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How to successfully outsource software development?

Outsourcing software development? Here are some tips to make sure the software outsourcing is a success.

How to successfully outsource software development?

Thursday May 23, 2019,

8 min Read

 Software outsourcing is still very much in trend. But the approach to software outsourcing has changed. Earlier cost savings was the most widespread reason for outsourcing software development. Now, with changing technology and the world becoming so interconnected, access to global talent is the foremost reason for offshore software development.

In this article, we aim to provide the answer to “How to successfully outsource software development?” We leverage our experience of 10 years to give you some tips for successful software development outsourcing.

Here we cover :

1. What is Software outsourcing?

2. Why do companies outsource?

3. How to successfully outsource software development?


1. What is Software outsourcing?

Acc. to Statista, In 2018, the global outsourcing market amounted to 85.6 billion U.S. dollars.

With the rapid advancement in technology and with the way the economy is racing towards globalization, automation is the primary requirement of enterprises in every industry vertical. But automation with the help of software is not that straight forward.

[a] After you brainstorm and figure out what software will add the competitive edge, you need to go ahead and hire an IT team that can bring your idea to life.

[b] This means putting out job requirements on third-party job search sites, shortlisting candidates, interviewing and hiring.

[c] Then once the development starts, constant management to keep everything on track.

Along with these, huge investment costs on their salaries, expenses, bonuses, IT infrastructure, etc. So, all in one - a huge overhead.

What if there was an easy way? Hurray! There is. Software outsourcing or offshoring software development!

Software outsourcing is like task delegation but to a different company (often in a different country) whose production costs, as well as operating costs, are lower than your own company.

In 2018. Deloitte reported that 31% of all IT services were outsourced.

This is because outsourcing is no more constrained. With globalization, the realms of outsourcing are always expanding. Once it was about cost constraints and now it’s about quality. Let’s take a quick look at “why businesses outsource?”


2. Why outsource software development?

Software development outsourcing is much more than addressing IT needs in today’s global world. It is more about exposure to talent, faster time to market, driving up profitability, improving market competitiveness and improving customer experience.

Some of the main reasons why companies outsource software development are :

[a] Cost Cutting

[b] Focus on Core Business

[c] Save time

[d] Enhance Service Quality

[e] Access to Intellectual Capital 

Let’s examine these in details :

[a] Cost Cutting

Outsourcing saves money! We all know that. The initial savings come from not having to spend money on in-house resources. And, in house software development is expensive!

Do you know: The US is known to pay its software developers some of the highest salaries. 

So, businesses save a good amount of money when salaries doesn’t need to be transferred every month.

Also, a good amount of money is also spent on project management and marketing of the software. Apart from salaries and perks, you also need to spend some money on the infrastructure (office space, computer hardware, and software) to support IT development. When you outsource software development, you don’t have to spend money on infrastructure either.

[b] Focus on core businesses

By outsourcing non-core activities, companies can focus their time and energy on areas where they have a competitive advantage. Outsourcing these non-core yet critical business processes will help achieve the best possible business performance.

This also doesn’t put a lot of unnecessary burden on your in-house staff especially related to tasks that don’t match their skill level. 

[c] Time savings

Time is a crucial factor and outsourcing software development comes handy there too. Say, you want to upgrade to a new and more secure framework but your in-house person has no prior experience on that framework vs you outsource software development to a company that has software developers experienced in that particular framework - where will you save time? Obviously the later one.

Experts are more efficient than amateurs, and software outsourcing can help you take advantage of that.

Also, with experience and outsourcing, your time to market is faster. This is because you can dictate the timeline to your offshore software development company and it’s then their responsibility to complete the whole project and make sure it’s ready for launch.

[d] Access to global talent

When you are outsourcing software, you can hire people without geographical boundaries and across all time zones. This means no need to be constrained within the domain of local talent.

When you have access to skilled business professionals from all around the world, the entire business application can be streamlined easily and effectively.

There are various other benefits of software outsourcing. Read about the benefits of software development outsourcing in details here.

Now that we know what software outsourcing is and why companies outsource software, we must also know that 33% of all software development projects fail.

With an experience of over 10 years in software development outsourcing, let us tell you “How to successfully outsource software development”.


3. How to successfully outsource software development?

[a] List down the requirements :

You are the best judge of your business needs. Keep in mind that outsourcing takes money and time. Jot down the features you want to develop and review what business purpose they will solve.

Keeping a tab of all the features on paper will give you clarity and you can easily judge what’s required and what not. This will make sure that expectations are crystal clear from the very beginning.

Also, it will act as a reference for the software development company that you will hire. They will get an overall picture of your software at a glance. This will also help in proper estimation of the project.  

[b] Due diligence

Once you know what business processes need to be automated to drive revenue for your business, you need to find an offshore software development company that can help you develop the software.

Look through the directory sites like ClutchGoodfirmse27, etc. to get a rough idea about who are the best players in the software industry today.

*** Clutch published a list of the best software developers in India for 2019 and Binaryfolksis at #39 in the list among thousands of software development companies in india.

Or speak to your friends and colleagues for references. Or reach out to the global freelancing platforms for hiring top class developers.

Due diligence has a crucial role to play in the success of your software. Shortlist 4 or 5 companies before proceeding to the next step.  

[c] Ask for references

If someone has completed software projects for other companies within scheduled budget and time, chances are they will complete yours too.

References will tell you a lot of things about a company - Their quality of work, how professional they are, how technically adept they are, how their codes are, how good their communication skills are etc.

Also, ask the references whether they are proactive or not? This means whether they ask a lot of questions, make suggestions for improvement, brings fresh ideas to the table, etc.

This will also help build trust with the software development team.

[d] Set clear expectations and communicate

Your software development company needs to understand your business requirements. Don’t tell them that - something like this would be good. Tell them what you want exactly. Encourage them to ask questions.

Request them to jot down the whole flow as a Business Requirement Document (BRD) and discuss the flow with them. When you both are confident about the flow, ask them to start development.

Keep the estimates real. Don’t tell them to develop Facebook in 2 weeks. Collaborate with them and ask them how much time will it take to develop the software.

Leverage technology (emails, video calls, slack, Trello) to communicate with your offshore software team to set a clear line of communication from the very beginning of the project.

[e] Testing

Don’t leave testing for the last day. I repeat, Don’t leave testing for the last day. Make testing a priority from the very first day, even if it is manual testing.

Errors or bugs often starts to accumulate during the requirement or design phase and then start showing manifestation eventually. Testing early will help identify these issues and also discover functionalities that might not have crossed your mind earlier.


-::Parting words::-

Outsourcing software development surely has a lot of advantages but it has some risks too. Take a look at the risks of software development outsourcing here. That is why keeping in mind these tips while choosing a software vendor is of utmost importance.

Remember: The key to software outsourcing success lies in choosing the right software vendor!