Guide to Successfully Outsourcing Software Development

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We live in the era of artificial intelligence, and technology is an essential aspect of successful business development. Some startup businesses try to develop quick shortcut solutions and overlook the role of automation and technology- they hit rock bottom. Others attempted to set up tech teams, but they failed because of a lack of strategic and tech knowledge.

While you are struggling to get started, someone else fills the gap in the marketplace. You try everything, and nothing seems to work out for you, then there is always a hero that shows up from the shadows to save your day – Outsourcing.

Why do 64% of all companies prefer to outsource all of their development functions? Well!

  • It saves their time and money.
  • Get access to global technology.
  • More focus on critical business aspects.
  • Improve overall work and product quality.

What is Outsource Development?

Outsourcing can be defined as assigning a part of in-house non-systemized work to a third party instead of doing it entirely yourself.

The outsource work can include:

  • Design 
  • Support and Maintenance
  • Consulting and development 

By outsourcing, half of your work is covered up by third-party organizations- expense, rent, administrating the team, hiring, and planning. The financial turn-out involved with outsourcing software development is $60-90 billion per year. It is expected to grow to $100 billion by 2022. 

Types of Outsourcing

Onshoring: Where you hire professionals from your own country or city. In this type of outsourcing module, you don’t face any issues with management, communication, and cultural differences.

Nearshoring: Hiring experts within the same time zone or a difference of one to two hours. Same benefits as onshoring.

Offshoring: Where you find contractors from around the globe who have different time zones. You have access to the world’s best tech enthusiastic on an affordable budget.

Types of Outsourcing

1. No More Micromanagement

Having an outsourcing agency means your project will be co-organized by your project manager. The project manager is responsible for planning, setting the deadline and delivery dates, scheduling and organizing future meetings and demos, and looking over suggestions and complaints.

You can contact your project manager for issues and inquiries. You have to assign the task to the project manager. You have confidence that the outsourced company will take care of the assigned task. Outsourcing the difficult task allows you to concentrate more on Macro management tasks that need your complete focus and energy. 

2. Having a Talented Tech Team from Worldwide

That’s the perk of outsourcing that you are not bound with geographical location. By surveying different companies’ portfolios, and feedback from other customers, you can hire the perfect one.  

3. Balance of Skills and Rates

With outsourcing, you reach so spread out from Asian countries to Eastern Europe. Asian and Eastern European countries, such as Pakistan or Ukraine, are thriving in outsourcing. Their rates are low compared to the US and UK. 

Outsourcing to companies from these regions gets you professional and high-quality work at the best affordable rates.

4. Access to Deep Knowledge

If you lack something, that’s not even a problem because there are always talented software development companies to help you. 

You can come up with a product idea. Depending on your budget and product type, you can create a minimum viable product (MVP). The software development company can help you with project planning, UI/UX design, cost estimation and give you the best optimal effect. 

How Much Does It Cost to Outsourcing Software Development?

The main reason businesses outsource is cost optimization cost. The cost of a good office area or taxes varies from country to country. So, outsourcing saves you a fortune. The average software developer earns $77k per year in the US. On the other hand, their colleagues from Asian countries make 11 times less money. 

3 Tips for Outsourcing Software Development

Listed below are some crucial points to keep in mind before hiring an outsource software development agency or freelancer.

1. Hire Service Provider Wisely

When you outsource, the product quality depends on the team or service provider’s work efficiency.

Looking for an agency or freelance with lower rates might save you some bucks, but there is no guarantee you will get high-quality work. Hiring a professional team or person means having confidence in their work quality which helps you scale up your company. 

So, what’s the process of hiring the best software company?

  • Browse their portfolio and check the past testimonials.
  • Visit apps or websites they have worked on.

Keep an eye on user experience, design, software load timing, and mobile functionality while checking their past work.

2. Start with A Paid Test Project

Ask the company or freelance to work on a trial project for you. Judging from how well they perform on trial projects will help you decide better.

Through test project, you can learn about there

  • Communication skills 
  • Time Management
  • Professionalism
  • Trustworthiness 

Executing the test project will require some investment in time and money. However, it will be worth it to avoid any future problems. 

3. Utilize Tool for Monitoring Performance

The remote team, which is not bound to one place, comes with many benefits. However, sometimes it becomes difficult to monitor their performance.

Don’t you think?  

How will you know?

  • Whether they are working or not in-office hours.
  • If they are charging you for idle work hours.

So, what’s the solution? Time Doctor might help you out. Verizon uses a powerful tool to track employee’s work activities. 

It can help you through:

  • Payroll- Bill, your team 
  • Inactivity Timer- Ensure idle time of employees doesn’t count as work hours.
  • Timesheet Reports- Track how much employees work during office hours.
  • Web & App Usage Report: Identify the website your employees navigate through work hours.

Advantage and Disadvantages of Outsourcing Software Development 

The efficiency of work distribution and professionalism in a team define the success of any business. Where outsourcing boosts the quality of work and provides better customer service, it has its disadvantages too. 

Let’s have a look at both pros and cons of outsourcing.


  • Less Cost and Flexibility 

You spend time and energy on new development projects, but one wrong decision can ruin the product quality. A service provider freelance or outsource company knows their job. They help you make the right tech decision that scales up the business. 

  • Attention to Core Competencies

One person or company can’t manage all aspects of software development. Something prospers while other parts fall back, and the burnout of managing all the work ruins the whole process.

To save the business from potential harm, hand thee overtasks to the right expert of that aspect and have more attention to core competencies of projects,

  • Security and Support 

Company confidential data is often put at risk because of human and material limitations. Having access to software that a third-party service provider has reduced the risk of leaking of data.  

A good product also needs regular maintenance or updates. Handing this kind of task to outsource significantly helps to keep the constant update of product performance.  

  • Access to a Best Skilled and Experienced Team

A team of talented and skilled people around the globe that know what they are doing. They do their job best and learn how to achieve their desired goal. 

The trained and certified diverse team works to make dreams come minute. The main emphasis of outsourcing companies or freelancers is what their clients or employers want and how they can deliver the best service.


  • Communication Restrictions

Having different time zones and language barriers between employees and employers becomes the biggest drawback of outsourcing work. 

Meeting calls keep getting postponed because the work hours never match. Things get uncomfortable when you try to convey the issue you are facing through text or calls. 

  • Increasing Rates

Prepare compensation for a module before hiring an outsource company for your project. 

Three main models to track rates:

Fixed Price — A clear and transparent model. The best option for the completion of routine tasks. 

Time and Material — Fixing utter expense and making corrections along the way work for projects with undefined results.

Cost-plus — For complex and intricate tasks, this model fits best. It requires a reasonable and flexible budget, best or long-term deals for scaling the business.

  • Data Theft 

According to experts, outsourcing comes with security to having confidence in the experience and professional service providers. IT data infringement has gone up to 25% globally by 2020.

Tips for Managing Outsourced Team

  1. Explain your outsource company or team about your business goal in detail.
  2. Make sure everyone stays responsible for the time and delivery of projects.
  3. Make sure to monitor their performance through effective tools.
  4. Respect everyone’s different time zones and adjust a middle way to work collectively.
  5. Assign the important tasks to experts in your team.
  6. Have weekly online meetings to share work progress.

Wrap Up

The continual evolution of software development outsourcing is not only cost-effective but flexible to work. 

Now, you know the benefits and risks of outsourcing, making the right decision can be a game-changer for your business. 

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