Pushing digital initiatives is tough- considering the factors like costs & manpower for startups and SMBs, and rigid organizational structure for the established firms. But if done right, it can help in gaining competitive edge, driving real value to customers, and defining new monetization strategies.
As industries started embracing digital revolution, the need for software emerged and along came the question of how to get it.
Obviously, not all industries are equipped and well-funded to develop a software to manage their business operations or to digitalize their product. Outsourcing software development for startups, enterprises, SMBs, and all such businesses acts as a lifesaver.
But just knowing how software development outsourcing can benefit your organization doesn't mean you jump into it. You need to know everything about outsourcing software development and that's what this post talks about.
So, let's start with the basics first!
Well, in simple terms, outsourcing means delegating your business operations to a third-party to add expertise. In this kind of process, i.e., software development outsourcing, you analyze your business operations and identify the part of software development that requires expertise. It could be a particular feature of the software or the complete software development as well. Then, you find a technology partner or a software development company to join hands with. They analyze your requirements and start with the development process.
Also Read: A Complete Outsourcing Guide For Newbies
As the need to launch a digital product erupted, outsourcing software development to an offshore country has become the new norm. Whether it is to plug in the technology gap, cut down development costs, meet sudden demands, scale the development, or even upgrade the software to stay competitive, outsourcing offers the perfect solution.
From startups and small-medium sized businesses to large-scale enterprises, everyone can leverage outsourcing software development to experts and ramp up their efforts to launch a product that disrupts the digital world
Despite knowing what outsourcing is, there are many questions that arise when someone is told to outsource software development operations.
Should I outsource?
How can software outsourcing help me?
How can I ensure success with outsourcing?
What are the risks of outsourcing software development?
When is the right time to outsource software development?
How do I find the perfect software development company for outsourcing?
The list certainly goes on!
So, before you join hands with a third party and get it to start working on your software project, there are several other questions that need to be answered.
This post will help you out answer all those questions.
While outsourcing software development, having a well-planned strategy in place is imperative to ensure you are not left with any confusion during the process. Outsourcing, while in general, is the same for all industries (getting a service done by another organization), the way you implement it varies with the way of working of each organization.
Many organizations come across different challenges in their work and operations which compel them to outsource software development. They need to identify the gap before they jump into devising a strategy for their business.
Every organization has a gap that it seeks to fulfill through outsourcing. This could be a short-term gap or a long-term one, a project requirement or a technology gap to fill-in for a client project. Different organizations have different requirements. Let's talk about these in this section.
Depending on your situation, you might just need a single developer for your in-house team or you might need a complete team of all the developers, testers, designers, and everyone to turn your software idea into a reality. In fact, for some projects, you might have everything jotted down and can even give the entire project away to an offshore software development company.
Once you have identified the gap, it's time to set up a goal for your project.
No matter what the initiative, having a goal in mind can help you scale. You need to set up a specific goal that would have a realistic yet challenging value. Without a goal that is in line with your business plan, you might risk the software development outsourcing going in the wrong direction. No goal in mind would only lead to wasted time, cost, and resources. You need to have real objectives to ensure that your outsourcing endeavor is leading the right way.
Depending on your outsourcing plan, you can differentiate your outsourcing goals in the following categories:
When outsourcing software development, there are a number of long-term goals that can help you make the most of the opportunity. There could be many goals that can help you in the long-run.
Some companies might start outsourcing as it could help them get software development services at a smaller cost. It might help cut down the overall costs of the development. Many other companies believe that outsourcing can help them scale up their teams quickly.
Outsourcing can help in fulfilling any type of long-term requirement of a developer or a team of developers. Another long-term goal that you might want to set is regarding maintenance. You need to form a long-term outsourcing relationship with a vendor to ensure your software is not just fully-maintained but also upgrades as and when any new technology is launched.
In the long run, you want to achieve quality codes for your software from a software outsourcing company that also helps you cut down your overall software development budget.
Apart from the long-term goals that most people talk about, there are some short-term goals as well that you can set-up based on your requirements. These could be as simple as getting on-demand support or on-demand developer for your software. You might have a small project at hand that needs completion within a specific period. However, due to a lack of developers, it is taking longer. Hiring a remote developer for those particular hours can speed up your development.
The next goal for any software development would be to plug the technology gap. Most of the organizations, startups, and enterprise choose to outsource their software development to integrate the latest technology in their development work.
