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Outsourcing Software Development 101 for Business Owners

March 1, 2024


Outsourcing services can help you speed up the usual software development life cycle.

Are you on the lookout for a more efficient path to software development? Does the underlying concern of whether your team can meet tech demands leave you feeling overwhelmed and questioning your ability to lead a successful digital transformation journey?

We’ve all faced these challenges at one point or another, feeling stuck between the pressing need to innovate and the practical realities of limited time, budget, and expertise. This is where the value of outsourcing software development shines. And with years of experience with the opportunities and pitfalls of software development outsourcing, we’re here to guide you through every step.

Table of Contents

What Is Software Development Outsourcing?

Software development outsourcing involves hiring external organizations to handle specific software development tasks or entire projects. Businesses opt for outsourcing to access specialized skills, manage resource flexibility, and reduce development time and costs. This arrangement can take various forms, such as project-based outsourcing, staff augmentation, or dedicated teams.

Is Outsourcing Software Development a Good Idea?

Software development outsourcing is an excellent idea due to the numerous benefits it offers to businesses, including cost savings, access to a broader talent pool, and the ability to focus on core business functions. They also provide scalability, where businesses can adjust the level of external support based on their current needs. However, it’s essential to approach this decision with a clear understanding of when outsourcing is most beneficial.

Here are five situations in which outsourcing to a software development company might be a good idea for your business:

#1 – When there is a skill gap in the current team

Complex projects often require niche expertise that may not be present in your current team. When your in-house team lacks the specific knowledge needed for a project, subcontracting can fill this gap by providing access to a global talent pool of specialists with precise skill sets. This approach ensures high-quality outcomes and enriches your team with new knowledge and perspectives.

#2 – When there is a spike in demand

In fast-paced industries, the ability to scale operations swiftly in response to market demands or growth opportunities is invaluable. Software outsourcing services offer a flexible solution by allowing you to augment your development capacity on demand without the long-term commitments associated with permanent hires.

#3 – When there is a lack of focus on core business activities

Every company has its own core competencies that it will crumble without. If non-core activities are consuming a significant amount of your resources and distracting from your primary business objectives, hiring out can help. It frees up your internal resources, allowing you to focus more on these core activities and leading to enhanced product offerings.

#4 – When there is a short-term or specialized project

Hiring out is a practical choice for short-term projects or those requiring highly specialized skills for a limited period of time. Engaging with an external partner for such projects avoids the long-term financial and managerial commitments of expanding your in-house team. Subcontracting also provides the flexibility to select partners with specific expertise tailored to the project’s requirements.

#5 – When the company sets cost reduction goals

Offshoring can be advantageous if reducing operational costs is a priority or budget constraints limit your ability to execute projects effectively in-house. Geographic arbitrage allows businesses to take advantage of lower costs in specific regions without compromising quality. It significantly reduces expenses, enabling the reallocation of resources towards core initiatives.

The software development industry has positively impacted various other industries.

How Many Companies Outsource Software Development?

According to Exploding Topics, 92% of G2000 companies use IT outsourcing. This widespread adoption is motivated by the pressing need for digital agility and the scarcity of specialized skills in many local markets. As companies strive to stay competitive, subcontracting has become integral to their strategic planning.

What Does Outsourcing Software Development Entail?

Outsourcing for a software development project entails defining project requirements, finding and vetting potential partners, and establishing clear communication and management processes. It also involves setting up contracts that outline project scope, timelines, deliverables, quality standards, and confidentiality terms.

How Do I Choose a Software Outsourcing Company?

Choosing the right software outsourcing company requires comprehensively evaluating potential partners’ capabilities, business practices, and alignment with your project goals and company culture. The goal is for this careful selection process to lay the foundation for a successful and productive outsourcing partnership.

Here are seven steps to help you choose a software outsourcing firm that is right for your company:

Graphic on the Steps to choose a software outsourcing company

Step 1: Define your project requirements and goals

Before initiating your search, clearly outline what you need from the external partnership. This includes the project scope, technical requirements, desired outcomes, and specific goals you aim to achieve. Understanding your needs will help you communicate your expectations more effectively and identify well-equipped companies to meet them.

