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How to Outsource Software Development in 6 Steps

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How to Outsource Software Development in 6 Steps

  • Nearshare Sofware Development
  • Nearshore
  • Outsourcing Software Company

25 June 2024

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The main reasons why so many organizations outsource software development are for cost savings, and fast ramp up solutions. On other occasions, software development outsourcing is considered as a way to engage with external tech experts adept at technologies that are out of your internal team’s reach.

In this piece, we’ll be giving some insights as to how you can begin to outsource software development successfully, leveraging our 20+ years of experience in the software development outsourcing industry. Shall we begin?

What Is Software Development Outsourcing?

Software Development Outsourcing involves the inclusion of an external team of software developers within your workflow. Depending on your needs, you can opt for a complete dedicated team that executes what you need, with oversight handled by an assigned project manager from that same external team, or simply use staff augmentation in order to find talent for specific tasks and maintain complete control over your projects.

Software development outsourcing can include a multitude of services and expertise, including: • Software engineering • UI/UX design services • Legacy systems modernization • Quality Assurance (QA) services • DevOps services, and more. Regardless, through a combination of contract agreements, communication dynamics, performance metrics and milestone deliveries, a project is set up to be manageable remotely or through face-to-face dynamics. Accountability is key.


Software Development Outsourcing Models

It’s important to remember that not all software development outsourcing agencies are alike. Each can specialize in a specific type of engagement, services or even industries. Regardless, the main differentiator lies in the types of outsourcing sources you can decide between. For this, there are three types of outsourcing models you can pick between:

  • Nearshore software outsourcing
  • Offshore software outsourcing
  • Onshore software outsourcing Let’s look at each of these in closer detail.

Onshore software outsourcing focuses on the services provided by software development teams based within your country. This model can help you vet the quality of the talent and the work easier than the other three, however it provides the least benefits in terms of cost effectiveness.

Offshore software outsourcing focuses on the services provided by software development teams based in a country farther away from your own location. This is a classic model for outsourcing, being Asia one of the most common spots for finding providers of this variety. These are usually the most cost-effective alternative, but risky in terms of quality.

Nearshore software outsourcing focuses on delegating software development tasks to a team that has geographic proximity to your own. For example, if you’re currently living in the United States, hiring talent from Latin America counts as nearshore software outsourcing. This alternative provides a balanced approach in cost effectiveness and quality.

Regardless of the software development outsourcing method you choose, they’ll likely provide you with one of two types of engagement models according to your needs. These are:

  • Staff Augmentation
  • Dedicated Software Development Team

Staff Augmentation

This model specializes in hiring key positions that you could need for a specific amount of time, while fully keeping control over your project. This means that this type of software development outsourcing is completely about the staffing, with no procedural input from the service provider. This model is key for developers that need specific tasks done and don’t need a full team, or simply have the specialty to direct the operations, but need more manpower.

Dedicated Software Development Team

This model, unlike staff augmentation, is giving full delegation to a hired team to perform specific tasks or processes, different from what is handled with your internal team. The scope of oversight a client possesses with this model is through milestones and completed objectives by the team.


Why Should You Outsource Software Development?

The main reason to start software development outsourcing is that it offers you a series of benefits that you don’t get from working with local talent. These benefits can vary from cost saving to even budget flexibility. Below we’ll give you a few examples of these benefits:

Budget Flexibility

Though budget flexibility may lead you to think about only the monetary benefits of software development outsourcing, there is more to it than that. For one, flexibility also refers to your team composition. By giving you the flexibility to ramp up or down your teams, outsourcing software development can let you be more efficient with you budget use.

Accelerated Time-to-Market

When you choose to outsource software development, you hasten the product launch. Giving a fully independent team of software developers full control over the project lets them focus on those particular tasks outsourced to them, letting your internal team handle the rest. Outsourcing software development will give you more coverage over your project and an edge over the competition by going to market faster and, potentially, have better product market fit through live feedback.

More Talent

Software development outsourcing offers you top tech talent without the limits of commitment you’d have with local talent. From choosing close by regions that give you talent working the same time zones, tech expertise that may be region bound, to cultural similarities for better communications, outsourcing software development gives you full control over how you scale your product.

Cost Saving

Software development outsourcing can offer you rate benefits that you can’t find with local talent. Just with top tech talent you can find in LATAM, companies in North America can expect to save from 20-40% in costs associated to salaries and benefits payed to software developers locally. This, on top of the flexibility to ramp down or up whenever needed, you can save as much as you need during the development process

Administrative Timesaver

Software development outsourcing lets you delegate both technical and administrative responsibilities to the devoted development team. This benefit gives software teams, both technical and executive, the time and focus to hone in on other aspects of the business, both for projects or for growth and scale.

