The Complete Guide on How to Outsource Software Development

If you don't already have an in-house development team or don't have capacity to deliver a product inhouse, outsourcing a development project can be a great option, 

While outsourcing development may be easy for those with enough experience, it can be time-consuming and tedious for CEOs and startup founders without experience. This is because, in order to find a great outsourcing team, you need to establish strict software requirement, choose the right hiring model and be involved in the vetting process. 

If you are ready to start building software, using an outsourced dev team, you need to have an understanding of what key steps to follow in this process. This article provides advice on how to outsource software development successfully. 

Looking for the right software development outsourcing company? At Deazy, we make it easy for you to hire experienced software developers from our team of vetted specialists. Hire vetted developers across tech stacks, and let us build your ideal software development team. Book a call with us today!.

Key Points

• Software development outsourcing is when a business hires an external development team to develop a software product. This practice is useful if the firm doesn't have an in-house team or wants to augment external developers with their existing team.
• Before you start looking for an external team to develop your software, you should know why you need the software, decide on the hiring model and the location you want to hire developers from and choose your technology stacks.
• While choosing the right partner can be difficult, asking questions to know if they have done a similar project and the kind of clients they have worked with will make your job easier.
• Depending on your location, you can outsource to an onshore, offshore or nearshore team. Or you can use multiple outsourcing models as long as they work for you.  

What Is Software Development Outsourcing?

Software outsourcing is when a firm contracts an external software development agency to carry out all the tasks of developing its software product. 

Organisations prefer to outsource their development project if they don't have an in-house team or there is a skill shortage, and they want to fill the gap by adding external devs to their in-house team. 

Development outsourcing has many benefits, including improved efficiency, cost reduction, access to global skills and fast development time. 

All these benefits are reasons businesses outsource their project, but you must choose the right partner to get the most. Let's dive into what you should consider before outsourcing development. 

Outsourcing Software Development: Things to Consider

Here are things to consider before outsourcing your project.

Consider Your Needs 

Do you run a software-dependent business? Most businesses can't function without software, hence the need to develop one. Identify your business needs and translate them to development requirements. Do you have an internal team to develop the software? If you don't, then you need an outsourced team.

What is your estimated budget? Before hiring, you must determine if you have the funds to cover the project cost. Since the software's complexity determines the development cost, you should prepare your budget based on your project requirements. 

What skill do you need? Or, if you have an in-house team, what skill gap do you want to fill? Your project requirements determine the skills you should look for when outsourcing. If you need an iOS app, you must hire developers with iOS skills. Or, if you need an Android app, you must hire a team with Android development skills. 

Consider the Outsourcing Model 

You can choose different models when hiring an outsourcing company. They are the relationship and contract-based outsourcing models. Choosing the right model is crucial because it determines if the developers will work per project or hour when building your software. 

Let's consider the relationship-based outsourcing models. 

• Team augmentation. In this relationship-based model, you hire a third-party development agency to boost your in-house team. The augmented team can either work onsite or remotely. You don't have to bother about normal employee costs like training, onboarding and benefits. An example is asking an external agency to provide a Kotlin programmer because you don't have one to build your app. This model efficiently fills in skill gaps in your in-house dev team.
• Project-based model. Using the project-based outsourcing model, you outsource everything to an agency that will handle your project, from planning to deployment. This model is for CEOs with little to no experience or technical expertise in developing software. An example of this model is an e-commerce store that doesn't have an in-house development team hiring a development company to build software. For some, this approach is the fastest and most convenient because they don't have to worry about development risk, project management and technical issues that might result during the development process.
• Dedicated team. Hiring a dedicated team is best if you have a complex development project. The external agency builds the team consisting of a project manager, developer, QA engineer, UI/UX designer, software architect and tester. Engaging a dedicated team is like having an in-house team; however, you don't hire them directly. The greatest advantage of a dedicated team is that you have all the skills you need to build your software. 

In the contract-based model, there are two options you can explore. These are the fixed-price and the time and materials models. 

• Fixed-price. You and the outsourced team will agree on a set rate before starting the project. The set rate is based on the estimated time and resources needed to build your software. An example is a dev team that charges $2,000 to build software for its client. The fixed-price model has two advantages; it is easy to set up and prevents overpayment. However, changing your requirements after starting the project is difficult if you have reasons to. If there are bugs in the code, you keep the software like that, or the developer will fix it, without additional charges. That is why this model is suitable for small software development projects.
• Time and materials. If you want to pay the developers for the time spent building your software, this model is right for you. If the programmers spend 100 hours developing your software, you pay them based on a fixed hourly rate. So, if you agree to $30 per hour, you will pay $3,000 for the software. This model is the best approach for software development because it favours you and the outsourced team. Also, it makes it easy to add changes after starting the project. 
   

Consider the Location

In this model, you can hire onsite, onshore, nearshore and offshore developers. 

• Onsite outsourcing. The external team functions like your employee because they work from your office. The advantage of onsite outsourcing is that the developers will get familiar with your business and can build a software product that meets your customers' expectations. Since you don't hire the team directly, paying for the resources they use and benefits is unnecessary. However, hiring onsite developers for rare skills will be difficult if you have a skill shortage in your location
  
  
• Onshore outsourcing. In onshore development, you will contract an external software development team to build your software; without working from your physical location. An example of onshoring is a firm in Washington hiring a dev team in Florida. The onshore outsourcing model makes it easy to find expert developers within your country if you have a skill shortage in your location. Also, since you are both in the same country, there will be no communication or cultural barriers. But onshore outsourcing is more expensive because you share the same living cost with the development team.
  
