Software Outsourcing: The Most Eye-Opening Guide for 2022

Software outsourcing isn’t new. Although there’s no specific date to tie down its genesis, it’s generally accepted to have started somewhere around 1980 showing it's been around for 40 years or so. There has to be a significant reason for this longevity.

It’s safe to say outsourcing software development thrives because it gives much value to its stakeholders. It allows for businesses to continue even with operational disruptions like what a pandemic can bring. Involving an external partner in the project welcomes expertise and loads of experience businesses use to create an upper hand in the industry.

With that in mind, if you’re looking to work with outsourcing services as an approach to project management that will help CTOs and product managers fill in any technology gap, this guide is for you.

We will consider:

  • A brief explanation of what software outsourcing involves
  • The different kinds of outsourcing models
  • The challenges it can solve
  • The challenges you may face
  • What to consider when implementing an outsourcing strategy
  • Determining when you’ll need to outsource your software development project
  • And the step-by-step process involved in software outsourcing.

This is going to be a fully packed guide so let's get right to it.

The Real Definition Of Software Outsourcing

Software outsourcing is a technique where a software development project is delegated to external development experts rather than using in-house manpower. This can involve outsourcing just specific tasks within a software development project or delegating the entire undertaking to a software development outsourcing company of your choice.

As the need for digital presence grows, software outsourcing evolved to be a norm that remedies the technology gap while at the same time cutting down project costs. This strategy is flexible enough to handle the abrupt demands of scaling the development up or down.

It helps startups and large-scale businesses alike to stay competitive in the market while being cost-effective. It allows any kind of organization to tap into a global talent pool of programmers, coders, and other software development experts to ramp up their efforts to stay relevant in the digital world by ensuring the project gets the latest technological software solutions possible.

Outsourcing connects you to experts around the world
Source: techfunnel.com

Software outsourcing brings with it competitive advantages not available with in-house teams. With software development services, development costs are cut down while taking advantage of a global talent pool of software specialists. You can hire from India, Ukraine, and other parts of the world that have the DevOps experts you need. With in-house teams, tech stack talents are limited within the locality.

Delivery time is also faster with outsourcing because development teams are committed to working on the outsourcing project alone, in-house teams need to handle in-house tasks. Lastly, it allows for flexible scaling of teams to suit the current demands.

Here at Aloa, we offer vetted developers and teams with proven expertise and experience to help you produce high-quality software that fits your vision. Cost isn’t only cut down, project quality is assured.

4 Common Types Of Software Outsourcing

Software outsourcing comes with different options. Here are the main kinds you can choose from.

  1. Homeshoring: this involves delegating the project to a software development team within the city or country you’re in. With close proximity, the teams can be invited to face-to-face meetings.
  2. Nearshoring: this type involves tapping an outsourcing company to work with that’s located in a nearby country. It comes as a good option if you prioritize skill set expertise, cost-effectiveness, minimal to no timezone difference.
  3. Offshoring: offshore outsourcing work is commissioned to distant countries. It can entail large timezone distinctions and language barriers but gets you access to more expert developers that might not be available for the first two options.
  4. Onshoring: the last type of software outsourcing involves bringing back a software development team to the organization's home country.

What Are The Basic Outsourcing Models?

Added to the different types of IT outsourcing are three different outsourcing models to choose from.

  1. Staff Augmentation: this model involves giving the outsourcing company the job of putting together the software development team, handling day-to-day operations, and bringing the project to completion. However, the client can have a call on who to hire and fire, how big the team should be, and how the responsibilities should be distributed to each developer.
  2. Dedicated Team: with this model, the outsourcing services handle every aspect of the project, and the team is retained for future projects.
  3. Project-Based: unlike a dedicated team that works with a client long-term, a project-based model, as the name suggests, works with the client on a per-project basis. The outsourcing services handle most of the decision-making aspect of the project and the client simply gets updated through progress reports.

Leveraging software outsourcing comes with a set of benefits for CTOs and product managers. Let’s now consider the challenges software outsourcing can solve for them.

Challenges Software Outsourcing Can Solve For CTOs And Product Managers

Many organizations choose to hire a chief technical officer or a product manager to handle all the software development needs of the company. Others are managed by the owners. In this section we’ll list down the challenges software outsourcing can resolve for both department heads. Some, if not all listed below apply to owners who handle the software needs themselves.

