According to new research by Commit, software development outsourcing is expected to grow by 70% between 2022 and 2023. The main reasons for this rise are the increasing complexity of software development projects, the shortage of skills in certain areas, and the need for faster delivery times. And outsourcing software development can be a great way to overcome these challenges. However, it can also be difficult to know where to start. This guide will help you to navigate the process and find the right outsourcing partner for How to Outsource Software Development Successfully
What is software development outsourcing?
By definition, software outsourcing is the concept in which a company or organization partners with a third-party supplier specializing in IT services to provide them with the adaptable software solutions they need according to their business demands.
There are various types of software outsourcing models and services. The most commonly known ones include onshore, nearshore, and offshore outsourcing. Here’s a quick overview of each location-based outsourcing model:
- Onshore: As the name suggests, onshore outsourcing is when a company partners with a supplier within its country. This type of partnership is ideal for companies who prefer to have control over every step of the software development process and want to be able to communicate easily with their service provider. Although onshore outsourcing can be more expensive than other types, it offers many benefits, such as shorter turnaround times and a greater understanding of business processes and cultural nuances.
- Nearshore: This outsourcing model is similar to onshore outsourcing in that it also involves working with a supplier in a neighboring country. This type of partnership is ideal for companies who want to take advantage of lower costs without sacrificing quality or communication. One of the best things about nearshore outsourcing is that it offers a higher level of cultural compatibility than offshore outsourcing.
- Offshore: Offshore outsourcing is when a company partners with a supplier in a country that is further away, typically in another continent. This type of partnership is often chosen by companies who are looking to save on costs while still getting high-quality offshore software development services. When offshore outsourcing, you can enjoy a wider pool of talent to choose from.
What are the competitive advantages of outsourcing software development?
Software development outsourcing boasts both pros and cons, but the benefits do outweigh the drawbacks, making it a viable solution for businesses. Some of the competitive advantages of outsourcing software development include the following:
1. Lower costs
One of the main benefits of outsourcing software development is lower costs. According to the 2020 Global Outsourcing Survey, almost 70% of respondents acknowledged cost reduction is the primary benefit that convinced them to outsource IT needs to vendors. By partnering with a third-party supplier, companies can take advantage of lower labor costs and other operational expenses thanks to the cost disparity between their local areas and the IT outsourcing destinations. Moreover, when done right, outsourcing can help you avoid the high costs associated with hiring in-house staff or building your own development team.
2. Increased flexibility and scalability
Outsourcing software development can help your business become more agile and adapt to change more quickly. It also enables you to scale up or down according to market demands and changes in business goals.
3. Access to expert knowledge
Only when you outsource software development are you able to tap into the global pool of IT experts and developers. That is why more and more IT businesses from around the world are leveraging software outsourcing as a practical solution to deal with the shortage of software developers.
4. Improved focus on core business
Outsourcing can help you refocus your attention on your company’s core activities and leave the non-core but essential tasks to the experts. This way, you and your employees can focus more on strategic initiatives that can help your business grow.
5. Risk reduction
When done right, outsourcing can actually help reduce risks for your business. For instance, by working with an offshore development team, you can mitigate the risk of losing critical knowledge if an employee leaves the company. You can also transfer certain project risks to the service provider, such as delivery delays or poor quality.
How to outsource software development successfully – Practical Best Practices
Software development outsourcing can be such a great way to get the best talent working on your project without paying the high salaries that come with in-house developers. However, it’s not always easy to find good outsourcing partners, and even when you do, there’s always a risk that things will go wrong. Now, let’s go over some strategies for outsourcing software development so that you can maximize your chances of success.
1. Define Your Objectives Clearly
Before you start looking for an outsourcing partner, it is fundamental that you take some time to define your objectives clearly. What are you hoping to achieve by outsourcing? What are your project’s deadlines? What is your budget? Answering these questions will help you to portray a partner that is a good fit for your needs.
2. Do Your Research
When you’re looking for an outsourcing partner, it’s essential to do your research and look at as many options as possible. There are a lot of different companies out there, and you have to find the one that you can trust. Try to get personal recommendations from people who have used outsourcing companies in the past, and read online reviews before making your final decision.
3. Have a Trial Period
Once you’ve found a company that you think could be a good fit, it’s a good idea to have a trial period before you commit to working with them long-term. This will give you a chance to check how they perform and whether they are the perfect match for your needs or not.
4. Communicate Regularly
Once you start working with an outsourcing partner, it’s important to communicate with them regularly. Make sure that you keep them up-to-date on any changes in the project, and let them know if there are any problems. The more communication there is, the smoother the project will go.
5. Set Clear Expectations
It’s also crucial to set clear yet realistic expectations from the start. What kind of results are you expecting? What is your deadline? What is your budget? By setting clear expectations, you can avoid misunderstandings down the road.
6. Be Prepared to Manage
When you outsource software development, you’re still responsible for managing the project. Hence, you’ll need to be prepared to answer any questions your outsourcing partner has and ensure the project is on track.
7. Have a Contingency Plan
Even if you do everything right, there will always be a chance that something could go wrong when you outsource software development. That’s why it’s important to have a contingency plan in place. What will you do if the project goes over budget? What will you do if the project takes longer than expected? By having a backup plan for these eventualities, you can minimize the risk of problems.