Introduction
IT software development projects fail for several reasons, but the success stories have something different to say. A well-planned approach to collaborating with a software outsourcing company can help organizations achieve a competitive edge.
Proper management allows the achievement of efficient resource allocation & maximizes production. These are some of the advantages of using software development outsourcing. A thoughtful management plan starts by selecting an outsourcing model. But, as said, so much goes into managing an outsourced software development.
This article will cover everything you need to know about software development outsourcing. Moreover, we’ll also talk about three companies that save millions by using software outsourcing services. Let’s get this done.
Before jumping into the case studies, let’s first start with the basics & understand what Software Outsourcing is.
What is Software Development Outsourcing?
Software development outsourcing refers to delegating software development work to an external service provider. Instead of handling all software development work in-house, companies are outsourcing them to experts who possess specialized skills.
Why is Outsourcing Software Development important?
Software outsourcing services have become an important part of many businesses. Additionally, it is successful in providing access to cost-cutting, knowledge, and diverse talent which are not accessible otherwise.
By using software development outsourcing companies can tap into a pool of global talent. By, doing this companies can develop quality software products faster as compared with in-house development.
Moreover, software outsourcing enables organizations to focus on other core activities of business by outsourcing development
Now, let’s quickly understand the different types of software development outsourcing.
4 Types of Software Outsourcing
Offshore outsourcing
When organizations are collaborating with a country from a different location or continent it is known as offshore outsourcing. Organizations use this practice to achieve cost-effective software solutions & gain access to a global talent pool.
Nearshore outsourcing
Nearshore outsourcing is when you collaborate with a nearby country located on the same continent. This outsourcing method offers benefits like overlapping working hours, cultural similarity & reduced commuting costs.
Onshore outsourcing
Onshore software outsourcing, also termed domestic outsourcing, involves collaborating with software development companies from the same country. However, it may not provide cost-cutting like an offshore option but is advantageous from all legal compliances. Moreover, it also minimizes language & cultural barriers.
IT Staff Augmentation
IT staff augmentation is a strategy that enables companies to hire remote developers to supplement their existing development teams. These remote developers work alongside the company’s in-house developers. IT staff-augmented developers possess highly technical expertise.
Now, let’s understand what are the benefits of Software Outsourcing.
What are the Benefits of Software Development Outsourcing
Software development outsourcing can immensely impact your business. Below are some of its advantages:
It is cost-efficient
One of the main reasons why companies choose software outsourcing is cost savings. Outsourcing software development to countries with lower costs can lead to significant reductions in development expenses. Additionally, it can also enable saving costs incurred in paying salary, infrastructure & overheads.
Below is an example of how much money you can save by hiring remote developers:
Imagine you need a Laravel Developer. If you are an organization located in the U.S., the average salary of a Laravel developer would be $117,000. But, if you decide to outsource the development to Brazil, the cost would decrease immensely to $54,000.
This allows you to save lots of money which stands at $63,000.
Get access to a wide talent pool
One survey by Daxx showed that 61% of respondents consider access to a larger pool as the primary reason for outsourcing.
Software outsourcing allows businesses to gain access to a global talent pool. This pool of professionals comprises specialized designers, developers & engineers. These experts can help the company deliver a high-quality product faster.
Faster time to market
By using the skills of an outsourcing partner, companies can accelerate their development process. This allows them to bring products to the market faster & enables them to achieve a competitive edge.
Software development outsourcing can help minimize the bottlenecks that occur due to limited resources or skill gaps. Moreover, this enhanced resource capacity will help keep the project on track by preventing any delays.
Scalability
Outsourcing offers the flexibility of scaling the development team up or down based on the wants & needs. This enables the organizations to cope with the changing needs without tackling the need to pass through a long hiring process.
Moreover, scaling an in-house team to fill specialized skill gaps can be a challenging task. However, software outsourcing minimizes the challenge by enabling an option to hire remote developers from a wide pool of talent.
Shifting your focus on Core activities
Outsourcing software development tasks can free up internal teams to shift their focus toward managing core business activities.
Software development requires an abundance of time & technical expertise. By outsourcing software development, an in-house team can ensure their focus on driving the business forward by performing core job roles.
Mr. John was a quite focused person when we talked about business, being a Founder of Goldman Sachs, he ensures his operation department excels. Recently an idea struck his head & he wanted to get custom software developed to provide more efficient investment backing services to his clients.
Being a seasoned expert in the industry, we thought to outsource this development work to let his team achieve excellence in operations more efficiently than before. To meet his requirements, he reached out to us to get the software solution ready.
