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Step-by-step Guide to Software Development Outsourcing

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Are you bored of keeping up with the ever-changing demands of the costs of software development projects? Is meeting project requirements proving to be a difficult task for you?

Are you looking to focus on the core business activities, but want to deliver software development projects on time?

If so then, hiring software development outsourcing services is the solution. In this guide, we’ll take you through the ocean of software outsourcing services. We’ll also cover the best practices of hiring remote developers. From understanding various software development models to choosing the right outsourcing partner, we will cover everything in this guide.

So, take note & let’s begin the journey by diving into the ocean of software outsourcing!

Let’s begin by understanding the term Software Outsourcing

What is Software Outsourcing

Software outsourcing is a process where an organization delegates its software development project to an external software development team. This team can be either a remote team of developers, software development outsourcing companies, or freelancers.

This is a practice, where companies outsource some or the whole of their project to these external software development teams. Outsourcing is done to attain cost-effective project success, improve efficiency by focusing on core tasks, etc.

Software development outsourcing services can be for various tasks like web & app development, software testing, etc.

In the recent past, this has become popular as an effective way to hire developers having specialized sets. However, it is advisable to note that outsourcing software development requires careful consideration & planning.

Let’s understand what you need to plan when looking to outsource software development services.

Now, let’s first understand why is Software development Outsourcing important?

Why is Software Development Outsourcing Important?

Software outsourcing services have become important for businesses. It helps in providing knowledge to in-house tech talents. It also helps organizations attain cost reduction by allowing the involvement of remote team members in the development process.

Leveraging software outsourcing services, also allows the organization to get access to a global pool of talent. This allows them to develop high-quality software projects faster as compared to their in-house development team.

By using software outsourcing. organizations can leverage the available resources by enabling them to focus on other core business activities.

After understanding why Software development outsourcing is important, let’s understand why companies outsource software development.

Why do companies opt for Software Development outsourcing?

There are various scenarios when companies opt for software development outsourcing services

  • Focus on core business:

Companies are on the hunt to focus on their core business activities by outsourcing software development

  • Flexibility in team scaling:

By hiring a software outsourcing company, organizations can scale their development up & down as per their project needs & requirements.

  • A sure-shot solution for any size of project

Irrespective of the project size, software development outsourcing services can help fulfill any project requirements efficiently.

  • Minimizing the hiring process

By outsourcing software development, organizations can minimize the cost incurred by lengthy hiring processes.

  • Reduction in development costs

By using software development outsourcing, companies can minimize the development costs which are higher with in-house teams.

  • Access to higher-quality talent

By hiring software development outsourcing services, companies get access to a higher pool of talent.

The above scenarios emphasize the point about why companies must opt for software outsourcing services.

Now, let’s move ahead & understand what are the types of software outsourcing

3 Types of Software Development Outsourcing

Companies leverage software development outsourcing to achieve a successful project deliverable. There are mainly three types of software outsourcing that any organization can choose from

Offshore software development

Onshore software development

Nearshore software development

Let’s begin with the first type of software development which is “Offshoring”

Offshore software development outsourcing service

This is an outsourcing strategy where a company hires software outsourcing services from another country. The organization aims to seek assistance from an external development team to achieve a successful software development project.

Leveraging offshore software development outsourcing has become popular in the recent past. Some advantages that this method provides are access to specialized skills, it increases the speed of project deliverables, etc. The biggest benefit is it enables cost savings.

By using the right software development tools, offshore software development has become easy & efficient. By using proper collaboration tools, like Asana, Slack & Clickup project management has become effective.

Despite all the above benefits, there are certain challenges that offshore software development poses. It creates challenges like cultural & communication differences. It is important to analyze these pros & cons before opting to hire an offshore software development service.

Now, let’s understand what an onshore software development service is.

Onshore software development outsourcing services

Onshore software development outsourcing services are the opposite of offshore development services. In this strategy, the company chooses to outsource their software development projects within their country, by hiring local developers.

Compared to offshore, onshore provides more valuable benefits, like communication, cultural alignment & quality control. By collaborating with local developers, organizations can avoid language barriers & cultural shortcomings.

This shows that onshoring is the perfect piece of choice for outsourcing, Isn’t it?