  
• Nearshore outsourcing. In nearshoring, a business will hire a dev team in a nearby country. For example, a retail business in the United States can hire a software development team in Mexico. Since Mexico is close to the US, they share a similar time zone and the chance of finding programmers that understand the business language is high. Nearshore development guarantees that you find programmers at a much cheaper rate than onshore and onsite outsourcing. It is a cost-effective way to outsource your software development project.
  
  
• Offshore outsourcing. You can choose the offshore outsourcing model if you don't mind hiring an external team in a far country to build your software. An example is a US firm outsourcing to a team in India. Since India and the United States are in different time zones, you should expect communication and cultural differences. However, most businesses will outsource to an offshore company because they usually charge much less than onshore and nearshore agencies.
  
  
• Multisourcing. You use several outsourcing models as long as they serve you right. For example, you can hire onsite devs and plug onshore developers with your team. Or, you can hire software engineers from a nearshore developer team and hire UI/UX designers from an offshore team.

There are different countries where you can outsource your software development project. We will group them by region to make it easy to know if you are nearshoring or offshoring when selecting any of them. 

Focus on Scalability

Most software development companies have a flexible hiring model that makes it easy to expand or reduce your team size whenever you want. This means that if the workload suddenly increases during the development process, they can help you to add more experienced programmers without disrupting the development pace. Before settling for an agency, you should determine if they have measures to scale your team should the workload increase.  

How to Outsource Software Development 

Mindful preparation and strategy creation are often key to getting it right when it comes to outsourcing software development. You have to define your goals and technology stacks, prepare your scope of work, choose the right partner, set clear expectations and start with a test project. 

Define Your Goal and Technology Stack

Before beginning outsourcing planning it's important to establish what you want to achieve. If you already know the kind of software you want, you can make a list of all the features you want on it.

Always ensure the result meets your business needs and customer expectations. There are three goals basic you can set for the outsourced team. 

• Ensure on-time delivery
• Accomplish all the project requirements
• Maintain high quality.

Based on your specific software needs you may also want to think about personalised goals which suit your build requirements, project timeline and goals. 

With these goals in mind, you will be able to make the right choice and choose a reliable partner that can deliver quality at all times. Remember your development goals should be SMART – Specific, Measurable, Achievable, Realistic and Time-bound. 

Aside from defining your goals, list all the technology stacks (programming languages, frameworks, a database, and front-end and back-end tools) needed to build the software. This will help you outsource to a team with all it takes to develop your software. 

Choose the Right Partner 

At this stage, choosing the right development company should be easier. You can find a development partner in your country, in a nearby country or a far away country. No matter where you hire, prepare some questions to ask before making up your mind.

Common questions include:

Could you share some examples of similar software development project you have delivered? 

The answer determines if the outsourced team has the right technical expertise to develop your software and if they have done something similar to what you want. You can get the right software if you outsource to a team that has done something similar. 

Don't just settle for one or two vaguely similar projects; the more the software development company has, the more experience and the likelihood that they can develop software that meets your business needs. 

Can you provide references from similar projects? 

If the outsourcing company shows you similar projects, they should be able to back them up with references. This will tell how the delivered software has performed for the client and helped the business.

If you can get positive reviews from two or three businesses your potential outsourcing partner has built software for in the past, that is a good sign that they might be the right fit. 

It will help you determine if your development partner has worked with companies similar to yours. For example, small startups will not want to work with a larger software development company that handles many big businesses. They might discover that their project is not prioritised, which might slow things down. 

Set Clear Expectations 

Setting clear expectations from the beginning will positively impact the development process. Your expectations should align with your goals to get software that meets your business needs. It is a good idea to perform several evaluations to track progress and provide feedback during development. 

Start with a Test Project 

You can ask the software development team to work on a trial project. Their performance can help determine if you want to continue working with them. This will ensure that you don't face issues working with them in the future. During the test trial, watch out for how they communicate, manage time, and if the team is trustworthy and follows best practices. 

Outsource Your Software Development Project to Deazy

One advantage of outsourcing your software development project to Deazy is that you don't have to go through all the above-mentioned steps. 

At Deazy, we simplify software development by providing you with experienced, vetted developers from our ecosystem. No matter the complexity of your project, we can help you find programmers across tech stacks and build your ideal dev team. 

When hiring an outsourced team, one thing to consider is scalability, and that is where we shine. Our flexible hiring model makes increasing and decreasing your team size easy based on your workload. 

There is no one size fits all solution to software development, so we intelligently match our clients with the right developers capable of handling their projects. 

Ready to build your software the easy way? Book a call. 

Conclusion

Outsourcing software development requires careful planning if you want the right partner. That is why you should first consider your needs, choose a hiring model that works best for you and hire onshore, nearshore or offshore developers. 

On how to outsource software development, you should define your goals and choose your technology stacks before searching for a development outsourcing partner. 

Set clear expectations to help you understand what you want from the outsourced team, and remember to start with a test project. 

Frequently Asked Questions 

How do you outsource software projects?

To outsource your development project to an external agency, you should define your goals, prepare the scope of work and define your technology stacks before assembling a team of experienced developers. 

What are the benefits of software development outsourcing?

There are several advantages of outsourcing your software project. They include access to a large talent pool, cost-saving, high-quality and faster development. 

When should you outsource software development? 

If your business depends on software and you don't have an in-house development team, you can outsource your software development project to an external agency. Another instance is if you have a skill gap and want to extend your internal team with the outsourced team.