6-Steps to Successfully Outsource Software Development

Here is a step-by-step guide for you to successfully begin software development outsourcing:

1. Set Clear Business Requirements

Outsourcing software development is not just about finding a service provider. It’s about having an intimate understanding about the needs of your product and business to find the RIGHT service provider. At that point, they’ll be more like a partner than a service provider. When outsourcing software development is a need you’re finding necessary for your project, ask yourself these questions:

  • What problem or pain point will outsourcing software development help me solve?
  • What are my corporate objectives for this software?
  • Who am I building these software products for?
  • What does my budget and timeline look like for developing these products?
  • What are the main functions of my product that need to be developed first?
  • Will my products need to be iterated with new functions throughout the process?

By asking yourself these questions, outsourcing software development will become easier. It gives you a better understanding of how you should begin to outsource software development and what a partner needs to know to best service you. Getting your own internal team involved in the process can even help accelerate the process even further.

2. Search for a Software Development Outsourcing Partner

The easiest way to find a software development outsourcing partner is to check reputable B2B marketplaces such as Clutch, Goodfirms or G2. These platforms focus on building a list of potential software development outsourcing parnters that can help you complete your business goals. Applying filters like locations, services provided, hourly rates, budget among others can help you shortlist those that best fit your needs to then leave them a request for a discovery call. Always keep in mind the business requirements you developed in the previous steps to avoid hiring an inadequate partner.

3. Discovery Call Time

Short listing is just one step in your journey to outsource software development for your product. After that, comes the discovery call, which will allow you to better understand those you’ve chosen. Here are some attributes to watch out for:

  • Domain expertise. This isn’t just about having experience working in technology in general, it’s about making sure you have the right credentials before you start to outsource software development. Experience in your industries, technologies required, and having an assortment of clients attended can help give you confidence in their expertise.
  • Technical proficiency. When you outsource software development, as we’ve said time and time again, experience in your needed technologies is key. However, when you find a client that actually has experience in many more, that is more than a green flag. It’s an indicator that you’ll be able iterate towards what the market demands more than with a fixed scope of technologies.
  • Work portfolio. Outsourcing software development is not just a one and done deal. Look at the prospective service provider’s portfolio. How many clients have they served? Did they leave with positive results? Have you heard good things about them from peers? Reputation is everything in the B2B world.
  • Customers' review. As we’ve said before, reputation is everything. So, when deciding on outsourcing software development and the prospective partner you’re in a call with, see what other companies have said about them. Analyze their experiences and figure out their strengths and weaknesses. This will help you have a better understanding of the company’s work ethic and what to expect from them
  • Communication policies. When you outsource software development, especially with a nearshore software development team, communication is key to keep track of your product’s progress. Having a product manager on your team can help you make sure your product is going well. By setting up deliverables and milestones, outsourcing software development becomes an easier task to manage.
  • Security measures. The last thing you need is to begin outsourcing software development for your project with a partner without basic security measures to keep your technologies safe. From basic NDS signings to broader encryption and security practices to keep your data safe, keeping your product secure is key, and your partner should feel the same.
  • Team engagement. Having a group of yes men is good for an ego boost, but useless for developing great products. Outsourcing software development can involve constant iterations, due to shifts in business needs, market needs or even errors in concepts. Having a software development team that helps you take your product to the next level.

4. Negotiation

After that discovery call, where you focused on what you need and how the outsourcing software development firm can help you achieve your needs, negotiations can commence. Even though you already discussed what you need for your project, sometimes the fine print might not fully encompass your needs. So, remember the main points to consider:

  • Business needs, including product-market fit
  • Corporate needs, especially administrative and executive
  • The problems your project is aimed to solve.

All these points should be summarized from your previous conversations in the discovery call.

5. Scope Out the Proposals

Negotiations will lead to proposals being sent your way by the providers you shortlisted earlier on. These proposals typically include a method on how to build your project, including solutions to problems, methodology, team composition, development timeline, costs and milestones. All the points you’ve negotiated by then should be present in the proposals you’ve received as well. Only with this can you properly begin to outsource software development for your project.

6. Sign the Contract and Get Started

After choosing the proposal that best fits your needs, all that’s left is to sign the contract! This contract should clearly outline the project’s scope and match what was sent to you through the proposal. Make sure IP and security details are also highlighted before signing as well, including NDAs. After you sign, you can finally start to outsource software development for your project!

To Sum Thing Up on Outsourcing Software Development

Now, that you know how to outsource software development, what’s stopping you from finding the right partner for you? Time is of the essence when it comes to software development, so if you have a project that could use a bit more steam to get started or to cross the finish line, it’s time to put these skills to the test. In fact, why don’t you start right now, with us? Teravision Technologies has been in the business of helping companies accelerate their software products for more than 20 years now. Give us a call and let’s discuss what we can do for you!

  • Outsource software development
  • Outsourcing software development
  • Software development outsourcing

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