A Comprehensive Guide to Software Development Outsourcing

Enterprises today look for ways to deliver high-quality software without compromising their resources. This can be challenging. Delivering high-quality software requires an expert development team, access to the latest tech stack, automation and testing tools, and continuous collaboration. 

Moreover, enterprises must fill technological gaps, meet infrastructure costs, market demands, and scale development to survive the competition. Achieving this without straining resources is difficult. Besides, the sphere of software development keeps expanding. 

As a business owner, you may be wondering, how do I focus on my core business while also delivering high-quality software on time and within budget? You must consider software development outsourcing. 

It doesn’t matter if you own a start-up, a small-sized, a medium-sized, or a large-scale enterprise; you can leverage the benefits of outsourcing software development to experts and build digitally disruptive products.

We have created this comprehensive guide on outsourcing software development services for your business. This guide will cover how outsourcing works, its different models, and where you can outsource the best developers. 

By the time you complete reading this guide, you will learn everything you need to know about outsourcing your software projects. We will also assist you in hiring the best software development company. 

Let us begin by understanding what outsourcing means.

What Is Software Development Outsourcing?

Outsourced software development is when businesses delegate their software development tasks to third-party vendors or software development companies. It is a business strategy to reduce development-related costs and improve efficiency so businesses can focus on their core activities.

Businesses begin by analyzing their operations to identify where they need to involve the expertise of a skilled software development team. This could be for a  few specific features of the software or the entire software itself.

Based on this, they choose a software development company to develop their software. The software development company is responsible for handling all development-related tasks, meeting technological requirements, and delivering the project on time.

The software development company can be located in the same country as the client or in different parts of the world. Various software development projects can be outsourced. Some include web app development, mobile app development, software testing and maintenance, web development, and general IT support.

Outsourcing software development has become a necessity for businesses. Businesses that want to evolve with the changing technology trends need to make quick strategic decisions that proffer them an edge over the competition. Hiring a software development partner is the best approach.

While the driving factor behind outsourcing software development was a business’s financial position, it isn’t the sole reason anymore. Businesses nowadays prioritize access to specialized talent, operational efficiency, technological adeptness, and accelerated time to market.

The demand for outsourced software developers has grown over the recent years. Consequently, the demand for in-house software developers has lessened. What factors push businesses to outsource software development instead of utilizing their in-house resources?

The next section covers that. But first, let us understand the difference between outsourcing and in-house development.

Understanding In-House and Outsourced Software Development

• In-House Software Development

In-house software development means that you as a business, get to build your own team from scratch. You evaluate the candidates based on their skills and experience and decide whether or not they are a right fit for your team. You control all processes like recruiting, interviewing, and onboarding candidates.

This is beneficial when your business is focused on a specific domain. For instance, you want healthcare software development services for your medical company. For that, you need a team experienced in medical coding along with other industry-specific skills.

In-house development allows you to choose and onboard candidates that match your requirements. Additionally, you get complete control over the development process. However, this approach is not always profitable for your company in terms of revenue.

Firstly, an in-house team needs upgraded software and hardware. On top of that, the IT industry changes constantly. New tools, technologies, and programming languages are frequently introduced. You need to train your development team to keep up with these changes. This requires a lot of heavy investment.

Secondly, you need to bear costs related to in-house employees. They are costs of infrastructure, recruitment process, payroll demanded by employees, etc. Moreover, you also need to bear the costs of sick leaves, public holidays, social security, etc. on behalf of the employees.

Thirdly, when you hire an in-house team, the candidates will most likely be from nearby vicinities. This limits your resources and access to skilled talent.

While the liberty to select and exercise control over your own team may seem ideal, the costs associated with it make it seem like a less popular development mode. When you outsource software development, not only do you save costs, but you also get access to the best developers.

Software Development Outsourcing

Outsourcing your software development means hiring an individual or a team of external resources to handle your software development projects. The team you hire works remotely through a project manager.

The project manager acts as a single point of contact between you and the development team throughout the software development lifecycle. You coordinate with them to define your project requirements, budget, and timeline. There are several perks associated with this approach.

A major one is that it is cost-efficient. You do not need to bear any hidden or overhead costs relating to training or technologies on behalf of the team.