4 Challenges For CTOs

A CTO takes care of all the aspects related to technology in an organization, including software development projects. Whether for a startup or an enterprise, a CTO ensures technical maturity for digital transformation and deals with the resolution of any technology-related disruption.

A CTO has many responsibilities
source: c-sharpcorner.com

Specifically, here is a list of challenges software outsourcing services can help solve for CTOs:

I. Recruiting Software Developers

The best developers an organization can hire are those who already have proven expertise. However, not every country has a wide pool of experts available. They can be too expensive to hire, ending up in the organization settling for moderate to low-skilled developers who would unlikely deliver the high-quality output expected.

Software outsourcing opens the door for CTOs to tap into a global talent pool of development team members to produce quality software.

II. Promoting Tech Innovation

As mentioned at the outset, CTOs hold responsibility for tech innovations which means they have to be constantly up to speed with tech trends and new ideas. With many responsibilities at hand, CTOs may not have the skill set or the time to learn emerging and recent software trends. Also, if there's a need to embrace new technologies like machine learning, IoT, artificial intelligence, and blockchain, this can be a big challenge.

Software outsourcing allows the CTO to tap into software engineers with vast technology stack backgrounds and who already have expertise in the latest tech trends and technologies. These experts can bring in new functionalities, state-of-the-art features, and suggest or share the latest software development process to the organization.

III. Meet Deadlines

Meeting deadlines is always a pressing need for CTOs. More responsibilities mean a bigger challenge to be on time. Add that to the limited resources they have access to that could hamper the quality of the project.

With software outsourcing, a huge weight will be lifted off the CTO's shoulders. Workloads will be shared to deadlines and will be easier to meet without compromising on the project’s quality.

IV. Complex Projects

If you currently have an in-house development team, it’s safe to say that you're aware that adding more workload to developing new software or functionality will be too much to handle with the current resources.

Hiring more team members would mean increasing operational costs and especially if you need certain expertise you still don’t have to manage the complexities of the project. After the project is over, the additional team members might not be needed anymore needing you to downsize again.

However, with software outsourcing, you can easily tap into specific expertise and have the flexibility to scale up and down the software development team’s size.

3 Real-Life Challenges For Product Managers

There are also unique challenges present for product managers handling startups, SMEs, and SMBs that software outsourcing can fix. They are:

1. Insufficient Tech Understanding

Product managers know what product to build but they may lack the in-depth understanding and expertise needed to make it happen. Unless they have tech stack proficiency, access to the library and framework, the project might be too much for them to handle.

With software outsourcing, technical expertise is readily available to tap into. The outsourcing company can even assist as a technology partner, later on, mature in all technical aspects, and handle other tech-related challenges.

2. Inadequate Planning

To ensure the software completion falls within the deadline and the specified budget, prior planning is a big factor to take into account. A well-strategized plan will ensure the project’s development process.

By working with an outsourcing provider, the project can follow the ideal approach with agile practices in place. Everything will be mapped out to ensure seamless execution and progress.

3. Inefficiency To Scale

With a new project at hand, resources, technical expertise, skills, and experience might be inadequate. Not every project manager can fill the role to fill the gap and hiring more team members, again would be too costly.

Whereas when the outsourcing marketing is tapped, each phase of the software development process will be handled with optimum efficiency and results. Again, also allows the freedom to scale up or down depending on the current needs.

Outsourcing Challenges You Might Face With Outsourcing

There are always two sides to the coin. While software outsourcing is generally designed to simplify the business process and take care of the complex elements in between, it also comes with some challenges. They might not be super daunting, but they are worthy to know about before deciding to tap into the outsourcing market.

source: freepik.com

A. Poor Communication

Outsourcing software development to a service provider means you might be dealing with people with different languages and cultures. Language is a barrier you must first address to ensure you communicate the vision of the project and that the outsourcing company’s development team can communicate back clearly any concerns and clarification.

Company culture must also be considered, a huge gap between the outsourcing provider’s culture and that of your organization will pose challenges when not dealt with early on. This also involves incompatible ways of working if each party insists on implementing methodologies to get the work done.

B. Regional Difference

When outsourcing a software project to a nearshore or offshore service provider, the time difference and distance might cause some challenges. Of course, they can be discussed early on to avoid any untoward miscommunication along the way. For one, team meeting schedules should be discussed early on, daytime for a client might be night time for the outsourcing company.

