Travancore Analytics

12 Must know factors before outsourcing software development for your business

October 3rd, 2022

Category: software development

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Posted by: Team TA

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Software outsourcing has been one of the most popular business strategies as technology is advancing at high speed and businesses are being highly competitive than ever before. Business organizations take a mighty leap in outsourcing software development from 21% in 2022 to a projected 36% in 2023, an increase of 70%. The increasing gap between supply and demand for developers along with the emerging gig economy, remote work, and the great resignation leads to the increased need of outsourcing skilled talents.

Product development is a labor-intensive and resourceful process which is the reason why many tech-savvy companies are quickly leveraging the benefits of AI, IoT, and robotics. Employing an external developer individually or a custom software development company to contract out development or project operations like financials, compliance, auditing, and testing to reach the final milestones is known as software development outsourcing. It offers immediate access to the latest technologies and expertise to stir up productivity and growth.

3 Prominent Outsourcing Models


Offshore Outsourcing indicates outsourcing projects to countries that are located far away with substantial differences in the time zone. For example, an offshore custom software development company in India would be an ideal offshore location for a U.S firm looking out to outsource its project.

Nearshore and Onshore Outsourcing involve outsourcing projects to places that lie near the same or with minimal time zone difference which can be a neighboring country or within the same country itself.

Offshore software development outsourcing is considered most financially viable, flexible in business offerings, resourceful in expertise, and faster turnaround time than expectations. Nearshore and onshore outsourcing is beneficial as they share the same time zones and cultural backgrounds and have better control and security.


Reasons Why Software Development Outsourcing Works?


  • Access to Expert Talents

Sometimes you may not be able to find the right team of people for your projects who have the expertise and talent to reach the milestone. Software outsourcing provides you a chance to explore the world and meet new talent and expert engineers trained to do what you intend them to do. Even better, the latest technology by the provider can enhance and enrich the skills of the in-house team.

  • Cost Efficient

It is estimated that an average of 30% of the cost is minimized by outsourcing the product. Companies reduce the internal costs such as the cost of training, procurement of tools, and infrastructure and in turn gain the freedom to focus on their core competencies.

  • Improved Quality and Reduces Risk

Software development outsourcing will expose the company to the expertise and experience of a professional global talent pool. They can easily identify issues and bugs through comprehensive QA and testing which further reduces the risk of errors, improving the quality of the product. Outsourcing is a way to diversify the business portfolio, whereby an investor spreads out their investments and thereby spreads out the risks too.

  • Increased Efficiency and Productivity

When there is a need for hiring an adequate in-house workforce to perform specific tasks, the staggering processes of the organization can lead to losses in revenue. An experienced outsourcing team of experts will have robust workflows in place to ensure the progress is monitored, milestones are met, and projects are completed on time. Feasibility studies are carried out to provide proof of concept, develop prototypes and implement QA to minimize the risk at the early stages of the product development cycle which in turn shoots up productivity.

  • Enhancement of Data Security

With the task of development of software outsourced successfully, the in-house staff gets ample time to focus on the critical aspects of the business, like securing sensitive data.

  • Increased Flexibility

Businesses only need to pay for the expertise that they need while outsourcing which eases the pressure on internal staff and frees up company time to focus more on their core business. Also, they can scale up or down the size of the team as required which allows you to respond to changes as they occur and take action with a quick turnaround.

  • Reduced Time to Market

Working with competent software developers who understand the project ideas quickly and develop them efficiently reduces the time to market your product significantly. A top custom software development company does its job efficiently and completes the project before the deadline which in turn ensures a faster turnaround time to market the product. Like any other business solution, software development outsourcing also has its challenges and potential pitfalls if outsourcing partnerships are not effectively integrated. Let us check out some of its disadvantages before taking an informed decision.

  • Communication Issues

Outsourcing can run into problems if there is a cultural misalignment and miscommunication with the partnered company. Time-zone differences, working days overlap, and cultural deviation can also lead to a breakdown in communication when expectations are not properly set.

  • Limited Control

If the outsourcing firm uses freelancers and gig workers, the hiring company may have limited control over the actual work.

  • Low-Quality Code and Documentation

If the partnered firm does not follow stringent quality controls and procedures, the results may be low-quality code and documentation. Hence it is essential to make sure that hired firms have a proven track record and scalable practices to maintain a high quality of their work and resources.

  • Low Company Morale

Outsourcing is not intended to replace in-house employees but is used in parallel to enrich the business processes. However, there are chances that some employees may find outsourcing a threat to their job within the Organization.

  • Limited Motivation

Compared to the in-house team, the level of motivation to complete the project successfully within the stipulated time will be lower with the hired Firm.


How to Find the Right Software Development Outsourcing Vendor?

With more than 23 million software developers across the globe, it is crucial to select the right outsourcing partner to complete your product according to your standards and have a compatible working culture and ethics. 

Here are some tips to guide you to choose the right partner


– Create a list of potential outsourcing partners

An excellent way of finding out whether the vendor is the right fit for you is to make a list of potential candidates and send out the RFP (Request of Proposal). This allows you to check and ensure that the vendor can fulfill your requirements and expectations.

– Ensure an effective communication

Good and efficient communication significantly improves quality. Find out the various means of communication and style to choose the right fit for both parties to work successfully.

– Ask for references and testimonials

It is always good to verify the company’s reference portfolio and be assured about its quality. Read their case studies, do the research and call their customers for feedback before finalizing the partner.

– Verify the security and privacy policies of the vendor

Make sure that the offshore or nearshore partners have secure servers to protect valuable information and have strict security policies to keep the client’s data confidential.

– Certifications and accreditation

To ensure quality standards, security, and confidentiality, verifying the outsourcing partner’s accreditations and certifications is vital. Certifications issued by ISO (International Organization for Standardization) like ISO 9001, and ISO 27001 are important as it covers quality management, data, system security, and more.

– Do not neglect the technology aspect

The technology aspect of the vendors should not be neglected as it is essential to find out if their software development processes align with your own. It is important to match criteria like the programming language, methodologies of software development, and quality control methods are all on par with your company standards and expectations.

Ending Thoughts


Software development outsourcing is a huge step taken by a company that can make or break its business endeavor. Yet, with the right service provider, scrupulous contracting, diligent monitoring, and efficient communication, you can build world-class digital products with a professional team of design, development, and strategy experts. Searching for a digital partner who will take the process of software development off your hands? You’ve reached the right destination. We are a dedicated team of custom software development service providers who ideate, design, and develop data-driven solutions tailored to solve your unique business challenges.

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