In addition, you get access to a wide talent pool. This means that if you want to get the best custom mobile app development services, you can put together a team of expert mobile developers, even if they are continents away, simply by outsourcing development.

While staying ahead of disruptive technologies is a major contributing factor, businesses are leaning toward outsourcing their software development because it guarantees stability despite organizational disruption. But that’s not all.

Outsourcing allows businesses to develop software efficiently since they are not limited by resources. When companies free up their available resources, they are able to invest in other areas of business. They can better manage demand and scale development efforts.

It is also beneficial if your in-house team lacks certain skills. For example, you want to build an EdTech application. But, your in-house team isn’t experienced in education software development. In that case, outsourcing development is a good idea.

Here are some good reasons to consider outsourcing your software development projects.

• It helps you meet tight guidelines without creating pressure on your in-house employees
• It allows you to easily handle large projects that your current team is not equipped to handle 
• It helps you free your in-house team during periods of high demand so that they can focus on high-priority tasks

While businesses consider making the move toward adopting outsourcing, they are still confused on whether it is the right business decision.  To give you a clear picture of both these types of development, we have created a comparison table based on certain parameters. Take a look.

Inhouse vs. Outsourced Development: A Comparison

5 Top Reasons to Consider Outsourcing Software Development Services

Software development outsourcing helps businesses maximize productivity while they focus on their principal objective. It is a smart business move that gives them a competitive advantage.

A key reason businesses should outsource software development is that it makes managing multiple projects easier for your team. When your team handles too many projects, it can slow down efficiency and productivity. Outsourcing a few can accelerate development.

Outsourcing your software development is the right decision if you want a team of highly skilled developers with technical expertise. We have already covered how it is a cost-effective way of developing your software.

The biggest advantage outsourcing offers over in-house development is that it empowers businesses to build high-quality software quickly. The quicker your business launches a digital product, the greater market advantage it gets.

By partnering with the right software development teams and implementing the correct strategy, businesses can benefit from software development outsourcing. Let us closely examine what those are. 

1. Gives Access to Skilled Developers
   Outsourcing lets you hire skilled developers from countries across the globe; there isn't a geographical barrier. These developers are experts in the domain and can help improve your business operation and performance. Having the best talent on your team helps you gain a competitive advantage.
    
2. It Reduces Costs
   Outsourcing helps lower development costs for your business compared to hiring in-house developers. You do not need to bear the costs of upgrading your technological infrastructure or any other costs.
    
3. Quicker Time to Market
   With consumer demand changing constantly, you must stay ahead of the competition. Outsourcing speeds up development so that you can quickly launch your digital products in the market.
    
4. Better Scalability
   Businesses nowadays are growing at a rapid pace. They constantly need to meet new market requirements. As a result, they must scale their IT infrastructure. Moreover, constantly upgrading internal teams to meet changing business demands consumes time and resources.
   
   By outsourcing development services, you get scalable solutions that can be easily expanded to meet changing market and technology needs.
    
5. Focus on Core Business Activity
   As a business owner, you handle several tasks and responsibilities on a daily basis. Some include managing finances, dealing with customers, and keeping up with the latest technology trends and practices. All of this consumes time. In many cases, software development is an essential part of your business but isn’t the core aspect. 

Outsourcing projects to a software development company lets you focus on your core business competency. By delegating projects to a reliable software team, you can dedicate your resources to other critical projects. 
 

Outsourcing models: Which is the best?

We have covered how outsourcing your software development can benefit your business and why you must consider it to withstand digitally competitive times. 

However, before outsourcing your software development, you might have questions like, what are the different outsourcing models available? What advantages do they offer? What is the correct choice for your business? We have you covered.

In this section, we will cover all outsourcing models one by one. We will briefly discuss what each model means and its advantages so you can decide which best aligns with your business. 

a. Onsite 
In the on-site outsourcing model, the company you partner with sends a team of qualified personnel to your workplace for the course of your project. This team is considered the third-party service provider and essentially performs the same duties as your staff. 

There is a lot of similarity between onsite outsourcing model and staff augmentation. The only difference is that in an onsite model, all developers are third-party service providers. On the other hand, in a staff augmentation model, in-house developers get assistance from third-party experts who work remotely.

