What Is Software Development Outsourcing? Complete Guide

Introduction

When companies want to create software development projects, their first choice is often to hire in-house developers. However, hiring in-house developers can be a time-consuming and expensive process. Not only does it require extensive human resources expertise and personnel, but it also demands investment in employee management, equipment, and training. 

Fortunately, you can cut costs by hiring a company that specializes in software development outsourcing services. This involves hiring a third-party team or company from another country to handle the work.

Learn more about software development outsourcing in this comprehensive guide. Discover fundamental terms and concepts of software development outsourcing, its benefits, and how to choose the best external teams to achieve business goals. 

What is Software Development Outsourcing?

Software development outsourcing is a business practice where a company delegates the task of software development to an external service provider. This provider could be located in the same country (onshore), in a nearby country (nearshore), or in a more distant country (offshore). This strategic approach allows companies to tap into global talent, reduce operational costs, and focus on their core competencies. There are many differences between onshore, nearshore, and offshore development, so it’s best to evaluate the one that is best for your organization.

Software Development Outsourcing 101

Software development outsourcing is when a business delegates a software development project to external teams rather than using in-house staff. Depending on the chosen vendor or package, software development outsourcing services can range from managing business functions, building applications for your company, or developing and maintaining applications for your clients.

Why Should You Outsource Your Software Development?

There are several benefits of hiring external development teams via outsourced software development. These are:

Fundamental Terms and Concepts of Software Development Outsourcing

Before outsourcing software developers, you must understand fundamental terms and concepts in the outsourcing world. These include engagement models, project scope and management, and team and required skillsets.

Engagement Models

An engagement model is the type of relationship between you, the client, and the outsourcing vendor. It determines:

These are the main types of engagement models:

Project Scope and Management

Project scope is a detailed outline of all resources, activities, and deliverables required to finish a project. It should also include what a project does not cover, project justifications, and measurable success criteria such as key performance indicators (KPIs).

A related concept is scope creep, which happens when a project’s requirements increase over time. This can occur when you don’t document, define, or control the scope of a project properly. Proper project management can help teams limit scope creep.

Team and Required Skillsets

The team refers to the development team. Depending on the complexity of your project, your team may consist of software developers, test engineers, directors, managers, QA personnel, and project leads. 

Team roles may also vary depending on your software development methodology. For instance, Scrum requires teams to have specific roles, such as Scrum Master, development team member, and Product Owner.

Required skillsets refer to the skills developers must have for your project to succeed. Your required skillset depends on your project requirements, complexity, and scope. For instance, suppose you want to create an online food-ordering app for iOS and Android. Your development team’s required skillset would probably look like this:

How To Choose the Right Software Development Outsourcing Partner

Navigating the outsourcing and nearshoring world can be confusing and complex, especially if you have never done it before. Many challenges can arise during the two processes, such as picking the right software development outsourcing partner to ensure you meet quality standards.

Here’s what you need to do to hire nearshoring or outsourcing software development services for your project.

Define the Project Goals and Requirements

First, define your project goals and business requirements. You must understand what you want to achieve when you hire the best software development outsourcing partner. Ask yourself the following questions:

You can now make a list of potential outsourcing software development companies.

Estimate Your Overall Budget

Don’t just focus on low prices when hiring software engineers. It can lead to hiring low-quality professionals.

To find the ideal partner for your business goals, you should establish your budget beforehand and seek a provider with the best quality-to-price ratio. Ensure you also inquire about hidden costs with potential software development outsourcing vendors to get a fair price.

Explore Countries for Outsourcing

Finally, explore different countries and areas for outsourcing and nearshoring. 

Several Latin American countries, such as Colombia and Brazil, are also excellent for software development nearshoring. Although outsourcing to distant countries such as India may be cheaper, it involves higher risks. Due to the vast difference in time zones, real-time communication with outsourced workers can be challenging and disrupt the workflow, impacting the quality of work and the bottom line. 

In contrast, collaborating with a nearshore team allows for real-time communication and a more flexible development process, enabling you to make quick changes to projects. Essentially, nearshoring provides a way to maintain the quality of hiring locally in the U.S. while reducing costs.

Nearshore Outsourcing with Flatirons

Flatirons is a nearshore software outsourcing company with offices in the U.S., Brazil, and Colombia. Flatirons boasts ample experience designing and building custom web and mobile applications with a focus on memorable user experiences.  Contact us today.