Reduced Risk
By using software outsourcing, organizations can reduce the risk associated with technological investments. The outsourcing software service provider would take all the project management & technical responsibilities on their shoulder.
Now, let’s understand a few challenges of Software Development Outsourcing
What are the challenges of Software Development Outsourcing?
Although, software development outsourcing is a cost-effective solution, yet is is not the best fit for all businesses. There are a few challenges surrounding software development outsourcing which are mentioned below:
Communication Barriers
A software development team comprises diverse team members working together from a remote location, which can pose communication barriers. Effective communication is necessary for the success of a project, as mishaps in communication can lead to delays & misunderstandings.
Some communication issues in software development include hurdles like language barriers, time zone differences, etc. But you can overcome the challenges by implementing some strategies.
The first strategy is to build diverse communication channels by using collaboration tools to streamline the communication process. Setting up video conferencing tools, emails & text-based conversations can help minimize the gaps.
The next strategy can be, that organizations can encourage open & transparent communication channels to allow members to share work progress. Moreover by doing this remote members can also seek clarifications about any concerns related to work.
Lastly, providing detailed project documentation, building communication protocols & assigning a communication coordinator can smoothen the information flow.
Quality & Risk Controls
Collaborating with remote development teams can create miscommunication & negligence, especially when you hire a partner with a questionable software outsourcing company.
But, worry not as there are two ways to tackle this concern
Before you move forward towards signing the contract ensure the outsourcing partner builds software keeping the quality standards in mind. Additionally, remember that adopting industry-level coding practices can enhance the quality control process.
By putting quality control at the top, software development teams can deliver reliable & high-quality software solution that meets the client’s needs.
The last challenge that organizations face while outsourcing software development is “Intellectual Property Concern”
Intellectual Property Concern
One of the biggest challenges that organizations face while outsourcing software development is “Intellectual Property Concern”. Companies can face IP concerns when sharing their proprietary information & codes with an external service provider.
There are several steps to mitigate the IP concerns caused due to software development outsourcing.
Some of them are mentioned below:
- Conduct a thorough Due-diligence
- Companies can sign NDAs to establish confidentiality
- Lastly, companies can establish restricted access to sensitive information & build encryptions to maintain data privacy.
Now, let’s understand what are the things you should consider before outsourcing a software development project.
9 Things to consider before outsourcing software development
Project Requirements & Complexity
Have you clearly defined the scope & objectives of the project?
It becomes difficult to manage complex development projects, as there might be a chance of miscommunication & a failed execution. But, having a proper plan in place can help both parties understand the project goals & requirements easily.
Consider which type of outsourcing suits you the best
Which outsourcing model fits the best with your project needs?
Decide whether you want to opt for onshore, offshore, or nearshore outsourcing based on the requirements of your project.
All three types have their advantages & drawbacks. Onshore outsourcing might offer smooth communication, while offshore would be more cost-effective. However, the latter one could pose a challenge to time zone differences.
Before, choosing the best fit be clear with your requirements to make a prompt decision.
Search for the right provider
Based on various aspects like industry experience & project success, did you evaluate your outsourcing vendor?
Choosing the outsourcing vendor based on the expertise, track record & cultural compatibility can be a game-changing decision. Moreover, you should look for outsourcing vendors who have experience in your industry to deploy the project successfully. Lastly, ask for the reviews & portfolio to choose the best fit.
Define your budget
What is the budget you allocated for your project? Is there anything you have planned to balance the cost considerations with your budget requirement?
Despite its cost savings as an approach, the companies are required to balance the cost & quality. Moreover, it is vital to understand the financial aspects involved & you should integrate them into your project goals.
Make sure you have a clear understanding of the project’s scope & requirements to define the cost of the project efficiently. Moreover, you should also break down the tasks & deliverables to estimate the cost of the project properly.
Protect your Intellectual property
Have planned any strategy to protect your intellectual property rights & codes?
While hiring a software outsourcing partner make sure to build proper strategies to address the intellectual property rights. Moreover, an organization is responsible for including all the clauses that protect your proprietary information, data & code. Lastly, you should also clarify who will possess the ownership of the developed software & other assets.
Evaluating potential risks & contingencies
Have you forecasted any future uncertainties & risks? If yes, do have a proper plan to address these risks?
Analyze future potential risks & have a contingency plan in place. While identifying risks consider factors like vendor reliability, change in project scope, etc. to build a backup plan.