Its benefits include: 

• It is cost-effective as it does not require employee benefits like onboarding and training
• The outsourced team adapts more quickly to your work model since it is present on-site
• It makes post-development support and maintenance accessible
   

b. Onshore 
When you hire a software development company from the same country as your business, it is known as onshoring or onshore outsourcing. 

For example, a city in your country is considered a software capital. But, your business is based in another city. In this case,  hiring that company’s software development services onshoring would be considered as onshoring. 

Its benefits include: 

• There are no language barriers as the developers would be located in the same city as yours and can communicate in the local language if needed.
• Since you and your software development partner are located in close proximity, it makes face-to-face communication and cooperation easier.
• If you are building a product for a target audience living in your country, onshoring provides an excellent opportunity to work with developers who understand the market and your target audience.

However, the only drawback of onshore outsourcing is that you can only access domestically available developers. 

c. Nearshore 
In a nearshore outsourcing model, you hire a software development partner located in geographical proximity to your business. The vendor is located in a nearby country which means there isn’t any difference in time zones.

For instance, if your business is located in the USA and you decide to outsource from Mexico, it would be considered nearshore outsourcing. 

If you own a middle to large-sized business, nearshore outsourcing may be a good choice. This is because the developer rates are a little higher compared to offshore partners. 

Benefits of nearshore outsourcing include:

• There are no cultural differences since the development partner is located in a nearby country and likely follows the same business practices.
• There is no language barrier or a difference in time zones, which makes communication easier. 
• Since the development partner is in a nearby country, traveling to that country for face-to-face meetings is easier. 
   

d. Multi-shore
If you own a large-scale business, you should consider the multi-shore outsourcing model. In this model, businesses employ several software development companies at once based on their location and services. This empowers them to leverage the strengths of various providers instead of depending on just one provider.

Multi-shore outsourcing can combine various outsourcing forms like offshore, onshore, etc. Before opting for a multi-shore delivery model, it is suggested you find a balance between cost, quality, and service delivery.

Its benefits include:

• You get to access a diverse range of expert developers
• It offers faster time to market
• It reduces risks of operational disruption as multiple vendors based in different locations perform software development

e. Offshore
If you want to optimize your business budget but also want to hire the best talent, consider offshore outsourcing. Through this model, you can hire a software development company in a distant country.

Businesses benefit from varying economic conditions in different countries, which impact development costs. Based on that, the entire software development or parts of it is outsourced to any feasible country. They avail excellent developers at low costs. 

• Its benefits include: 
  Talented resources are available within the stipulated budget
• It optimizes project costs
• Businesses get to hire developersfrom different time zones and take advantage of time zone overlap for e-meetings and communication

f. Staff-augmentation
Imagine you have four developers working on a project, but you feel the need to hire three more. How do you hire more personnel without investing your company’s time and resources? The answer is, through staff augmentation.

The software outsourcing partner you choose will provide you with the required experts; you do not need to spend your budget or resources to hire the required personnel. Additionally, you get to exercise complete control over the project.

Staff augmentation lets businesses hire additional resources according to project requirements to meet deadlines and achieve goals.

Its benefits include:

• It lets you hire specific expertise for your project requirement
• It makes adding more members to an existing team easier
• Businesses do not need to invest resources for onboarding or training new employees

g. Managed team
In this model, you can hire a team that works onshore or offshore to manage their development process. It includes the client, the outsourcing company, the developers, the testing teams, etc.

The team is managed by an in-house project manager. They regularly communicate with the outsourced team, assign tasks, and verify progress. 

Its benefits include:

• Businesses can avoid hidden costs of training, hiring, and managing
• It helps ensure scalability without straining resources
• It boosts operational efficiency

h. Project-based
Project-based outsourcing means you completely outsource your software project development. The software development partner you hire handles all requirements, from research to development to final product delivery.

In this model, businesses don’t need any technical expertise. The responsibility of handling the entire project lies on the software development company throughout the development lifecycle. This way, businesses can focus on their main business goals.

Its benefits include:

• Businesses can build higher quality products when the management is handled by project managers
• The responsibility of ensuring task completion lies on project managers. Hence, businesses can focus on other key areas

We are certain that by now, you might have clarity regarding which outsourcing model will adapt to your business. You must keep key parameters like budget, timeline, and resources, among others in mind before outsourcing your software development.

