How to effectively outsource software development? this question has always been on the top of mind of every CEO in the world. To begin with, Software development and IT are considered to be one of the most effectively outsourced industries in the world . So much so, that countries like India and China have become synonymous with such operations. Thus, it can be lucrative to capitalize on opportunities that are continuously growing, especially as many industries are shifting online.
However, the practical issues of logistics present itself once the concept of external partners is understood. The “what” of “outsource software development” may be known, while the “how” remains a mystery. Outsourcing may seem intimidating or complex, and businesses can struggle with deciding on an outsourcing partner. This blog introduces a step by step guide of what to consider and how to find teams, evaluate their suitability, manage work on projects and create meaningful networks for the success of the outsource software development project.
Why businesses outsource software development?
In order to determine if outsourcing is the right choice and will be valuable to a project, the advantages of outsourcing need to be examined. Thus, businesses tend to look within before looking at external factors.
Focus on core business activity
Why should firms focus on core elements rather than keeping everything in-house? Core competencies are important processes that businesses cannot outsource without losing out on value and their main operational purpose. Many businesses fail to reach their full potential because of distractions and complications presented by peripheral tasks.
Save on costs
According to a global outsourcing survey, 59% of businesses outsource as a cost cutting measure. By employing external teams at lower rates than those in the United States and the UK, firms get more out of software development, especially when cash flow problems are acutely relevant. Outsourcing also ends up decreasing the psychological stress on business owners, especially in times of economic instability. To Outsource software development saves on training, infrastructural, recruitment and other costs incurred during everyday business operations. Thus, serving as an attractive alternative to permanent inhouse teams.
Improve on quality
Business needs have shifted throughout the years, and while prices may have been the main focus years ago, quality is what drives the market now. This is because the user’s experience overrides small reductions in cost when purchasing an inferior product. When it comes to software development, the same principle applies. Firms need IT and software that makes their businesses more efficient, in order to create a better experience for customers. To Outsource software development to someone who specialises in software development, and therefore has up-to-date systems, technology and staff, can improve the final output quality because of the skill sets and expertise they bring to a project.
Become more flexible
The tech industry is ever changing, and so are markets. Software updates, changing needs, and economic turns all contribute to a fast paced environment where innovation is needed to stay ahead of the curve. By hiring contractors and consultants, companies are able to cope with changing seasonal and cyclical demands. This keeps labor costs low, predictable and efficient. Outsource software development allows firms to compete by employing agile technology that incorporates trends like Artificial Intelligence and load time optimization. All these flexible elements culminate in a more attractive and less risky presence in the market.
Reduce time to the market
By outsourcing, firms can greatly decrease product life cycles of their outputs and speed up market launches. This is because offshore teams can work in tandem with inhouse or other external teams to get work done quicker. More experience in software development and launching products also means that offshore companies are well equipped to understand how to work more efficiently. Moreover, experience leads to shorter timelines and skills equate to an easier and quicker process. Oftentimes, speed is a main factor in the success of businesses that operate in competitive markets. The more time it takes to get to the end user, the more money is wasted. Thus, offshore outsourcing can help in resolving issues and getting products and brands out there is much less time than in-house development.
Acquire a diverse team of industry professionals
If a project requires a specialized skill, outsourcing can help link businesses to professionals that are acutely trained to accomplish the job. External teams can streamline processes and create platforms, apps and a social media presence that is fully integrated with their web operations. Certain countries have specialised in specific categories of the technology sector. For example India has become the undisputed IT powerhouse of the world. Thus, companies can establish links with the best countries for software development and employ the most highly skilled teams.
The diversity of outsourced teams also gives projects the benefit of fresh, innovative perspectives. Experts from around the world may use more agile development models, effective techniques or contemporary methods to work on your project. They may also have ideas that companies can take advantage of, that would otherwise go unrealized. It is important to remember that outsourcing is not necessarily a simple task based transaction. It is a full fledged partnership between firms, to reach the best possible outcome.
Since outsourcing software development is a considerable investment, it helps to know the types of outsourcing models there are in order to make the best choice.
So, what are the sources of outsourcing?
This model consists of outsourcing end-to-end management of the entire software project. Businesses give project requirements to the outsourced team, and the team works on the project from scratch. At the initiation phase, where companies explain their goals for the project to the outsourced team, a price or rate is decided, along with a project deadline or time line.
It is not necessary for pricing to be determined through an hourly rate, and can be a fixed pricing model or on a task oriented model.
A project based model is especially useful if
- the project requirements are clear.
- the scope of the project is fixed.
- the deadlines well established and agreed upon by both parties.
This model consists of hiring a team of skilled experts from a third-party vendor. These software development professionals work together and act as an extension of in-house core teams. The dedicated team can consist of a wide variety of skilled professionals like software engineers, designers and UX specialists. They ensure that product development processes are running smoothly and effectively.