Establish a communication strategy
Did you forget to build a clear communication plan by not including communication tools & modes of communication?
Build a clear & efficient communication strategy, as regular communication is important to ensure both parties are aligned together. Moreover, both organizations should also decide what communication tools & modes are they going to use. A remote team that possesses the right communication skills is surely going to excel in the competition of the market.
Prioritize Data Security
What are the data security measures the vendor needs to take during the software development outsourcing practice?
Being an organization it is your responsibility to ensure that the outsourcing vendor has robust security measures in place. Moreover, data breaches can have some severe consequences, so discuss the security measures & encryption methods to be used beforehand.
Quality Assurance
Are there quality standards & testing protocols defined? If yes, how will you ensure that the software meets the quality standards?
The last strategy to consider before hiring a software development service is to check for quality assurance. The organization should define proper quality standards & testing procedures.
Moreover, they should also specify what are the criteria that need to be met to achieve the benchmark. Further, they should also define how the issues will be solved if any. Lastly, they should evaluate the software’s progress based on all the aforementioned benchmarks.
Now, let’s understand are there any better alternatives to software development outsourcing services?
Software Development Outsourcing Services: Are there any competitive alternatives available?
If you are outsourcing software development because of monetary factors, then it is advisable to choose other alternatives.
For example, hiring remote tech talents will help you minimize the hiring costs & provide access to skilled IT professionals. Furthermore, by choosing IT Staff augmentation, companies can scale their team smoothly.
The decision about choosing the right model for software engineering depends on various factors. Here are a few of them
Outsourcing Developers
Outsourcing software developers can be a suitable option in the below scenarios:
- Short-term Projects:
If you have a project with a specific scope & timeline defined, choosing an outsourcing method will be useful. Outsourcing software development provides the right skill sets to make it a go-to choice when hiring developers
- Specialized Skills:
You should opt for outsourcing developers when your development team is looking for specialized skill sets that are absent in an in-house team.
- Cost savings:
If you aim to achieve cost reduction & avoid overhead costs, choosing a software outsourcing model will be feasible.
Hiring Full-Time Remote Developers
Hiring a full-time remote developer would be beneficial in the following cases:
- Long-term projects:
For a development project, that requires constant maintenance & improvements, hiring remote developers will be a viable strategy.
- Team Integration:
In case your project requires close collaboration with the existing team, hiring a full-time remote employee is better.
- Communication & Collaboration:
When consistent communication & collaboration are important, hiring full remote developers can help build real-time interactions.
Based on the above-mentioned scenarios, a company can decide which model suits their needs when working remotely.
Now, let’s understand how Acquaint Softtech has helped its clients achieve a high level of project deliverables.
How Acquaint Softtech Has Helped in Software Development Outsourcing
Acquaint Softtech is a custom software development & IT staff augmentation company that helps clients hire remote developers. Acquaint Softtech provides remote developers at just $15 per hourly rate. Moreover, our team holds 15+ years of experience in custom software solutions.
Let’s see how we helped three of our major clients attain a successful project deliverable
Gowd
Gowd had an idea where they were allowing customers to share their subscriptions or buy a shared subscription. They had a very powerful idea but lacked a team that could help them execute the idea.
That’s where we came to their rescue. Our team of developers allowed users to either share their subscriptions or buy a grouped subscription. We designed it to keep various quality checks in mind to ensure it becomes a highly practical marketplace. Moreover, we focused on simplifying its design & building an easy navigating interface.
Read the detailed case study on One-Stop Subscription Sharing Platform
Now, let’s see how we helped Great Colorado Homes in meeting their development needs.
Great Colorado Homes
The real estate industry is booming exponentially. Every real estate organization needs a website to stay ahead of the competition. That’s why our client Great Colorado Homes reached out to us. The organization had an effective idea that needed a perfect piece of execution.
We helped them develop a custom real estate website that was specially tailored to meet their requirements. We built an appealing interface to give UI/UX a WOW experience. The development was done to simplify the process of buying & selling houses. Moreover, it also offered users a wide range of resources to have a delightful browsing experience,
Read the detailed case study on Expand Your Real Estate Business Online
Wrapping Up!
In the modern tech-led era, face to face interactions has shifted from offline to an online mode. Companies are seen switching their work model from being offline to being completely online. Moreover, organizations are seen building a managed remote developer team to meet the software solution needs.
By using hiring models like software outsourcing & an IT staff augmentation model, organizations are able to hire remote developers. By hiring remote talent organizations are ensuring they get to hire skilled professionals.
