Tips for Outsourcing Software Development Services Successfully

Thinking about outsource software development? Check out this article for tips on how to find the right software development partner and manage your project effectively.
Azumo Research
September 8, 2023
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Introduction -  How to Outsource Software Development

When it comes to software outsourcing development, there are a lot of factors to consider. But if you're looking for a software development partner to help take your business to the next level, here are some tips on how to outsource software development services successfully.

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What is Outsourced Software Development

Outsourced software development is the process of contracting a third-party software development company to create, manage and deliver software products or services on behalf of another organization. It allows businesses to tap into a global pool of talent, while still maintaining control over the quality and direction of their product development.

Software Development Outsourcing Models

First let's address the types of outsourcing models available to you. The first relates to the location of software development outsourcing service. The models are generally described as onshore, offshore, and nearshore.

1. Onshore. This is when a company outsources software development to a team within their own country.  This model is often more expensive, but it can be helpful if you need to be able to closely manage the software development process or require that the developer team be present on site.

2. Offshore. This is when a company outsources software development to a team in a different country. This model can be more cost-effective, as it opens you up to a global pool of software development talent but can pose management challenges as you move farther from your time zone.

3. Nearshore. This is when a company outsources software development to a team in a nearby country.  This can be a good compromise between onshore and offshore models, as it offers many of the same cost savings as an offshore model while still allowing for some level of proximity and cultural familiarity. You can read more about some tops for Nearshore Software development here.

Software Outsourcing Relationship Models

In practice, these outsourcing models can be divided again into several relationship based models: staff augmentation, managed or dedicated teams, and project-based development.

1. Staff augmentation. In this model you hire or contract additional personnel to supplement an existing in-house team.  There are several benefits to using staff augmentation for software development. For one, it can be a more cost-effective solution than hiring full-time. Additionally, it can be a flexible solution that allows businesses to scale up or down their software development efforts as needed.  

2. Managed or dedicated teams. In this model, the software development company becomes an extension of your in-house team, providing you with a dedicated team of developers who work on your project full-time.  This can give you more control over the software development process and insight into the development team's daily effort.

3. Project-based development. In this model, the software development company works on a project basis, meaning they are only contracted for the duration of the project. This can be a good option if you have a one-time software development need or if you want to test out working with a software development company before making a longer-term commitment. Regardless of intent you will provided the developer with a set of specs to tasks to complete.

Which type of software development outsourcing model is right for your business will depend on your specific needs and objectives. If you need a specific software product or service created, then a project-based software outsourcing model may be the best option. If you need an ongoing software solution that can be developed and maintained over time, then a managed or dedicated software outsourcing team may be a better solution.

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How to Outsource Software Development

Now that we've covered the basics of software development outsourcing models, let's look at what you need to consider before you start the outsourcing process.

Define your outsource software development goals.

First and foremost, you need to clearly define your software development needs. This will help you find the right software development partner that can meet your specific requirements.  

To do this, you need to sit down and think about what your software development goals are. Once you know what you want to achieve, only then should you can start looking for a software development partner that can help you reach those goals.

Some goals to consider when outsourcing software development include: increasing efficiency, reducing costs, improving quality, and accelerating time to market.

1. Increasing Efficiency. One of the main reasons businesses outsource software development is to increase efficiency. When you partner with the right software development company, you can get access to a team of highly skilled and experienced developers who can help you develop high-quality software quickly and efficiently.

2. Reducing Costs. Outsourcing software development can also help you save money. When you outsource software development, you only need to pay for the services you need, when you need them. This can help you avoid the costly overhead associated with maintaining an in-house software development team.

3. Improving Quality. When done right, outsourcing software development can also help you improve the quality of your software products. When you partner with a reputable software development company, you can get access to a team of experienced developers who are familiar with the latest software development trends and best practices. This can help ensure that your software products are of the highest quality.

4. Accelerating Time to Market. Outsourcing software development can also help you accelerate time to market. When you partner with a software development company, you can get access to a team of developers who are ready to start working on your project immediately. This can help ensure that your software products are launched in a timely manner.

Do your research and ask for referrals.

Once you know what your software development goals are, it's time to start doing your research. This includes looking for software development companies that have a good reputation and are known for delivering quality services.

A great way to find software development companies is to ask for referrals from people you know and trust. If someone you know has had a positive experience with a software development company, then there's a good chance you will too.

But be forewarned building software is complex business. The project that went well for the friend's company building in C# may not be the best choice for your company looking to build a web app in Node and React.

Look for companies who have a broad base of experiences and understand how to build and release code.

