How to Outsource Software Development: A Comprehensive Guide

24 July, 2023
Every business needs the support of technology to survive the fierce market competition. However, developing a software solution using in-house facilities might not be an economically feasible choice for many enterprises.

This is where the software outsourcing concept comes in. Even start-ups and small businesses can enjoy the edge of technology when they can afford customized software solutions for their businesses.

What Is Software Outsourcing?

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Software integration remains a necessity for every business today. Now, you have two ways to do it. You can either outsource software projects to software development firms or develop them using your in-house resources.

According to the latest data, outsourced software development has become a rising trend over the last few years.

This means that businesses are now relying on expert software development firms for developing their own software solutions. You should outsource software development if developing one using your internal resources costs you more in terms of money, time, and manpower.

What Are The Advantages And Disadvantages Of Software Outsourcing?

Outsourcing is a widely used choice that businesses do for several requirements. Especially for tasks that require special skill sets of the employees, time, and investment, most enterprises find outsourcing the task to the experts to be the best alternative.

By the same logic, outsourcing software development has also become a widely picked alternative. Like every other outsourcing process, software outsourcing also comes with its share of evens and odds. Before outsourcing the process, understand what are its benefits and problems.


· Less Time-Taking: When experts take care of the software development task for your business, they deliver you the final product within a predefined deadline. You can often choose this deadline.

If you are in a hurry, professional firms will develop the software based on standard templates. If you need something customized, the time required would be a little higher but not long enough to make you repent your decision of outsourcing development of software.

· More Goal-Driven: You just have to make the developers understand the theme and spirit of your business and they will fashion software exclusively functional for your enterprise.

Additionally, at every level of development, the engineers will consult you to make the software supportive enough to help you achieve your business goals.

· Cost Effective: Maintaining an in-house software development team can be an expensive affair for many businesses. Especially small businesses shy away from embracing the digital edges due to the excessive cost of nurturing an in-house IT team.

Outsourcing the entire process will make software integration possible and financially feasible for start-ups and small-scale organizations as well.

· Lower Risks: If you outsource development of software for your business, it would help you run the business with fewer risks. When engineering firms deliver software for your business, they generally provide the client with a free test drive.

This helps you understand if the software is working effectively and flawlessly. If you come across any issues, the third-party company will make the amends to make the software perfect for your organization and customers.

· Easier Project Management: Initially, it might appear to be a tricky task to manage a project progressing miles away from you. But, if you can provide the team of experts with the essential inputs about your business goals, customer base, business operations, products, etc., the professionals will take care of everything.

Additionally, they will also contact you regularly to provide you with the latest progress updates on the project. In fact, you would feel more relaxed and content after outsourcing the software development process than you would have been if the project was done in-house.

All these benefits ensure that a business gets to grow by leaps and bounds. Outsourcing the software development process is a wise decision for all businesses. Especially for those who have always hesitated to integrate the latest technology with business operations dreading the high costs, it can be a game-changer.


Alongside the benefits, the outsourcing process of software development may also come with a few disadvantages. Here are a few such issues that you should be aware of.

· Hidden Costs: When you outsource the software development process, the company you entrust the task with, always provides you with a project cost estimate. But, when it comes to making the final payment, this estimated cost might fall considerably short of the real-time invoice value.

This means that the company you have picked had hidden charges that it did not disclose in the beginning to bag the project. This is not something infrequent in the business world. Therefore, you need to be careful about choosing the vendor in the first place.

Additionally, you should also ask for a written contract or agreement paper with a clear mention of no hidden charges.

· Security Risks: Another issue you might come across after assigning the task of software development to a third-party enterprise remains security risks.

When the company responsible for developing software proceeds with the work, they get access to confidential and critical information associated with you and your business.

To get the job done properly, this is a necessity. But, when you collaborate with the wrong partners, they might misuse the information and engender serious security issues for your company.

Again, you need to be careful while assigning a firm such a delicate task. Careful selection can keep several potential perils at bay.

· Delivery Failure: If the company managing your software development task is not professional enough, they might miss out on the delivery deadline.

In a world where competition lurks in every corner, a delay by even a single day can be costly for your business. But, professional, experienced, and reputed software development firms will never disappoint you in terms of delivery.

· Quality Issues: The team managing your software development task needs to be focused and strategic. Every business is different and so are its objectives. Therefore, template solutions might not be adequate for your enterprise.

Discuss what you want from the software and let the team of engineers know your aspirations so that they can fashion the software accordingly.

However, even after all that, if the team of professionals working on the project lacks vision, dedication, and skill, the resulting product would not be up to the mark.