Managing a dedicated team is similar to managing a remote team. Hence, some management needs to be in place to keep the team on track and act as a liaison. A Project Manager can be hired to focus on dedicated teams and motivate them to deliver the correct output at the right pace.
This model is especially useful when
- building a long-term relationship with an outsourced company.
- software requires regular maintenance and updates.
- software is highly scalable.
In this model, the outsourcing partner handles the recruitment of the software development team, but the business is still in charge of core processes. Companies manage their software development projects and initiatives themselves along with the distribution of responsibilities within the outsourced team.
This model is especially useful when
- Businesses want to get more involved in the development process.
- Creative control is required during software development.
The model any business chooses will correlate with the nature of any project, and what businesses want out of their initiatives. It will also be concerned with the budget and timeline in which the project must be completed.
Choosing a country to outsource to
Outsourcing is an international industry that is diverse in terms of specialization and geographic location. For example, China has invested more in software development and tech advancements in AI. India has more of a focus on IT and customer relations. Countries like France are now becoming the go to regions for animation outsourcing, while South American countries are new contenders that are quickly covering ground. Competitive advantages of countries can be on the basis of culture, technology, investment or even language. They should be considered along with the project needs of the business.
Developing nations in Asia especially are shifting to a more tech heavy economy. This is a major factor in software development, and should be taken into consideration for firms looking to outsource. For example, Pakistan has partnered with China to expand its tech infrastructure, as well as capitalise on 5G. This means that most, if not all, outsourcing firms in the country will reap the benefits of such country-wide improvement. Additionally, the base population and its skills are an important factor in finding qualified professionals for the job. Finally, the decision may just depend on how well a firm gets along with its outsourcing partner. How effectively they are able to form cohesive networks based on trust and understanding. This may require similar visions, cultures or languages that can link the partners together.
Now that we have gone over the advantages of outsourcing software development, you may be wondering how to find the right offshore software development company? Good thing, we have that covered as well.
Here are some good strategies to get started with.
Where to find teams
Finding an appropriately qualified outsourcing team can seem daunting, especially when every software development project is unique. It can be helpful to post projects, complete with specifications and guidelines on popular platforms. Here, professional teams will be able to see them and pitch themselves. Here is a list of the most frequently used platforms for finding teams to work on outsourced projects. They are free and easy to use, requiring a simple sign up process where businesses and representatives can make accounts that open up the path to a host of outsourcing and freelance opportunities.
Upwork: is a worldwide freelancing platform where you can find any type of specialist. Post your project and hundreds of teams and individuals will offer their services. Another alternative is to find a team by yourself. On Upwork, contractors are rated by customers and prices, so you’ll definitely find a team that corresponds to your goals.
Toptal: is a platform with experienced developers, who are rigorously tested for technical and English skills during the approval process. Toptal says they approve less than 3% of all applicants. Consequently, developers on this platform are pretty expensive: rates start at $60 per hour. Unlike Upwork, where freelancers bid on projects and employers choose the best offer, Toptal offers candidates to employers within 24 hours. Before clients start paying, there’s a two-week free trial period.
Clutch: is a credible directory of over 7,000 companies. All of these companies are categorized and rated, which makes it very convenient for searching.
LinkedIn: is a professional network with a huge pool of companies and consultants. You can find information about any company, check endorsements, and communicate in person.
Fiverr: is an online marketplace for freelance services. Sellers list their services and interested buyers may ask questions or purchase them. Fiverr works like a middleman guaranteeing both parties are happy with the end result.
Some other useful platforms to post about and find jobs are:
Additionally, social media platforms are a great place to get in touch with companies and show off your own projects. Platforms like Behance, Dribbble and Quora are places where designers, marketers, software developers and content creators can share their work, network and gain opportunities for employment. The added benefit of these platforms is that companies and individuals usually have profiles that showcase their previous work. Businesses can judge potential teams by their past work and quality, taking uncertainty out of the picture.
How to evaluate teams
Once offers for a project are received from any of the above mentioned platforms, businesses must assess offshore outsourcing teams in terms of suitability. The ultimate decision can rely on a number of factors. So, the question is how to determine the best software outsourcing company for any business? Here are some key elements that should be considered before a final choice is made.
Portfolios: in order to judge the previous work of any firm, a portfolio is an effective record to illustrate the scope and history of a partner. Portfolios may include previous designs, websites, apps or software that was bespoke to client needs and project functions. It is always useful to pay close attention to previous work that most closely aligns with the current project to be initiated.
References: one element that cannot accommodate false claims about any business is references provided by previous clients. Any good freelancer or outsourcing firm will have a record of client testimonials, or be able to provide you references upon request. These may either be credentials from partnering firms or direct reviews of clients. Businesses should be cautious while working with partners that have questionable reviews or references. Instead, let these records serve as a good standard for what working with the partner will be like.