You can get an API or application program interface, a plugin, a small module, or any other thing developed for your software. This could help when the API you need is to be developed using a cutting edge technology that is yet not present in your in-house team or even in your local region.
Outsourcing can also help you with migration. When you want to migrate your website, web application, mobile application, or any other digital product from one platform to another and upgrade it, outsourcing can be very helpful. It can speed up the process of migration and help you become digitally advanced.
Even when you are planning for digital transformation, joining hands with an external technology partner can speed-up your digitalization efforts.
With goals in place, you can move ahead with your software development outsourcing plan. This is where you can think about the right strategy to choose.
The first step towards successful software development outsourcing would always be about strategy. If you have adopted the right outsourcing strategy, your outsourcing efforts are bound to succeed. But if you have had a wrong start, your outsourcing efforts would not last long. There are several strategies that businesses adopt depending on their requirements and their working.
Below, you can find the common types of outsourcing strategies that are gaining prominence.
Whether you want to fill short term technology gap or build a long-term outsourced, cost-effective center of excellence, hiring developers, or setting up an extended team is the best solution. So, depending on your requirements, you can get core developers or a complete team of developers, designers, project managers, QA testers, and others.
You can easily hire developers and build your extended teams for software development and add additional expertise to their projects. Not just a team of developers, you can also build your own team for full-stack development, on-demand for ad-hoc needs, maintenance & support, and independent testing.
Make remote team members an asset to your organization and leverage the value that they can deliver.
Another approach to outsourcing is when you outsource a particular part of your project to an offshore software development company. Here, you might need an interface for your software, want to have a new plugin developed using a new-age technology, modernize your existing software, get a single-page application, or anything else.
This is a great strategy as you can keep your in-house team working on the core of the software while the remote team of developers can build the independent module or work on your smaller project.
For startups and SMEs with smaller team size and just a few people at the management level, managing an offshore team or remote developer could pose more challenges than being beneficial. That’s where outsourcing complete project development comes to help. Depending on your requirements and the involvement you want, you can get end-to-end product development.
Ideation: Creating the product roadmap and strategy, prototyping the UI/UX, and developing the MVP.
Development: This is the stage where the actual software is developed by the developers. When outsourcing development, your idea of the software is transformed into a full-fledged software with its APIs, web, mobile, and cloud apps.
Scaling: This is the stage where your software is up-to-date and ready to rule the market. It would include everything from inbound to outbound strategy to generate demand.
The biggest advantage of outsourcing the complete project to a software outsourcing company is that it will ensure clear deliverables and reduce friction. All you need is a clear goal, a well-developed outsourcing contract with the scope, and other things listed clearly. This would help in the end-to-end development of the software in a more streamlined and speedy manner.
The next strategy is one that companies can adopt when need a complete team of developers, testers, designers, and others but neither have the time nor the resources to manage them. That's when they can contact an external company to hire full team to work on their software. The best part here is that there would be a project manager over the team to make sure everything goes as planned.
The organization can have as much involvement as it wants. It can discuss requirements directly with the project manager and ensure the work is done as described. It can even have meetings with the developers if needed.
When outsourcing, you need to be careful as to how you undertake the entire transition to ensure it succeeds. Performing due diligence before outsourcing or choosing the offshore software development company is also important.
But even before that, you need to be sure if outsourcing is the right solution for you or not. Timing is a huge factor in outsourcing success. Outsourcing when your company is neither ready or nor in need for an external source can be harmful. Same goes if you refrain from outsourcing despite all signs telling you to outsource.
So, let's find out first when is the right time to outsource and when a company should avoid outsourcing.
Many startups, enterprises, and CTOs come to us with the same question. They are not sure if it is right for them to outsource product development or hire an in-house team to do the job. If you are wondering if software development outsourcing is for you or not, keep reading to know if it is right for you to outsource.
Outsourcing software development can be a very effective way to cut down your overall cost of development. You save on the IT cost, the infrastructure cost, hardware cost, and many other costs when you start outsourcing. You can even save up to 70% of the cost by outsourcing compared to the same done in-house in regions of Europe and North America.
The next reason why you should probably choose to outsource your software development is if your local developers are not as skills as your project demands. You can always find the required skills in countries where IT talent is better and more qualified.