Make sure you're compatible with your software development partner

When you outsource software development services, it's important to make sure that you and your software development partner are compatible. This means having similar values, goals, and working styles. If you're not compatible, it can lead to misunderstandings and frustration on both sides.Here are some questions to ask yourself to see if you're compatible with your software development partner:

  • Do they share your values?
  • Do they have the same goals for the project?
  • Do they have a similar working style to you?
  • Are they easy to communicate with?
  • Do you trust them?

If you answered 'no' to any of these questions, it's worth considering whether you're compatible with your software development partner. If you're not compatible, it's likely that the project will be more difficult and may not be successful.

Have a solid contract in place.

When you outsource software development services, it is important to have a solid contract in place. Having a contract in place will help ensure that both parties are clear on expectations and can help avoid any disagreements down the road.

If you are working with a provider offering a fixed price, the contract should spell out the scope of work, deliverables, timelines, and payment terms. If you are working on time and materials,  the contract should specify the hourly rate, project milestones, and of course payment terms.

In either case, be sure to include a clause that allows you to terminate the agreement if the software development provider is not meeting your expectations.

Regardless of contract type, you should know how the software outsourcing company treats the developed Intellectual Property (IP). Will they transfer ownership of the IP to you? Or, will they only grant you a license to use the software? Make sure this is clearly spelled out in the contract. Many developers will tie their payment to transfer which is a reasonable approach.

Make sure you understand the developer's process.

When you outsource software development services, it is important that you understand the provider's process. This way, you can be sure that the provider is following best practices and that your project is on track.

The software development process typically consists of the following steps:

1. Requirement gathering and analysis: In this step, the software development team works with you to understand your business requirements. They will also do a feasibility study to see if the proposed solution is possible or too expensive to maintain.

2. Design: Once the requirements are gathered, the software development team will start working on the design of the solution. This includes creating wireframes and mockups.

3. Implementation: This is the actual software development phase where the code is written. Each good software developer will have a well articulated approach to development and maybe even a handbook. Review their approaches so you understand the ceremonies they plan to employ and whether that matches your business model.

4. Testing: Once the code is developed, it needs to be tested to ensure that it meets the requirements and that there are no bugs. For testing, you can look for vendors who are skilled at Automated Testing and Manual Testing. Although Automated Testing may look more expensive at first you may find it will save you more money in the longer run.

5. Deployment: Once the software is tested and approved, it can be deployed to your servers or cloud environment. In all honesty we hope you are running everything in the cloud and leveraging a good code repository. If not this is something a good software developer can work with you to implement as well.

6. Maintenance: Even after the software is deployed, there will be some maintenance required. This may include adding new features, fixing bugs, or providing ongoing support.

Make sure that you understand each of these steps and that you are comfortable with the software development team's process. For the many steps mentioned above, we view this as a critical component when choosing your developer.

If you go to one of the marketplaces to find a developer or two you may have no assurance that they are around to handle maintenance issues or may not have agreed to some of the implementation or architecture choices.

Good software outsourcing companies will be able to step into any part of this process and pick up where you or your team left off or need help.

Manage the project effectively.

When you outsource software development services, it is important that you manage the project effectively. This includes setting clear goals as we discussed earlier, communicating regularly during daily ceremonies and planning meeting, and tracking progress through a ticket management system like Jira or Basecamp.

It is also important to have a clear understanding of the software development process so that you can provide feedback at each stage.

You should have a Product Owner on your team who has a thorough understanding of the product vision and project goals.  That person should be able to articulate what done look likes and be able to put it on paper before a single line of code is written. This approach will save you money.

Be prepared for challenges and setbacks.

We all know that software development can be challenging and there will inevitably be some setbacks along the way. The important thing is to be prepared for them and have a plan for how to deal with them.

One common challenge is scope creep, which is when the project requirements start to change during the development process. This can happen for a number of reasons, such as changes in the market or new insights from the development team. It is important to have a plan for how to deal with scope creep so that it doesn't derail the project.

Another common challenge is dealing with bugs and issues that arise during development. This is why it is important to have a good software development team in place who can quickly address any issues that arise. We believe the best software outsourcing teams can help you see around corners during the development process so that a change today will be well understood if the market or product vision were to change tomorrow.

With that said, it is important to be prepared for the fact that software development is a dynamic process and things will inevitably change along the way. The important thing is to have a flexible approach and be able to adapt as needed.

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Outsourcing software development can be a great way to take your business to the next level. By following the tips in this article, you can ensure that you find the right software development partner and that the project is managed effectively. Remember to be prepared for challenges and setbacks along the way, and you will be well on your way to success.

If you have any questions about outsourcing software development, or if you would like to learn more about our services, please contact us. We would be happy to chat with you and help you navigate the software development process. Thank you for reading!

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