing is best for companies that need real time collaboration and face to face meetings. Language barriers are lessened as a result. This method is usually more expensive as well..
• Nearshore outsourcing: Nearshore outsourcing is generally beneficial for firms seeking time positive similarities to cultural proximity. It provides cost containment with a level of convenience to realizing that benefit.
• Offshore outsourcing: Offshore outsourcing is the cheapest model. The talent pool is larger with offshore models, but it could mean dealing with different time zones or communication challenges.

Pricing-Based Models

• Fixed-price model: Fixed price models are best if your project has clear boundaries. You’ll be able to agree on a price to pay an outsourcing company, it’s an easier way to budget your spend on outsourcing related spend within your budget.
• Time and material model: Time and material model means you pay an outsourced resource cusomarily based on what the time and materials used to produce your outsourced product. The model allows for easy variability but requires that you be conscious of your spending, especially in a committed project.
• Dedicated team model: Here, usually, you hire a third-party outsourcing resource for a longer-term relationhsip. The provider team can be used for ongoing custom software projects.

Read More: A Hiring Roadmap for Top-Tier .NET Developers

Factors to Consider When Outsourcing Software Development

Before you outsource your next app or software project, keep these factors in mind:

• Technical expertise: Make sure the outsourced provider has experience with your tech stack (for example: React, Node.js, Python) and check the reputation or porfolio of the developes that you are considering for their outsourced business.
• Reputation and portfolio: Inspect review sites, case studies and review the previous work tasks in the portfolio of the providers, in the proposed capacity. 
• Communication and collaboration: Communication and collaboration is important to productivity, you must be able to communicate freely and see that the collaboration meetings allow for a shared understanding processes to avoid misunderstanding or misinterpretation.
• Time zone and cultural compatibility: Offshore outsourcing may present difficulties in collaboration when time zones are drastically different.
• Data security and IP protection: Make sure the company follows strict legal security protocols and employs NDAs. 

5 Pitfalls to Avoid When Outsourcing Software Development

Although outsourcing comes with considerable rewards, it is not free of risks. Listed below are common pitfalls you should avoid: 

1. Choosing the cheapest option: Cost containment is important, but sale-priced quality will be a costly mistake.
2. Poor communication: If the outsourcing company fails to communicate effectively, delays and misunderstandings will inevitably occur.
3. Unclear project scope: A poorly defined project will lead to delays and cost overruns.
4. Ignoring legal agreements: Failure to employ NDAs or IP protection can lead to data leakage.

Overlooking cultural differences: Different cultures may result in contrasting work cultures that impact collaboration and productivity. 

How to Hire the Right Software Development Outsourcing Company

To ensure you pick the right partner, here’s what you should do:

• Do thorough research: Review the company’s previous work: Look through the company’s work samples, case studies, or testimonials from past clients. 
• Ask for references: Reach out to past clients so you can receive honest feedback. 
• Evaluate their tech expertise: Confirm the capability of the service through technical expertise or specific technology. 
• Test their communication: Clear communication is crucial for successful collaboration, so test their communication experience.
• Start with a small project: Don’t just trust blindly, start with a small project to understand the capabilities of the vendor.

Challenges of Outsourcing Software Development

Outsourcing comes with its share of challenges, including:

• Time zone differences: Offshore outsourcing can result in the inefficiency of communication.
• Data security risks: Sharing sensitive information with an outside person increases the risk of data breaches.
• Quality control: Quality assurance and control can be difficult with an outside agency.
• Hidden costs: Some companies will charge hidden fees when they are halfway through projects with remote outsourcing.

Also Read: Navigating Hiring Maze: Tips to Find the Right Android App Developers

Outsource Software Development with Magicminds

Magicminds is a strong software development company that guarantees you high-performance software solutions with accelerated or enhanced app performance that maximizes growth. 

Our experienced developers works tirelessly to achieve your business objectives and propel your success. This will help you take wider strides while opening unlimited opportunities and growth of your business.

Why choose us?

• Expert team: You will get top-skilled and seasoned developers who use their years of experiences to provide you with the limitless possibilities. 
• Transparent communication: We ensure seamless and transparent communication process while sharing with you weekly update throughout the development process.
• Flexible engagement models: We believe in flexible engagement models during staff augmentation or full-cycle development. We take care of your needs. 
• Proven track record: We have completed projects successfully across many different industries from eCommerce to healthcare. 

Final Thoughts

Outsourcing can provide you with great benefits from lower costs to faster delivery times; however outsourcing may lead to needing to plan meticulously, communicate clearly, and be sure that you find the right partner. 

To alleviate some of these feelings you can outsource to a trusted software development agency such as Magicminds, to assure that your software project will be handled sufficiently. 

Ready to outsource your next software project and gain a competitive edge? Get in touch with Magicminds today and let’s build something extraordinary together!