Besides that, there are also some specific skills and requirements to look out for before finalizing a software outsourcing vendor. You can refer to the below checklist to make sure the vendor you partner with matches all requirements.
 

Choosing the Right Vendor for Outsourcing: A Checklist

01. Evaluate Their Technical Expertise and Knowledge
Evaluating technical expertise and knowledge should be your topmost priority when choosing an outsourcing vendor. Each project is different and has unique requirements which need unique expertise.
 
For example, an Android developer must be proficient in Java and Kotlin. In the same way, an iOS developer must be familiar with Swift and Objective-C. Similarly, when it comes to data science-based projects like AI/ML development services, the developers must be skilled in using Python. 

02. Analyze Their Development Approach
Usually, software development companies specialize in certain development methodologies, such as Agile. Try to understand and analyze the vendor’s best development practices and flexibility. Their development methodology must align with your business objective.

Find out if the vendor is willing to accommodate your preferred software practice. Also, learn about their experience of working within your preferred methodology.

03. Consider the Time Zone Difference
Varying time zones can become major project roadblocks. A vast difference in time zones can impact operation, communication, and efficiency. If a vendor is in a vastly different time zone than yours, you should establish a clear communication process

04. Refer to Client Testimonials
Client testimonials are one of the most effective ways to evaluate a business. Before outsourcing software development, understand the vendor’s relationship with their previous clients. For this, you can refer to sites like Clutch and Goodfirms.

05. Assess Their Communication Skills
Software development is a complicated process. There’s a fair chance that the vendor you outsource to is located in a different country or even continent. Appropriate communication is important to overcome challenges and adhere to the project timeline.

Maintaining a transparent channel of communication is crucial to mitigate any chances of miscommunication and ensure smooth functioning.

06. Go Through Their Work Portfolio
The potential vendor must have experience handling projects similar to yours. They should have the necessary industry expertise to tackle challenges effectively. You must interview the potential vendor and refer to the case studies mentioned on their website.

07. Understand Their Pricing Model
Every vendor operates under different pricing and cost models. While selecting a vendor, you will have to keep pricing in mind. There are several pricing models commonly used in software outsourcing. Some of these are fixed, outcome-based, revenue-sharing, etc.

You must choose the right pricing model that fits within your defined budget. Outsourcing is an ideal way to reduce project costs compared to hiring in-house developers.

08. Ensure Legal Compliance
Technology and digital activities are governed by rules and regulations. Your potential vendor may be located anywhere across the globe.

Consider factors like geography and the vendor’s knowledge of compliance before selecting them and evaluate whether they comply with existing laws and regulations.

Besides the above checklist, you must verify if the vendor is willing to sign a software agreement with you. It is an extremely crucial step when teaming up with any software development company. Why is a software agreement important? Let’s find out.

What Is a Software Agreement and Why Is It Important?

A software agreement is a contract between you and the software outsourcing company. It defines what work will be handled by the outsourcing company, expectations, requirements, and project deadlines. The goal of a software agreement is to protect both parties.

Once you have finalized a software outsourcing company, the next step should be signing a software agreement. It guarantees that all confidential information relating to your software is protected.

It is an important instrument in IT outsourcing. It streamlines business processes for your company and the software vendor to facilitate smooth long-term collaboration. It helps you define the workflow and eliminates the need for frequent renegotiations.

One of the most significant advantages of a software agreement is that it mitigates legal and contractual disputes that may arise. It helps define the roles and responsibilities of both parties, potential roadblocks, unforeseen circumstances, and threats to intellectual property.

Another advantage of signing a software agreement is that it prevents the software vendor from duplicating or misusing your software for their own personal use.
Now that the importance of a software agreement is cleared, let us explore what it must contain.

a. Project Scope
This includes technical designs, development tools and methods, and other similar software or systems required to complete the project. It also includes everything that is required for providing development and post-development support. Additionally, it contains all technical documentation and agreements.

b. Terms of Payment
Once the scope of the project has been decided, a software agreement should  define the terms of payment. These terms are decided on the basis of project requirements. The vendor may offer you a monthly payment cycle or a fixed-price model, whichever is mutually agreed upon by you.

c. Terms of Penalty
Suppose there is an incident of a data breach causing damage to your business. In that case, you can enforce the terms of the penalty. The terms of the penalty include when and how you can avail compensation from the software vendor in cases of contract breach. These terms are mutually decided between you and the vendor.

d. Intellectual Property Rights
Your software is your intellectual property. Intellectual property rights include your right to patent, trade mark, control IP access, and database rights to protect the software’s source code. If your outsourcing vendor infringes any of these tights, they can be held accountable.

e. Terms of Confidentiality
Often, when you outsource software development, you have to disclose confidential information relating to your business such as marketing strategies or trade secrets to the vendor so that they can build your software efficiently.