You already have an in-house team of developers but they are too busy in other projects. This is the time you can definitely reach out to an outsourced software development company. You would not be exploiting your in-house team and they would be able to work in their full efficiency on the current project, maintaining quality.
You need to have careful monitoring and management of any project if it is taken in-house. You need to ensure compliance, manage teams, check the code quality, and much more. With so much on your place, you might find it difficult to focus on your business growth. By availing the outsourcing software development services by an expert company, you can easily focus all your energy on things that need your special attention.
As you work with experts that you’ve chosen from across the world, all you need to do is explain your product idea to them and they would get started with the development. Moreover, bringing in expert teams to work on your project would mean speeding up your development timelines.
The next factor that convinces most people to opt for software development is the requirement for technology. The latest technology is being added in the digital world and a new version of the latest frameworks or coding languages are being launched. Finding a new developer each time you want to add this technology stack could be challenging, in terms of both time and money. By joining hands with a technology partner, you can be assured to add the latest tech stack in your software development.
Right from the start, you need to have a clear vision of what all you want from them and follow-up with them. If you have your apprehensions and doubts, here are some ways that can help you succeed in outsourcing software development.
It is very important that you pay extra attention and heed to the onboarding process of your team for outsourced services. Just like you would onboard any regular team for your in-house operations, you should treat the remote team the same way. Sharing the information about your company and its culture, introducing them to other team members, delegating tasks, and everything should be as smooth as with any in-house hiring.
Before you finalize any company, it is important that you ask them to work on your test project first. Get them to work on a smaller module or project to test how the communication goes. Also, check their trustworthiness and honesty about the process, delivery on promises, and how quick they are in developing it. You can even start with a smaller product or a prototype of the product wit MVP development.
When you have the developers or team members sitting within your physical proximity, the communication tends to be extremely high. You would end up telling them everything you know and ensuring they are clear about what’s required of them. But when you are working with remote teams, this poses a problem.
It is important that you at least give 25% of that communication time to the outsourced teams as well. You cannot just assume that they would know everything about the software, your company, or the way things work, or what you expect them to do. Say everything clearly and make sure there are zero assumptions.
The next tip to succeed when you are outsourcing software development is to be involved as much as you can in the development project. You would be totally involved in any in-house project. Do not be too carefree about your outsourcing project thinking the project managers would handle everything.
Although they would definitely take care of everything, it is your responsibility to be involved. Be available for weekly meets. Also, it is important that you give early feedback to anything and everything you feel is not going as planned. Outsourcing gives you flexibility and you can always communicate with them about your requirements to get early changes done.
While it is important to know when you should outsource software development, at the same time, it is also important to know when not to do so. Yes, there are many instances when you can work better without outsourcing to achieve success. Here are some of the things that will tell you that you should not be outsourcing software development.
Jumping into outsourcing is never a good idea if you are still not convinced that you have found the right company. There are a number of things that you need to assess before finalizing the outsourcing software development company. Do not join hands with a company just because it is offering you cheap development. Check the reviews, testimonials, portfolio, experience, technology stack, niche, etc., to ensure quality.
Before outsourcing, discuss the non-disclosure agreement, IP protection, confidentiality of your software, etc. If you see even the slightest hint of any threat, avoid outsourcing. Additionally, if your core information like the customer records, business data, etc., needs to be passed on to the company, such situations call for in-house development.
For companies like Uber, whose core business revolves around the Uber app itself, outsourcing its development is never a good idea. You need to be involved in your core business competency and cannot delegate its development to someone else.
While outsourcing is supposed to decrease the overall cost of software development, there can be some instances where it might expand your budget. For example, if you want a plugin or API developed, hiring a highly specialized professional for it could be very expensive. You can rather get an intern or a junior developer from your local area to get it done.
Even when you are outsourcing your software development to some offshore company, you are always liable to have some control over the work and access the docs or files required for the same. If you find yourself being totally cut off from the project and see the outsourcing software development companies take all the decisions, you can definitely avoid this method.
While outsourcing is known to simplify your business process, it does come with some challenges that might seem like nothing to some but be super daunting to others. Working with so startups, enterprises, CTOs, and organizations of all scale, we have come up with a list of the biggest challenges that are commonly encountered during software development outsourcing.
Improper communication is one of the many outsourcing challenges. Having assumptions is also a big setback in outsourcing software development. As you know that your development team would be sitting across oceans, communicating your expectations is a must. Ensure there are no competing priorities, delegation, or scope creep. Set clear guidelines and list everything down in the contract. Ensure transparency in communication through good communication tools.