Therefore, outsource the software development process only when you know about the previous works of a company. You can rely on the feedback of former clients on the company's website to gauge their quality.

In short, outsourcing software development can be advantageous only if you pick the right company to do the task. Therefore, remain attentive while choosing a software development firm from the many available in the market.

What Are The Best Practices For Successful Software Outsourcing?

The practices related to software outsourcing remain various. Before you hand over the responsibility of software development to another company, be sure to know how to outsource software development more effectively.
For different businesses, different forms of software development outsource models can be more suitable. Here are three software outsourcing models that a business may adopt based on its existing setup and resources.
·      Managed Team: In this model, the outsourcing service provider and the owner of the business share the responsibilities. The managed team, in this case, operated separately and does not remain in close contact with the in-house team. A manager assigned with the task to oversee the daily progress of the project keeps track of everything.
·      Stuff Augmentation: Stuff augmentation allows the least extent of outsourcing where the owner remains in charge of the project from beginning to end. However, the entrepreneur can hire more skilled and trained professionals to augment the in-house team to carry out software development more efficiently. 
·      Project-Based: If you want to outsource software development in its entirety; the project-based model remains the best alternative. If you do not have an IT team in place that can handle such a delicate project, you can opt for this model.

Check the present status of your technological specifications, figure out your long-run and short-run goals, and check your resources before choosing any of these models.

How Can Companies Ensure They Get Quality Results When Outsourcing Software Development?

Once you have selected a model for outsourcing software development projects, it is time to understand how to make the venture worth every penny you invest. Keep the following in mind before getting started to make the project successful and rewarding for your business.
·      Be clear about your goals. This means that your outsourcing provider should know what you have in mind when you outsource the project. You know your stakeholders such as customers, end-users, and managers better than the company that will be developing the software. Therefore, explain your business and your goals to help the third-party company develop a software solution befitting your business requirements.
·      Software outsource can be more effective when the developers get work documentation. In simple words, keep your budget, expectations from the software solution, business expansion and growth aspirations documented properly and hand it over to the team of developers. This makes working on the project with defined objectives possible for the engineers.
·      Be specific about your existing technology stack. This means that your outsourcing partner should be aware of the technical resources available to your business so that they can develop a software solution that best fits your requirements.
·      Involve expert engineers in the process of discussing outsourced software product development. Software development is a specialized task that needs special expertise. Only trained engineers can understand the jargon used by the outsourcing partner.

What Are The Risks Involved With Software Outsourcing?

When you outsource software development projects, you need to be careful about the choice of vendor. However, the common risks associated with outsourcing of software development remain as follows.
·      Inadequate communication between the business owner and the outsourcing provider
·      The business owner might not know the delivery deadlines explicitly
·      While conducting cost comparison, settling for the lowest cost service can be detrimental to your business at times
·      Hasty decisions can be a source of problems in the future
When you outsource, software developers will offer you an estimate of the total cost and the benefits you will get from the final product. Do not rely on their words blindly and always keep an expert by your side who can judge their words for you.

How Can Companies Ensure That Their Intellectual Property Rights Are Protected When Outsourcing Software Development Projects?

Outsource developers the task of devising a software solution for your business only when you know that it would not come at the cost of IPR (Intellectual Property Rights). Outsourcing software product development is undoubtedly a smart move for any business. But, at the same time, you need to be careful about your data security and other rights.
To begin with, you can revise the former agreements made by the third-party company with other clients to understand their business ethics. You can even take this agreement to your corporate lawyer to get it checked for any misappropriations.
Legal documents often do not make much sense to laypersons. Only a legal expert can interpret the true intentions of an agreement. If you find anything not favorable for your business, you should negotiate with the outsourcing provider and get it changed.
If you wish to know how to successfully outsource software development, keep these things in mind to avoid Intellectual Property Rights issues. You can even restrict the vendor’s access to data and other resources if need be.

What Measures Should A Company Take To Ensure That Its Data Is Secure When Outsourcing Software Development Projects?

IT software outsourcing or software outsourcing projects may become a threat to your company’s data security if you do not remain cautious.
·      Choose an outsourcing company carefully
·      Be clear about your expectations
·      Train your in-house team on data handling
·      Limit the vendor’s data access as required
·      Check backups regularly
·      Scrutinize all security logs regularly
Whenever you outsource software engineering firms the task of software development, make sure to keep a close vigil on their activities.
In short, outsourcing software project can be a beneficial venture for your business if you choose the vendor carefully. With a reliable, reputed, and expert vendor, realizing your dreams of reaching the high point of your business domain will be easier and less risky.
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