Step 2: Research potential partners

Compile a list of companies that specialize in the services you require. Use industry networks, online reviews, and professional platforms to gather information. Look for companies with a strong track record on projects similar to yours and expertise in the necessary technological outsourcing trends.

Step 3: Evaluate technical expertise and experience

Assess each company on your list’s technical capabilities and project experience. Review their portfolios, case studies, and client testimonials to understand their proficiency in handling projects similar to yours. It is essential to choose a partner with a proven track record of delivering high-quality software solutions in your specific industry or technology area, such as:

  • Healthcare 
  • Retail
  • HR 
  • Entertainment
  • Fitness
  • Hospitality
  • Manufacturing 
  • Fintech 

Step 4: Consider communication and cultural fit

Evaluate potential partners’ communication practices, language proficiency, and cultural compatibility. Ensure that your chosen company values transparency and has a compatible working style and ethos to facilitate smooth collaboration.

Step 5: Analyze development methodologies and project management practices

Look for companies adopting agile, iterative methodologies that allow flexibility and ongoing collaboration. Their project management practices should align with your expectations for timelines, quality control, and responsiveness to changes.

Step 6: Discuss and understand pricing models

Discuss pricing models with potential companies and ensure you understand what is included in the quotes. Consider companies that offer flexible pricing options tailored to your project’s size, complexity, and duration, ensuring value for money.

Step 7: Conduct due diligence and final evaluation

Before making your final decision, conduct thorough due diligence on your top choices. This includes verifying references, reviewing contracts and legal documents, and ensuring compliance with industry standards and best practices.

Is Outsourcing Software Development Expensive?

The cost of IT outsourcing can vary widely depending on several factors, including the project’s complexity, the location of the external companies, and the level of expertise required. Generally, outsourcing can offer cost advantages compared to in-house development, particularly when the region the outsourcing vendor’s network of professionals is based in has a lower cost of living.

How Do You Successfully Outsource Software Development?

Successfully outsourcing software development requires careful planning, clear communication, and a strong partnership with the right outsourcing provider. The right approach can lead to transformative outcomes for your business.

Here are three essential steps to ensure your subcontracting endeavor is a success:

Step 1: Establish clear goals and expectations

The first step in a successful outsourcing journey is to define what success looks like for your project. Set clear, measurable goals and expectations for the project’s outcomes, timelines, and quality standards. It’s crucial to communicate these objectives to your external partner to ensure alignment.

Step 2: Choose the right partner

Conduct thorough research to identify potential partners with the requisite technical expertise and a proven track record in your industry or technology domain. Evaluate their communication style, project management methodologies, and client testimonials. Consider conducting a small pilot project to assess their capabilities and compatibility with your team.

Step 3: Foster collaboration and communication

Establish robust communication channels and regular check-ins to ensure ongoing alignment and transparency throughout the project. Encourage an open dialogue where feedback is actively sought and valued. It’s also important to treat your outsourcing partner as an extension of your team, involving them in relevant discussions and decision-making processes.

WillDom is among the top software development companies in the world.

WillDom Can Help You Succeed in Your IT Outsourcing Journey!

Inadequate technical expertise and project management practices can lead to cost overruns, missed deadlines, and a final product that falls short of your vision. To make matters worse, the repercussions of a mismatched partnership can affect your company’s reputation and customer satisfaction. This is where WillDom steps in as your experienced partner in IT outsourcing.

WillDom is a leading software development company equipped to ensure your projects exceed your expectations. From day one, our commitment to fostering seamless communication ensures we are perfectly aligned with your objectives. Also, our global talent pool is curated to offer you the best in class expertise, providing innovation, quality, and efficiency in every project we undertake. Contact WillDom today and experience a hassle-free, transparent, and result-oriented IT outsourcing journey!

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