Ultimate guide to outsourcing software development 2023

Now that you’ve decided on the types and models of outsourcing, it’s time to look for potential partners. Make a list of at least 4 to 7 likely software development outsourcing firms. Outsourcing software development is a dynamic market that changes year after year to global events and business trends.

Outsource Software Developers

The BPO industry workforce in India is expected to shrink by 14% in 2021. One estimate of the worldwide BPO market from the BPO Services Global Industry Almanac 2017, puts the size of the industry in 2016 at about US$140 billion. In the US, American clients nearshore to Canada and Mexico, as well as to many nations in Central and South America. President Obama promoted the Bring Jobs Home Act to help reshore jobs by using tax cuts and credits for moving operations back to the U.S. “Outsourcing” is a continuing political issue in the U.S., having been conflated with offshoring during the 2004 U.S. presidential election. The political debate centered on outsourcing’s consequences for the domestic U.S. workforce.

It is also a flexible approach to software development when compared to a more rigid project-based approach. The difference between T&M contracts and other models is that you establish a clear pay rate for the time needed to complete the project. This model fits projects with no set date or no clear vision of the finished product. It is very flexible since the final price depends on the time and not other factors.


The product is frequently updated to improve performance and satisfy the evolving needs of its end customers. Outsourcing enables businesses to tap into a global pool of talent, allowing them to work with skilled developers from around the world. This means that businesses can access top-notch talent without being restricted by geographic location, which is especially important in today’s digital world. ScienceSoft built a cloud-native, microservices-based SaaS vCIO product and consistently delivered new features and updates to ensure a superior user experience for SaaS users.

Fitzgerald identify several contracting problems companies face, ranging from unclear contract formatting, to a lack of understanding of technical IT processes. A 2012 series of articles in The Atlantic highlighted a turning of the tide for parts of the U.S.’s manufacturing industry. Hiring at GE’s giant Appliance Park in Louisville, Kentucky, increased 90% during 2012. This allows companies to streamline production, boost competency, and increase their bottom line. Outsourcing has gone through many iterations and reinventions, and some outsourcing contracts have been partially or fully reversed.

  • When you outsource the development of mobile apps or any software solutions to an external team, your entire company depends on this third party to build and deliver a superior product.
  • A number of outsourcings and offshorings that were deemed failures led to reversals signaled by use of terms such as insourcing and reshoring.
  • As a result, the market has become more competitive and the competition for tech talent has intensified recently in many countries, especially in Western Europe and the US.
  • ScienceSoft’s attention to detail in how everything is documented and communicated is by far the best of any agency that I’ve worked with.
  • Once the outsourcing model is determined, the next step is to select a provider that fits the project requirements.

As per Glassdoor, Malaysian software developers earn an average salary of $4,400. Companies offer Vietnamese software developers an average of $7,800 per year. The average salary of Singaporean software developers is $11,000 per year. Filipino software developers are offered an average salary of $9,000 per year. You want to develop software without the hassles of project management.

Dedicated team

Therefore, you must create a clear roadmap to guide the entire process. It is especially important when you consider outsourcing software development for startups. The protocols should be established with the input of the offshore company so that you might reach realistic agreements on the status of the project and the path to completion.

Outsource Software Developers

In such a case, the initially selected team should be scaled up or down, which is pretty challenging if you develop software in-house. Listen to our podcast in which tech founders reflect on their journey of building a successful startup and reveal hiring a software developer their secrets to success. Having transformed from top-down and hierarchical to collaborative and multidirectional, companies must now reinvent their engagement models and cultures if they want to benefit from their digital transformations.

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Understand what budgeting factors to consider when outsourcing software development and what to expect from the process. Unclear contractual issues are not the only risks; there’s also changing requirements and unforeseen charges, failure to meet service levels, and a dependence on the BPO which reduces flexibility. The latter is called lock-in; flexibility may be lost due to penalty clauses and other contract terms.

Outsourcing IT projects enables companies to work with highly skilled software developers at economical pricing, empowering reduced time to market and gaining first movers’ advantage. As the business world is reverting to its pre-pandemic modus operandi, companies across industries have started operating from offices. This has compelled businesses to revisit software development outsourcing strategies for digital transformation. We are a testing outsourcing services company, we ensure that all your digital solutions meet your requirements as well as the highest quality standards. As we mentioned before, there are 3 main outsourcing models you’ll need to choose from.

Outsource Software Developers

Choosing the right outsourcing partner is crucial to the success of your software development project. Look for a partner who has experience in your industry, the technical expertise you require, and a proven track record of delivering quality work on time and within budget. Consider factors such as communication, cultural fit, and geographic location when selecting your partner.

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Also, Chinese developers are often recognized for their huge contributions to the rising tech world. In fact, HackerRank put them first on their list of countries with the best software developers available. HackerRank conducted a report on what countries are the best at software development on an international scale, and Taiwan ranked 7 out of 50. Western companies frequently praise the calibre of Taiwanese developers for consistently exceeding expectations.

Outsource Software Developers

Choosing a software development outsourcing company that meets your requirements is a key step to ensure the greatest success. Do the research and ask questions before reaching an agreement with an outsource software company or freelancers. The project-based outsourcing model is used in case the client company needs more tech expertise for the project; they hire the outsourcing development team to build the product and manage the workflow.

What services can be outsourced

By using software development outsourcing services, you can have a chance to update to the new trends which assure the best business outcomes for your company. Whether you are a startup or an established enterprise, understanding these models will help you make informed decisions and drive the success of your software development projects. In Europe, nearshore outsourcing relationships are between clients in larger European economies and various providers in smaller European nations. The attraction is lower-cost skilled labor forces, and a less stringent regulatory environment, but crucially they allow for more day to day physical oversight. These countries also have strong cultural ties to the major economic centers in Europe as they are part of EU.

They have 10+ years of experienced software developers in various domains. By transferring time-consuming projects to an outsourcing vendor, you can reduce the workload for your internal tech team. As these outsourced teams don’t require additional guidance, your employees can focus on projects that directly contribute to business growth.

Steps of Software Development Outsourcing

After all, outsourcing can be a great way to save time and money, but if done incorrectly, it could lead to headaches or even project failure. To avoid any risk, you can provide for your option to terminate the agreement at any time if you see that the development outsourcing company is not up to the task . Additionally, you can stipulate that the software components developed as of the termination will be kept by you.

Before you outsource software development services, make sure to decide on the engagement model that best suits your project. Follow the advice we’ve shared above, or get in touch with our IT outsourcing services company for a free consultation. One of the biggest benefits of outsourcing software development projects to the Philippines is English fluency in this country. The Philippines surpassed India in 2012 as a leader for outsourcing, mainly due to the increased Indian population at that time.

In fact, the development begins with the selection of an outsourcing model. With no need for renting office space, setting up an entire development infrastructure, and putting together a professional team, outsourcing is faster and more cost-effective than in-house development. But what are the other reasons to outsource software development for startups and established businesses? You, as the client, manage the software development project and all its individual tasks.