What to Consider Before Software Development Outsourcing

Outsourcing software development work is by no means a new practice. As technology continues to advance at an incredibly fast pace, it has become even more common for busy companies to partner with third-party development companies to achieve their goals.

There are many reasons why companies choose to outsource their software development needs. Hiring and maintaining an in-house team of developers is expensive – and not just in terms of salary. There are many costs associated with in-house employees, including taxes, benefits, health insurance, vacation time, as well as the hardware and software tools needed to get the job done. Outsourcing software development eliminates these extra costs, so companies only need to pay a single monthly or weekly fee.

What are the benefits of software outsourcing?

Outsourcing software development also offers many other benefits to organizations. Outsourcing allows for on-demand scalability when large projects arise that may require more team members to get the work done on time and within budget. It also connects companies with unique or niche skill sets that they would not otherwise have access to due to costs, hiring restrictions, or general talent shortages in the information technology world.

Partnering with an experienced and reliable outsourcing partner also helps mitigate your company's risks. As cybersecurity is a top priority in today's technology landscape, companies must ensure they make the most secure and reliable products available for their own internal use or for their end customers.

What to think about before hiring an outsourcing partner

Obviously, there are many benefits to working with development outsourcing for software development. However, there are some things that companies should consider and decide before looking for and hiring an outsourcing company.

#1 Decide on the Skills Needed for the Project

Before a company starts looking for the ideal development partner, it is important to know the requirements for the job. A detailed design outline or set of specifications that define how the software should work will help avoid misunderstandings in initial meetings with outsourcing vendors and beyond.

With a detailed project outline, the next step is to decide on any key competencies needed to complete the project. Key competencies are the qualities considered important by the company and that an outsourced employee needs to possess. For example, an in-house team may have a lot of experience in mobile development but lack experience in complex integrations. Once a company decides which skills it is lacking, it is easier to find the right contract employees without redundant skill sets.

#2 Choose the Right Type of Outsourcing

There are three ways to outsource projects: offshore, nearshore and local. Each type brings its own advantages to the process.

Offshore outsourcing is the process of hiring an external development team in a region or continent completely different from the hiring company. This method of outsourcing is popular because it not only provides companies with access to a wide range of skills from around the world, but also reduces costs much further, as the cost of living is generally lower than in the contracting country.

When organizations partner with a company in a neighboring or nearby country, it is called nearshore outsourcing. This is typically more affordable than local outsourcing, offers compatible time zones, and is generally compatible in terms of culture and communication style with the hiring company.

#3: Set a budget

Cost is a crucial consideration when it comes to successful outsourcing. Outsourcing is a great way to reduce the cost of completing a software development project. While it is important to have a clear idea of ​​an overall budget when beginning the process of finding an outsourcing vendor, this is not the complete project definition. Cost should in no way mean a compromise in quality.

By attending initial meetings with outsourcing vendors with an initial budget in mind, companies can get a better idea of ​​whether or not a partnership with a particular vendor will work.

#4: Find a way to protect intellectual property

A confidentiality agreement or some type of legal contract needs to be in place before a company will proceed with a partnership with a software development outsourcing provider. This contract needs to detail who has access, where the source code is stored, the specific responsibility for the task, and any confidentiality requirements. This is especially important for completely new software products that have not yet reached the market, as it is easy to leak intellectual property.

Map out a realistic growth strategy and milestones. – With a growth strategy defined before hiring an outsourced company, organizations better define the development roadmap. This helps refine the scope of the project and identifies functionality that the software may require in the future. A clear growth strategy allows the outsourcing team to know not only what they are building today, but also where they will go in the future.

Companies also tend to generally underestimate the amount of time required to fully develop a software product. Therefore, organizations must take the time to decide in advance about achievable project milestones. They must be realistic, measurable, and achievable while allowing for any necessary testing or debugging time.

Getting started with software outsourcing

Outsourcing software development projects is a great way for companies to achieve their goals while staying within budget and time limits. It also gives organizations access to a larger talent pool, the ability to scale up or down on command, and risk mitigation for security threats. Before any company begins the search for the right outsourcing provider, internal teams should take the time to consider the items mentioned above to help better ensure successful long-term partnerships and projects.