Outsourcing Software Development

Over the last few decades, software development outsourcing has grown dramatically. Approximately 64% of all businesses now outsource their entire development process!

So why not?

Outsourcing software development can provide numerous benefits such as cost savings, improved product quality, and more.

In this article, we’ll define software development outsourcing, as well as its benefits and drawbacks. We’ll also go over five common software outsourcing models and four effective tips for outsourcing your software activities efficiently.

What is Software Development Outsourcing?

A company hires a third-party service provider to handle its software development projects in software development outsourcing. Development services can include creating custom software for your company or creating commercial software for your customers.

Outsourcing software development services frees up your internal IT team to concentrate on core competencies like growth and innovation.

In fact, you can outsource your entire development process, just like 64% of all businesses!

Let’s take a look at some software development services you can outsource:

• UX Design: Offers usability consulting, front end, and UX design services for TV, PC, and mobile devices across all industries.
• Feasibility Study: Assists in benchmarking your product idea through feasibility study, proof of concept, and user testing to minimize risks in the early stages.
• Consulting: Offers technology advice to easily implement the optimal technology stack for custom software development requirements.
• Software Architecture: Helps design solutions quickly and more efficiently for projects at different scales.
• Software Testing: Provides a full range of software testing services to produce a fast, reliable, and efficient software product.

But where do you outsource to?

While Egypt is popular offshore destination due to its low costs and English language proficiency, you can outsource to any location that best meets your needs.

You can choose between nearshore, onshore, and offshore software development outsourcing models depending on your location.

This is what they mean:

• Offshore outsourcing: Outsourcing to a company or freelancer in a foreign country. 
• Onshore outsourcing: Hiring an outsourcing services provider within your own country, either remotely or on-site.
• Nearshore outsourcing: Outsourcing services to a company from a nearby country.

Let us now look at the numerous advantages of software development outsourcing.

4 Key Benefits of Outsourcing Software Development

The following are four advantages of outsourcing your software development team:

1. Cost Savings

This is the primary reason that businesses outsource their software development processes.

In fact, 59% of all businesses use outsourcing to reduce costs!

How does outsourcing save money?

Hiring an in-house software developer can be costly because resources are used for scouting, training, and onboarding new employees.

Hiring an outsourced team allows you to save money on these hiring costs. Furthermore, you will not need to invest in office supplies or train them.

The cost of living also differs significantly between developing and developed countries. For example, the cost of living in London is significantly higher than in Egypt.

You can also hire top-quality talent from developing countries like Egypt at a fraction of the cost by outsourcing your software development team!

2. Access to Global Talent Pool and Cutting-Edge Technology

When looking for talent, you are not limited by geography when using outsourcing.

Instead, you’ll have access to a plethora of third-party vendors from all over the world to handle your custom software development projects.

What is the advantage?

The majority of these software development firms have gained technical expertise through their work with a diverse range of clients.

Outsourced teams have access to cutting-edge software development tools to manage these clients and projects. This will allow them to easily adapt to your company’s needs!

There is an outsourced team to handle any project, no matter how specialized it is!

Outsourced teams may also use Agile development methods or DevOps, which allow them to be more productive. These processes can also help to reduce time to market, allowing your company to rapidly increase its technological capability.

3. Greater Focus on Core Business Processes

Outsourcing benefits your internal team as well!

You can reduce the workload on your internal tech team by transferring time-consuming projects to an outsourcing vendor. Because these outsourced teams do not require additional supervision, your employees can devote their time to projects that directly contribute to business growth.

Furthermore, rather than forcing your in-house development team to handle projects they are not equipped to handle, simply outsource it to a third-party vendor!

As a result, your full-time employees can focus on strategic goals that are appropriate for their skill level, while the outsourced team focuses on these niche software solutions.

4. Improves Product Quality

Having an outsourced software development team can often improve the final product’s quality.

How?

Your outsourced team can have dedicated testing and quality assurance resources to ensure that the final software product is stable and provides a better user experience.

Furthermore, because your outsourced team may have new ideas for improving your software solution, it can lead to more innovation. They may even propose new approaches to existing business problems.