Confidentiality terms help in enhancing the safety of your software. You sign a non-disclosure agreement with the vendor which forbids them from disclosing your confidential information to a third party or any other entity.

f. Data Security
Your business may have gathered a lot of sensitive customer data such as email IDs, names, addresses, phone numbers, etc. It is important to protect this information. Including a data security clause protects you from data theft or fraud. It  imposes legal penalties on the software vendor in case of a breach.

Why Consider Software Development Outsourcing to India?

Industries across the world and all vertices are embracing the technological revolution. With it, every business aspires to create a strong foothold in the competitive market. But many don’t know which country to outsource from.

An increasing number of businesses prefer outsourcing their software projects to India. Why is that? What does the Indian software industry have to offer that makes it a preferred choice? Let’s find out!

1. IT Infrastructure
   Even though India is a developing country, it has progressed greatly in the software development domains like infrastructure and technology. India has a large pool of engineering and IT resources. This has helped India attract several foreign investments as well.
   
   Also, India is advancing rapidly in terms of technological infrastructure, cellular networks, satellite connectivity, and fiber-optic networks. Thus India offers an abundance of talented resources. It has become a preferred outsourcing destination for high-quality software development solutions, custom web development solutions, and mobile app development solutions.
    
2. Cost-Efficiency
   One of the primary goals behind outsourcing is reducing costs. The cost of hiring developers from India is much cheaper compared to Western countries. At the same time, the quality of software is not compromised.
   
   Moreover, there are several vendors offering a flexible pricing structure that suits all business needs.
    
3. A Large Software Industry
   India has seen a massive technological expansion. Major technological companies like Accenture, Infosys, IBM, TCS, and Wipro have emerged as leaders in the software development industry. In addition to that, they offer skilled employees across the world.
   
   India also offers a large variety of custom software development outsourcing including services like system integration, managing business processes, database management, business intelligence, and consulting services. This makes India an even more preferred option for software development. 
    
4. There Is No Communication Barrier
   A continuous interaction between you and your software development vendor is necessary to ensure seamless development. Language barriers can be a challenge during outsourcing. However, around 265 million people in India can speak English.
   
   Hence, language would not be a barrier to software development. You can effectively communicate with your outsourced team in English through different platforms like Skype, Slack, Google Meet, Zoom, Teams, etc.
    
5. Government Support
   The Indian government is pro-IT; it is continually refining its policies to support software development outsourcing. It recognizes the  IT industry as one of its priorities and provides several tax benefits and exemptions that encourage its growth.
   
   India’s Information Technology Act includes several electronic contracts that help in improving data security.
   
   Outsourcing your software development to India can be very promising. The Indian IT industry is growing rapidly, and as a result, several software development companies are emerging. One such leading software development outsourcing company is TRooTech Business Solutions.
   
   For the past several years, TRooTech has been designing, building, testing, and evolving software for several major industries like Finance, Healthcare, Education, Real Estate, and many more. TRooTech actively helps businesses build cutting-edge software and reduce development costs. 

06 Steps to Successfully Outsource Software Development Projects

The entire process of outsourcing your software development project can be overwhelming if you don’t know where to begin. From creating an effective strategy to finalizing an outsourcing model, we have broken down the process into 06 easy steps. Let’s begin.

Step 1:  Define What You Want to Build
It is important to define what you want to build. It makes it easier for you to communicate to requirements to the software development partner you are outsourcing to. You should have answers to basic questions like: 

• Has a similar software been developed before or is this a new concept? 
• Is it technologically possible to build this software? 
• If the answer to the previous question is yes, what technology will be required to build the software? 
• Who will be the target audience for your software? How will it help them? 