Another challenge that organizations might face when outsourcing software development is inadequate planning. You have to plan everything up front and cannot just start with whatever you feel could be right. From the technology selection to the number of developers in your distributed team, have everything planned beforehand to avoid confusion.
Apart from conflicting company cultures, there might also be a change in the methodologies. There are different methodologies like scrum, waterfall, agile, etc., and if your way of working is in stark contrast with how your outsourcing company works, there might be many challenges.
There are several companies that have successfully outsourced but later get too dependent on that company. This is unhealthy and called vendor lock-in. For effective outsourcing, it is important that your partner outsourcing company is efficient in knowledge transfer post the development.
The next challenge that many companies face when outsourcing their development work is project management. In many cases, you are supposed to manage the entire team while in others you can get managed teams. It is important that you give special regard to project management.
In many cases, the CXOs or the software owners are able to share every detail about their software in-depth. But where they lack is sharing the business context. It is very important that you also share your business context. Knowing the target users, market, demographics, and what value you intend to get from this software product would help the outsourcing company to serve you better.
When it comes to outsourcing, there are several opportunities that it brings with it. It is not just a moniker of offloading your software development to another company, it brings with it some extraordinary opportunities for you as well.
Businesses that outsource their software development get the benefit of focusing on their core business functions. While the outsourcing company is focusing on building your software product, you can pay attention to what’s working and what’s not going right with your business. You can actually upgrade your business with strategic planning.
Cutting down your cost is one of the biggest advantages of outsourcing. You can cut down your cost by a large margin if you strategically plan your outsourcing endeavor. If your objective is to minimize your cost or launch the software at the minimal cost, there is no better option than outsourcing.
In case your project is high-aimed and needs technology expertise, getting a highly specialized technology partner is easy in outsourcing. You can choose a company that brings to you the latest tech stack and can deliver the integration you require.
In addition to cost reduction, you also get to share the risks with the external outsourcing software development service provider. While you have your in-house team working on some functions, this outsourcing team can pitch in the expertise of an external team as well.
Bringing together a team of developers for in-house operations could take a long time and if you have demand volatility, you do not have the excess time. Outsourcing gives them an edge with flexibility, You can scale your team up and down very quickly as per your software demands.
As the world is turning into a global village, many countries are opening doors and offering outsourcing services.
Apart from India, China, Ukraine, there are several other countries that offer outsourcing software development services.
When you are planning to outsource your software development, there will always be a question around which region to choose for. Countries across the world have started offering outsourcing services to organizations across the globe. If you wish to know the major outsourcing regions from which you can choose your outsourcing partner for software development, here is a list of the same.
With IT hubs like Bangalore, Hyderabad, Gurugram, and similar cities, India is fast gaining popularity as one of the best countries to outsource software development. India produces over 3.1 million graduates and 300,000 graduates each year. Not only does India have great IT talent, but the cost of outsourcing is also pretty low. You can hire remote developers for at low as $15 per hour from India. The people are also fluent in English, eliminating any language barrier.
With 92% of the Philippinos speaking English, the Philippines has become a great country to outsource software development. However, there is still a bit of a technology gap. So, if you have complex software to be developed, it is probably best that you chose some other country. The Philippines is best for simple software development.
As per the stats from HackerRank, Poland ranks third in housing the most skilled professionals. However, language continues to pose a barrier as only 30% of the Polish people consider English as their second language.
With 4.7 million tech graduates being churned out by China every year, this country is one of the most popular destinations for western companies to develop any type of software. However, there are challenges here as well. Only 10 million of the 1.3 billion Chinese population speak English. Moreover, IP protection and piracy is also an issue in this country.
Ukraine has great tech talent and can be trusted with all types of software development projects. While English is not a common language there, over 80% of their IT populace can communicate in this language. Its time zone also overlaps with the US and UK, giving you better flexibility.
India has gained popularity as a hotspot outsourcing destination. Many companies from across the world have joined hands with Indian companies to outsource their software development. In fact, as per a recent survey, 85% of the companies based in the United States prefer outsourcing a majority of the operations to India. Whether it is data processing, eCommerce management, search engine marketing, software development, or any other kind of IT software outsourcing service, they love outsourcing to India.