No, there are certain limitations to this method. One of them is, that it limits access to the talent pool to be available only from local boundaries. This type of hiring is more expensive than other outsourcing services.

Now, let’s understand the last type of software outsourcing service, i.e., Nearshore Software Development

Nearshore software development outsourcing services

Nearshore stands as the middle ground between the two previous outsourcing models. This is a practice in which companies outsource their projects to a nearby country that shares a similar time zone & culture.

This strategy enables the teams to work with skilled developers living near their country. This will result in faster travel, effective communication & better cultural alignment. By adopting this strategy, companies can also expand their operations & enter new markets.

Even though nearshore outsourcing is cheaper than onsource outsourcing, it remains expensive as compared to offshore outsourcing.

Based, on the above information, any organization can choose the right outsourcing fit that suits their needs & requirements.

Now, let’s understand some important statistics about software development outsourcing.

Software Development Outsourcing: Some Statistics to understand

Software outsourcing services have seen a huge growth in their adoption, let’s find out some statistics that prove the argument

As of 2020, IT outsourcing was valued at $92.5 billion, which is estimated to grow by 3% to 5% by 2024.

37% of small businesses are leveraging outsourcing services, which is almost over half the value of global outsourcing.

The above-stated figure is directly impacting technology like cloud computing, an important tool for 90% of companies.

Now, let’s understand some of the basic outsourcing software development models used for software development outsourcing

3 Software Development Outsourcing Models to watch out for

There are namely three software development outsourcing models to choose from while using software development outsourcing services.

They are as follows:

  • IT Staff Augmentation
  • Project-Based Outsourcing
  • Dedicated remote teams

Let’s understand all of them one by one.

IT Staff Augmentation

The first one on the list is IT staff augmentation. The staff augmentation model enables organizations to hire remote developers to bridge their collaboration with the existing teams.

In this approach organizations, hire remote developers temporarily to work with their in-house teams.

IT Staff augmentation provides various benefits like:

Access to a broader pool of skilled IT professionals.

Flexible scalability to meet project needs

Cost savings

By using Staff augmentation organizations can quickly fill skill gaps, boost their project timeline & maintain control over development processes. Staff augmentation enables organizations to combine the benefits of both an in-house team and an external team.

Project-based outsourcing

This method allows the organization to outsource certain specific projects or tasks to external teams. Instead, of hiring long-term software development outsourcing services, companies leverage this method to address specific development needs.

Project-based outsourcing model also provides agility & flexibility enabling the organizations to adapt to the changing business needs

This method lets the organization focus on its core business activities by helping them outsource other technical tasks.

When you hire project-based outsourcing services, the software outsourcing company takes full responsibility for the project management.

Dedicated Teams

A dedicated teams model enables the organization to hire a dedicated team that manages the project entirely. This remote team will be responsible for working & managing only a specific project fully.

This method is more useful to companies, that need getting custom software developed to fulfill their business needs.

As per the requirements, organizations can find the right fit for software development outsourcing services to fulfill their needs.

Now, let’s understand the Pros & Cons of Software Development Outsourcing.

Pros of Software Development Outsourcing

Outsourcing software development has become popular & organizations are using this technique to get their solution solutions delivered effectively.

This popularity has a reason behind it.

Using software development outsourcing services provides lots of advantages to companies. Let’s understand all of them.

Cost Savings:

Using software development outsourcing can help companies minimize a lot on their costs. Outsourcing development helps organizations reduce costs towards development as compared to hiring an in-house team.

Not only this, organizations can get access to highly skilled IT professionals by outsourcing to lower labor costs countries.

Access to specialized skills:

By using software development outsourcing companies can get access to a wider pool of specialized skills.

By collaborating with outsourcing companies, organizations can tap into a global network of skilled professionals with technical skills. Doing this will allow the organizations to minimize geographic boundaries.


By outsourcing software development to external parties, organizations can boost project execution boosted.

The external programming experts will bring an agile approach to the development process by accelerating the project timelines.

By using external services companies can optimize their development cycles, &complete projects for digital products.

Scalability & flexibility:

Outsourcing software development allows companies to scale their team strength up & down based on their requirements. Whether they want to ramp up the organizations for larger projects or scale down during small ones, outsourcing can help.

External teams are always ready to handle the diverse scaled-up approach using their expertise during development projects.