C. Limited Idea On Business Context

While avoidable, this can pose a challenge when not discussed at the outset. The client should be able to communicate the vision of the software project more thoroughly. Sharing the context on the market, demographics, target users, and the value you want to provide will help the outsourcing team deal with the project in a way that goes in line with those goals.

Generally, to avoid development potholes, clear communication of expectations and vision should be discussed beforehand especially for custom software development. The outsourcing partner should also provide comprehensive knowledge about the output post-development to help implement and run it seamlessly.

Considerations In Implementing An Outsourcing Strategy

A well-planned strategy involves identifying gaps and key factors before jumping to the development phase. Here are some things to consider:

I. Identify Technology Gaps

Pinpoint technology gaps before reaching out to software product development companies. By not doing so, you might risk the project going out of the time frame allotted to it and going in the wrong direction. It will also help you avoid wasting resources and budget.

One of the main benefits of outsourcing is that it allows you to plug in the latest tech trends to increase the quality of the software whether it's for mobile app development or web development. Identifying gaps will put this advantage to maximum use, help you become digitally advanced faster, and provide a seamless implementation and launching.

II. Determining Goals

The second thing to consider is your short-term and long-term goals. The short-term goals can include seamless onboarding and ensuring day-to-day seamless operations and communication.

As for long-term goals, it can include assigning in-demand support or developer for maintenance and future developments. Long-term goals can also comprise planning for developer demand spurts to cut down on overall cost compared to abrupt hiring where candidates can demand a higher rate.

With these considerations determined, it’s also easier to identify when you’ll need an outsourcing strategy. Let’s now consider five scenarios when you need to work with an outsourcing service.

5 Common Scenarios When Outsourcing Is Needed

Scenario 1: When There’s A Demand For Specific Tech Specialists

Your current core in-house development team might lack some expertise needed to create the software project at hand. Depending on the need, you can hire specific tech stack experts together with project managers, QA testers, and other experts who specialize in certain fields within the software development process.

Scenario 2: When There’s A Demand For An Entire Development Team

Current in-house technical teams might already have a lot on their plate and a new project might be too much to handle. If you have periodic projects, you can hire an entire development team with competencies to handle each phase- from start to finish to avoid overwhelming in-house team members and CTOs.

This also allows easy scaling up and down of members to meet current demands compared to hiring full time that can hinder cost savings.

To get the project going you might need:

  • Web developers or mobile developers (depending on the project)
  • Quality assurance specialist
  • Quality assurance testers
  • UI/UX designers
  • Project manager

Setting up this full dedicated team will speed up the software or application development.

Scenario 3: When You Need To Entrust Full Development

This scenario would likely happen for smaller team sizes. When there’s just too much work at hand, this initiative will be advantageous for all people involved. From ideation to development to scaling, you can entrust the whole process to an external development team provided that they keep you updated with regular progress reports to see if the project is hitting the time frame allotted to it.

Scenario 4: When Scaling Or Modernizing An Existing Software Or Application

If you already have a mobile application or software at hand but are starting to become obsolete, hiring a development team to implement new tech trends and functionalities especially with safety and user experience features will be beneficial.

Scenario 5: When There’s A Need For A Technology Partner Or Co-Founder

If you’re a startup tech company, you might need to tap into an outsourcing partner to take care of specific aspects of the projects that are out of your expertise. You might know about the tech hardware but need someone to handle the software side of things.

To sum it up, when should you consider software outsourcing?

  • When your team or your region doesn’t have the required tech experts
  • When your core in-house team is running at full capacity
  • When you need to scale or modernize an existing software
  • When you can’t focus on other aspects of the business
  • When you want quick project-focused development that allows for cost savings

7 Outsourcing Tips To Achieve Better Outcomes For Finding And Working With The Right Developers

To succeed in your software outsourcing initiative, here are a few tips to keep in mind.

1. Determining What To Outsource

Not every aspect of the project needs to be handed over to an external team, outsource those that just need the expertise you lack and if you lack enough team members to work on certain points in a project. This can mean doing some case studies on your first few projects to see which can be kept in-house or must be outsourced to be more cost-effective.

2. Ensuring Seamless Onboarding

It’s safe to assume that the outsourcing team, with all the expertise, already knows everything about the vision of your project. However, this presumption can be damaging. Communicate clearly how and when you want things done and share pertinent information about the company, the team members, the culture, and the project vision so that everything goes smoothly.