Let us now look at the risks associated with software development outsourcing.

3 Major Challenges of Outsourcing Software Development

Here are three issues you may encounter when outsourcing software development:

1. Communication Barriers

This is one of the most significant disadvantages of outsourcing.

You may need to overcome issues such as language barriers, cultural norms, and time zone differences.

For instance, if your outsourced team is on the other side of the world and encounters a problem while you are sleeping, they will have to wait hours for your approval on a change!

This can significantly slow down the problem-solving process and even impair productivity.

So how do you bridge the communication gap?

Here are some solutions:

• Use collaboration tools like Slack and Jira to manage your processes.
• Encourage transparency by checking in with your remote team every week.
• Identify potential language barriers and hire a translator if necessary.

2. Privacy Risks

When working with an outsourced team, there may be some security risks.

Consider this.

You disclose sensitive company information to a third party and rely on them to use it correctly.

An individual employee has the potential to steal or replicate your outsourcing software or algorithm. Alternatively, if the outsourced company’s database leaks, your sensitive information may be jeopardized!

How do you reduce these risks?

Here’s how you can safeguard your data:

• Ask software vendors to sign an NDA (Non-Disclosure Agreement) before sharing your data. This document legally restricts them from sharing trade secrets.
• If your software is proprietary, include the intellectual property rights clause in the contract. This will protect you from any copyright infringement issues in the future.
• Use performance monitoring tools to monitor your outsourced team. This will help you keep track of what they’re doing and accessing.

3. Code Quality Issues

There are no hard and fast rules for what constitutes high or low code quality.

However, code quality can be loosely defined as a set of attributes that must be communicated to the outsourced team. Clarity and maintainability are two essential characteristics.

In addition to errors caused by miscommunication, adherence to quality standards can be a challenge if you’re a non-tech firm lacking significant coding expertise.

For example, you should be able to determine whether the code is properly formatted, documented, and tested in order to ensure long-term success and bug-free execution.

How do you keep quality issues in check?

What you can do is as follows:

Check to see if the software development outsourcing company has a quality assurance process in place, including code review and unit testing.
To stay on top of the development efforts, hold regular meetings with the team.
Use project management tools such as Trello and Basecamp to track bugs and manage backlogs.
Sure, these can be difficult, but with the above-mentioned proactive measures, you can overcome them.

If you want to outsource software development, you must first select the best model for your needs.

5 Common Software Outsourcing Models

The best part about outsourcing software development is that you have complete control over your outsourced team!

To meet the needs of your business, you can use various models to outsource the development, maintenance, and testing of your software solution.

Here are five models for team management that you can use:

1. Project-Based

This model entails outsourcing the entire software project from start to finish.

You can give the outsourced team project requirements, and the team will work on the project from start to finish.

Before the project begins, you and the outsourced team agree on the project’s price and deadline.

Note: Typically, pricing is not based on the number of hours worked or the resources used. This gives the outsourcing developers complete control over the project’s planning and execution.

When should you opt for this model?

• If the project requirements are clear.
• If the project scope is fixed.
• If the deadlines are known and agreed upon by both parties.

2. Dedicated Team

This model entails contracting with a third-party outsourcing vendor to hire a team of skilled experts. These outsourced software development experts collaborate and serve as an extension of your core team.

When selecting a development team, you can assess them with a short coding test to see if they are ready to take on the necessary tasks to develop software for your company.

A dedicated team can include a variety of skilled professionals, such as a software engineer, designers, and UX specialists. They make certain that your product development processes run smoothly and efficiently.

A dedicated team is similar to a remote team in terms of management. You can hire a project manager who will communicate with your outsourced team and report to you.

Unlike the project-based model, pricing is determined by the number of hours worked and the number of dedicated team members hired.

When should you opt for this model?

• If you’re looking to build a long-term relationship with an outsourcing company.
• If your software requires regular maintenance and updates.
• If your software is highly scalable.

3. Staff Augmentation

In this model, a third-party vendor builds the software development team, but you are in charge of the core processes.