There are several reasons why outsourcing software development to India is a great idea. Here are some:
With over 3.1 million graduates each year, India has a pretty large talent pool. There are over 200,000 software engineers serving in India who have experience in the field. The IT sector of India employs over 3 million talented individuals. You can easily find your perfect software engineer for the development work in this country.
The Indian government has taken several initiatives to boost the IT sector and take it to the global level. It is making outsourcing to India secure for foreign countries and welcoming global corporations. The government has taken the “National IT Task Force” 108 point Action Plan to boost this sector. The country’s cyber law is also on point to ensure there is no threat to your security or intellectual property.
The country is 9.5 hours ahead of the USA, 4.5 hours ahead of UK, 3.5 hours ahead of Europe, and 4.5 hours behind Australia. However, it doesn’t let this time difference create any issue with the work. The overlap period allows for easy syncing for meetings or discussions with clients. In fact, you can have your business running 24 hours as your offshore team in India would be working after your in-house team has gone home.
The next advantage that you have of outsourcing software development to India is that you save on your development cost. Going by the outsourcing cost guide, one can see that the cost of outsourcing software development to India is far less than getting the same done by an in-house team. You can get developers working for you for as low as $15 dollars. The price might go up based on seniority, expertise, and technology. Yet, it will still come under your regular in-house development.
The communication barrier was once considered one of the biggest reasons why companies shied away from outsourcing to India. India is the world’s second-largest English-speaking country. You can expect a smooth transition of thoughts and knowledge with IT professionals who are extremely fluent in speaking English.
Many people have their apprehensions that such low costs would mean low-quality codes. However, the quality of the products that Indian developers and Indian outsourcing software development service providers have delivered. There are so many ISO certified companies in India and you can trust them with the quality of the codes.
When you are outsourcing software development to India, there are certain points and factors that you should check. These factors can not just help you make a more informed decision but also ensure that you join hands with a web development company that is praised for its outsourced services.
Technology is ever-evolving and if you are not in line with what is cutting edge, your software might not be able to succeed in the market. You can check with the teams and ask them what are the technologies they are well-versed with and if they could rope in the technology you need. The company should also have the required infrastructure to handle the project efficiently.
This is an important factor as you would not want to get on board with a team that does not respond to your queries on time. In the very initial phase itself, see how long they take to respond to your initial emails or texts or calls. Good communication is the key to succeeding with your software development and if the company cannot be available when you have any requirements, you can choose to not choose them.
What type of partnership you want to have with the company is also an important factor to judge the company on. Check their service or engagement models. They might be offering end-to-end software development, only providing remote developers, offering complete dedicated teams, or might even be working on just short term projects. Know if you and the company are both on the same page before getting started.
One of the most underestimated aspects but an important part of this process is the maturity level of the management. It is imperative that you know how experienced their managerial team is and the project managers are. This could help in a smooth transition and more efficient management of your project.
Your Intellectual Property is your right and one of the biggest apprehensions that companies have when outsourcing software development is the theft of their IP. It is important that you check the contract, their terms on IP protection, Non-Disclosure Agreement, confidentiality protection, etc. Also, check that the company is ready to comply with the regulations and standards of your company, your country, and all else.
Each project has certain budget limitations that it needs to abide by. You need to find a company that would fit in with the budget that you have. Check all the costs that would be included in software development. You cannot compromise on the quality of your project. You can also check the hidden costs and ensure that there are no added costs that the company might add in your contract.
Also Read: Outsourcing Contract: What You Need To Know
The next thing to check when you are choosing a company for outsourcing software development is the portfolio. Check out the portfolio of the company. What type of projects they have worked on and what is their expertise.
The next thing that you need to check is the testimonial. You can check what the customers have been talking about the company. It’s not just the reviews on the company site but also on other review sites to ensure that they are actually a customer-serving organization.
We hope you have a clear idea of what and how outsourcing software development can help you with your business. At Classic Informatics, we have over 18 years of experience in the domain of information technology.
As a software development outsourcing company, we have assisted hundreds and thousands of startups, enterprises, CTOs, and organizations of all scale build their software and move ahead in their journey to digitally transform. Whether their objective was to save costs, develop a state of the art software, or speed up the development, we have proven our expertise and garnered a lot of applause.
By outsourcing to our software development team, you can infuse your project with a talented workforce, high-quality codes, and seedy development.