3. Start With A Trial

An outsourcing team can have remarkable expertise but blockers might occur on work culture and relations. It’s best to start with a trial period to ensure the work relations are good on both ends and also to see if they can deliver output promises.

4. Take Advantage Of Communication Tools

It’s easier to communicate with someone in proximity so when working with remote developers, take advantage of video communication tools to ensure you get clear instruction across and also help develop rapport among team members from the in-house side and the outsourced side. In the long run, they might know how to work together for the project’s maintenance and developments so good work relations should be developed.

5. Be Proactive

Keep tabs on what’s going on even if you outsourced the whole development project. Assuming that everything is going smoothly might cause some untoward blockers. Without micromanaging, keep posted on the progress to ensure everything is moving the way it’s expected to be.

6. Establish Dependencies

Establishing dependencies means communicating what’s expected to be delivered and when. This will eliminate the blame game that occurs when no one takes responsibility for certain tasks.

7. Encourage A Healthy Feedback

Your processes won’t be right all the time or you might be able to see areas on the current development methodology that can be improved to make it more seamless, communicate your suggestion to see if it benefits the project. Also, encourage feedback to acknowledge the outsourcing team’s knowledge on the matter.

To also help you get a quick view of an outsourcing company that is a good fit for your need project needs, here’s a brief checklist to go over:

  • Technical Skills: Do they possess the tech stack knowledge required in the infrastructure?
  • Response Time: How long do they respond to initial emails, calls, or texts? Do they communicate when they’ll mostly be responsive to messages?
  • Partnership Mindset: Does their engagement models cater to your project needs? Do they offer developer freelancers, dedicated teams, full-time team members, or staff augmentation?
  • Intellectual Property Rights: Are they reliable? Can they offer confidentiality protection and sign an NDA without any apprehension? Do they have previous or current theft issues?
  • Budget: Do they fit the budget set for the project?
  • Portfolio And Social Proof: Can they present samples of their work and reviews from previous clients regarding their work relations and work output?

6-Step Proven Software Outsourcing Process

Step 1: Determine The Need For Outsourcing

Identify why you need to outsource. Do you lack the expertise or the manpower? Specifying your reasons will help you find the right fit and determine the appropriateness of people to onboard.

Step 2: Select An Outsourcing Company

Decide on the model and type of outsourcing you go for. After getting a shortlist of qualified candidates, send a request for a proposal. This document will help outline the parameters.

The document should include:

  • Software development project overview
  • Company background
  • Software project vision and goals
  • Project scope
  • Schedule of deliverables
  • Conceivable roadblocks
  • Budget
  • Outsourcing company expectations
  • NDA or non-disclosure agreement

Step 3: Procure A Binding Contract

Before moving on with the software development project, ensure that a binding contract is signed by both parties. This will reinforce the agreed details made and protect both parties. Outline the project duration, timeframe, budget, and other important details.

Step 4: Implementation

Time to start the projects. Start with proper onboarding and establishing communication channels and progress report expectations. If agreed on, give a trial period. Additionally, employ a risk management strategy, walk through the software development lifecycle before starting the testing phase.

The common SLDC you can follow is:

  • Ideation
  • Planning
  • Design
  • Coding
  • Testing
  • Deployment
  • Maintenance

Some companies also employ the agile methodology, shown below:

Agile development cycle

Step 5: Progress Monitoring

Other than requesting progress reports have a monitoring system in place. Check for day-to-day productivity if it goes in line with agreed daily work hours.

Step 6: End Contract Or Renew For Another Project

Depending on the organizational needs and the current project performance, you can communicate when the contract is ending or if you’d still be working with them for future projects. This will allow them to make room on their schedules for your requests.

Last Thoughts

There you have it, an in-depth and eye-opening guide for software outsourcing. Follow the tips and steps below to streamline your selection process and to expedite your project development.

Outsourcing a software project can seem scary at first especially if you aren't equipped with the knowledge and experience to shortlist and pick an appropriate developer for your needs. Here’s why we at Aloa would to offer our hand out to help and offer you vetted programmers to cut back on the long hiring and selection process

Got some more things that need clarification? If you need any more information or assistance in finding the best developers to work with, feel free to email us at resources@aloa.co.

The views expressed in this post are the writer's and do not necessarily reflect the views of Aloa or AloaLabs, LLC.
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