You, as the client, are in charge of managing the software development project and all of its individual tasks. You are also in charge of distributing responsibilities within the outsourced team.

Meanwhile, the developer is in charge of the team’s output. They also handle employee issues such as vacations and compensation.

When should you opt for this model?

• If you’re looking to be more involved in the development process.
• If you want more creative control during software development.

4. Time and Material

The Time and Material (T&M) model is made up of projects with a clear end goal.

This outsourcing model typically calculates in person-hours of effort, and the client pays only for time spent on development.

Furthermore, because T&M is typically based on Agile methodology, all stages of development are visible. This increases the chances that the deliverables will meet your expectations.

And the contract with the outsourced company is fully realized once you accept the final results of the work.

When should you opt for this model?

• If you have a clear goal for the project.
• If you’re looking for a short collaboration engagement.

5. Fixed-Price

The Fixed-Price model has no external dependencies and a well-defined scope and requirements.

In other words, it is not limited by time or resources. And you, the client, are charged based on pre-determined milestones and specifications.

What happens if you want to add or remove a feature?

Under this model, the implementation of new features is negotiated in a separate statement of work. However, paperwork and approval for new features can take longer and may cause the entire development cycle to be delayed.

When should you opt for this model?

• If you want to develop a small project.
• If you have a clear scope and defined schedule for the project.

4 Simple Tips for Effective Software Development Outsourcing

When outsourcing your software development processes, keep the following four things in mind:

1. Choose the Outsourcing Provider Wisely

Your software’s quality is heavily influenced by the quality of your outsourcing provider.

A high-quality software development firm can create excellent software that will increase your company’s productivity. Hiring a software development company with a bad reputation, on the other hand, may jeopardize your operations.

So, how do you find the best software outsourcing firm for your company?

Reading reviews and testimonials about software outsourcing service providers isn’t always enough. You should look at some of their previous work.

Their work reflects their quality and abilities. It also demonstrates their technical abilities.

Begin by looking at apps, websites, and other software that they’ve created.

Keep an eye out for the following features:

• User experience: How easy it is to navigate it and engage with content.
• Mobile functionality: How well the tool works on mobile devices.
• Design: How aesthetically well-crafted the software is.
• Software load timings: How quickly the tool loads.

2. Start with a Test Project

Before hiring an outsourcing software development company, you need to be sure about its capabilities.

Start by asking their team to work on a trial software development project. Their performance on this project can help you decide whether you want to continue working with them.

Here are a few things you can learn about your outsourcing partner through this test project:

• Communication skills: Does your outsourced team ask important questions? Are they able to follow instructions effectively?
• Trustworthiness: Is your outsourced team open and honest about their processes? Are they able to deliver on their promises?
• Time management: Does your outsourcing partner create internal deadlines of their own? Are they able to submit work on time?

A test project may necessitate an investment of time and resources. However, it ensures that you will not face any major issues in the future.

3. Define Goals

It is critical that you clearly define the objectives of your outsourced project.

But keep in mind that they must be realistic, well-balanced, and attainable.

While the objectives of each software development project may differ, establishing clear expectations from the start can have a significant impact on growth and development. It is also critical for determining success when outsourcing.

Assume your outsourced project requires additional resources during the course. You can then assess whether it is consistent with your objectives and make your decision.

Furthermore, as your project progresses, you should conduct timely evaluations. This can assist you in making the necessary changes before investing too many resources.

4. Use Performance Monitoring Tools

One disadvantage of outsourcing software development is the difficulty in monitoring the performance of your remote technical team.

Consider this.

Your outsourced team may be located thousands of miles away.

How will you confirm:

• If they’re working during office hours.
• If they’re accessing non-work-related websites.
• If they’re billing you for idle work hours.

Wrapping Up

Outsourcing is one of the simplest ways to save money and accelerate your software development process, whether you’re a startup founder or a CTO.

While it can be difficult, you can easily overcome it by setting clear goals, communicating clearly, and monitoring in real time.
By outsourcing software development, you will have no trouble leveraging a talented workforce to accelerate your company’s growth rate!