Hiring an outsourcing partner without having clearly defined goals can lead to miscommunication and a lack of direction. Make sure that the outsourcing vendor fulfills your development needs and methodology. 

Step 2:  Prepare the Scope of Your Project
Knowing your project’s objectives, deliverables, scope, and content is essential to build a roadmap. This roadmap will help guide the software development company. Your project scope should contain parameters like objectives, deliverables, constraints, pricing, etc.

Step 3: Define the Budget and Timeline
To make sure your software project development is efficient, establishing a budget limit and timeline is important. Set up key performance indicators that will assist you in keeping track of the project development.

Defining a budget helps you determine which outsourcing model to go for. It also assists in identifying how many developers to hire. 

Step 4: Assess Your Needs
Assessing your needs helps you decide which outsourcing strategy might work effectively for you. There are two basic models in general. They are project-based or specialist.

If your existing team lacks the necessary software development expertise for a specific project, you can hire a team of developers for that particular project. This would be considered a project-based hiring mode.

On the other hand, if you already have an in-house project manager but need to hire specialists to fill the gaps in development, it falls into the specialist hiring mode.

Compared to a project-based approach that is more rigid, the specialist approach is more flexible and can adapt to all software needs. Whichever hiring approach you favor, verify whether it aligns with your business interest as it will influence the next step.

Step 4: Choose an Outsourcing Model
There are multiple outsourcing models to choose from. We have already covered their types and benefits. Based on your project’s requirements, budget, timeline, and desired hiring approach, you can decide which outsourcing model you wish to go for. 

Step 5: Evaluate Your Options
Once you have finalized which outsourcing model to go for, you should evaluate your available options. Here are some things to consider before deciding to partner with a software development company.

• The Size of the Company: How big is the development company you are considering? Does it have enough developers to meet your requirements?
• Years of Experience: How long has the company been in business? 
• Technical Skills: Does the company have good expertise with the technology needed to develop your product? Does it have sufficient knowledge of software development, maintenance, and delivery?
• Development Method: What is the software development methodology that the company uses? Does the methodology align with your business’s methods? If not, can it adapt to your development method?
• DevOps Methodology: Is the company experienced in DevOps methodologies like continuous integration and delivery (CI/CD)? Do they have experience using these methodologies?
• Language Proficiency: Is the team of developers you hire well-versed in communicating in your native language? If not, are they able to communicate in English?
• Pricing Structure: Does the company’s pricing structure match your requirements?
• Regulatory Compliance: Does the software company you consider hiring follow all regularity measures?

Step 6: Sign an NDA
After evaluating your options and making a decision, you must sign a Non-Disclosure Agreement. It is crucial to protect your sensitive and confidential data. This is one of the final steps before onboarding the outsourced software development team.

Outsource Web and App Development to TRooTech

Every business aims to build effective software solutions in less time to attain market success. There are two reasons companies mainly outsource their software development. To reduce costs and speed up development. It is convenient when you don’t want to employ an in-house development team.

Other benefits of outsourcing software development include increased efficiency, streamlined resource allocation, and improved security. Whether your business is already established or starting out, outsourcing your web and app development benefits your business.

As seen above, outsourcing to software developers in India has a lot of advantages. Even then, you must take into account that cost benefits aren’t the sole reason you should outsource your software development.

Through outsourcing, you can develop, test, and launch your product to the market quickly. For that, you must select a software development partner with vast experience dealing with global clients and leveraging the latest tech stack and designs.

TRooTech Business Solutions is a custom software development company that outsources expert web and app developers to industry leaders looking for digital solutions. Our team comprises seasoned developers and expert UI/UX designers who utilize industry best practices to build software products that meet all modern requirements.

We offer services like staff augmentation, infrastructure outsourcing, web development, mobile app development, and many more. We establish an effective, long-term business relationship with our partners and assist them in overcoming software development challenges. This is why our services are tailored to individual and specific client requirements.

For the past several years, we have been innovating groundbreaking technologies embracing digital transformation in education, eCommerce, Healthcare, Finance, Marketing, and many other industry verticals to drive efficiency and growth for our clients.

We have years of experience developing web and mobile applications for clients across the globe. By teaming up with us, you can access high-quality developers and technology that steer your business toward exceptional outcomes.

Partner with TRooTech today and transform your business ideas into scalable products!