Focusing on core competencies:

By outsourcing, organizations can focus on other core job responsibilities by utilizing the skills of an in-house team.

Outsourcing partners will be responsible for taking all the necessary responsibility for software development. This will help organizations improve their business performance.

Now, let’s understand the cons of software development outsourcing.

Cons of Software Development Outsourcing

As it is said, anything on this earth has two sides of the same coin. Though software development outsourcing provides various benefits, it also has a few disadvantages to be considered.

Communication challenges:

Software development outsourcing is one of the pressing challenges of communication. Organizations that outsource software development find it difficult to maintain a smooth communication flow.

Using proper communication tools can help the organizations build an effective communication. Finding organizations that align with your communication patterns & time zones is very crucial for smooth integration.

Quick Control Risks

Choosing the right software outsourcing partner can be tough. When any external software outsourcing company doesn’t work as per the required quality it will result in a loss.

The organizations should ensure the quality standards used by external vendors before hiring them.

Now, let’s understand the process of hiring a software outsourcing company

10-Step Process to Software Development Outsourcing

After learning the meaning, types, pros & cons of software development outsourcing, let’ understand the process of hiring external vendors.

A software development outsourcing process comprises ten steps, let’s understand all of them one by one.

Defining project requirements

The step is to define the project requirements. It is necessary to define each project requirement to run a project delivery successfully. The company should list down the hourly rates compensated the skill set required & the tech stacks needed to work on the project.

Search for potential vendors

Based on the requirements, it is important to find all the right alternatives that meet the requirements. Based, on the list of alternatives the best fit for the project should be shortlisted.

Conducting a background check

After finalizing the outsourcing vendor based on the requirements it is necessary to run a thorough background check.

Establishing communication channels

The organizations should build & use the best communication channels to maintain smooth project management.

Setting clear project milestones

After setting the communication channels, the next step is to define the KPIs. Setting goals can help team members understand what is expected from them.

Establishing a Contract

After setting the goals, organizations need to sign contracts with external vendors to initiate the software development work.

Conducting regular meetings

Organizations should conduct regular meetings the external vendors to understand the progress of the work. By conducting meetings, the organization can understand the progress & can improvise the process if required.

Monitoring the project quality:

The organization must monitor the project quality. By analyzing the progress & process of the project company can suggest proper feedback to attain quality project deliverability.

Maintaining a good work relationship

Maintaining a good professional relationship with the vendor is essential for project success. A successful project case study always has a flavor of cooperation between the concerned parties. By building effective communication & conducting face-to-face meetups companies can build a good relationship with external parties.

Finalizing the cooperation

After the nine steps, the organization needs to move ahead to the final step of finalizing the contract. The organization should sign the deal with the external software outsourcing company mentioning all the details of the project.

While outsourcing software development going through all the above ten steps is necessary to attain a successful project deliverability.

Now, let’s understand how much software outsourcing costs.

What is the cost of Software Development Outsourcing

We have identified the cost of software development outsourcing based on different regions. To get a broader view about the costs of software development outsourcing check the below.

Best Software Development Outsourcing Regions :

  • US : $90-200 / hr
  • Western Europe : $60-80 / hr
  • Eastern Europe : $30-60 / hr
  • Canada : $35-60 / hr
  • Asia : $20-45 / hr

Based on the above table we can state that outsourcing development services from Asia is cost-effective

Now, let’s understand why Acquaint Softtech is considered the best software outsourcing company.

Now, let’s understand why Acquaint Softtech is considered the best software outsourcing company.

What makes Acquaint Softtech the best Software outsourcing company?

Acquaint Softtech is a software development company specializing in IT Staff Augmentation Services and custom software development.

Our team of experts has 15+ years of industry experience in helping our clients build custom software solutions.

We can help your organization hire remote developers who meet your requirements based on hourly rates. We have vast experience working on various programming languages.

If you find software project management difficult, then worry not we are here for your rescue.

Wrapping Up!

Outsourcing software development can help organizations in bridging the gap available in their software development team. Organizations can choose the right strategies onshore, offshore, or nearshore to meet their requirements. Different models like IT staff augmentation, project-based outsourcing, or dedicated teams can help find the right fit.

Despite a couple of drawbacks, outsourcing software development is a strategy worth implementing to meet the skill gaps.