Skill sets and language: Skill sets and language are essential factors in choosing the right offshore outsourcing firm. Qualified experts in the field of software development should be able to provide quality and communicate effectively with clients. Discrepancies in language not only delay work, but can reflect in project outputs and deliverables. English language is seen as the international business language with more than 1,5 billion speakers. This means 20% of the world’s population has some form of English proficiency. Companies operating in the developed western world especially, require the skill in order to create relationships with customers and partners. Thus, it is essential for the right outsourcing partner but to pay attention to details through their use of language.
Time Management: delivering projects on time is key. Not just with the final output, but incremental deliverables along the way. Offshore outsourcing firms, by nature, have massive amounts of autonomy and must work independently due to geographical distance. Hence, the right outsourcing partner must be time sensitive and efficient with work. Micromanaging is out of the question with such teams. So, if outsourcing partners are not responsible or agile, a lot more time is wasted. In the digital world, hours can correlate to significant losses in traffic and market value. Competition is fierce and firms that get ahead do so quickly. Thus, it is essential that any offshore outsourcing partner has excellent time management skills and be available to communicate whenever needed.
Trustworthiness: Trust is crucial element to outsource your work. When a project is outsourced, firms must decide on specifications, targets and timelines. Then, they must leave the actual implementation of the work to the partner. This means that once the initial stages of development are decided, trust is at the forefront. When dealing with software development, it is likely that the client company will not have large teams on hand that can quickly fix issues that come up. Hence, it is the job of the firm to work ethically in providing a quality product. Fortunately, word travels fast and trust need not be unfounded. A firm’s previous records can all reflect on its trustworthiness. Moreover, once a reputation for shoddy work is established, other firms can avoid working with undependable partners.
Do a test project: a popular method of determining the viability of an outsourcing partner for a particular software development project is through a test project. This entails either a coding, design, language or competence test (or a combination of all of the above) that can be used to see how the partner would do if given the real project. Test projects work especially well when a partner’s portfolio does not have similar assignments or they are relatively new in the industry. Such tests can give partners credibility as well as garner trust between the two parties.
When working with an outsourced team it is possible to encounter a few security risks. Software may be at risk of being stolen or replicated which is why it’s important to safeguard data.
So, how should businesses reduce these risks? Here, looking at the types of important documents to consider when outsourcing becomes essential.
Types of important offshore outsourcing documents
SLA (Service Level Agreement) – This document indicates the project requirements, meeting times and reports.
SRS (Software Requirements and Specifications) – This document should list all requirements and specifications for the software project.
KPI (Key Performance Indicators) – These serve as evaluation points for different phases of the project.
NDA (Non-disclosure Agreement) – This document keeps data and information regarding the project secure, maintaining that nothing can be stolen or passed along to other firms. With an NDA, firms can ensure that their information cannot be subject to any leaks and duplicate or off brand software cannot be made from schemes of the project that are then disseminated freely.
Given that offshore teams are thousands of miles away, how can businesses make sure they are efficiently managed?
A good offshore team can go a long way in keeping the organizational structure of a business strong. Although managing them from afar may seem daunting but with open communication – firms can create a strong empire. Let’s look at the way to go about it.
How to manage teams
Managing offshore teams can be difficult. Both because of geographical distance, and differences in time zones. Fortunately, technology has truly linked the world and communicating with offshore teams is easier than ever. It can thus be helpful to see offshore teams as global teams rather than external partners. This is so that there is a constant link between parties and a long term relationship can be formed, especially if the project is of a large scale or if future projects can be initiated through the same outsourcing partner. In order to keep such a network intact, and growing, these elements should be incorporated in daily activity.
Schedule meetings regularly: regular meetings mean regular updates, so that all parties are on the same page and no discrepancies in the project persist in terms of ideas or form. Meetings can be incorporated into weekly or biweekly routines and team leaders from both organizations should be included and lead proceedings, so as to have representatives in place to immediately work out any issues that arise.
Videocall: Rather than keeping meetings textual or telephonic, it can be useful to add video into the mix when setting up meetings. This is because seeing the other party can add an element of trust, build a relationship and bypass communication errors that arise from subtext. Video calling platforms like Zoom, Google Meet or Microsoft Teams as well as Skype are usually free for certain time limited meetings at least and can be a quick and useful tool to enhance communication. These platforms can also be used to give presentations, share screens and go through documents together- making the process much more efficient as well as enriching the experience.
Meet in person: in order to keep teams motivated and create cohesion between partners, it can be helpful to arrange at least one meeting between partners in person. This allows both clients and outsourcing service providers to get to know each other as people, and to experience each other’s cultures holistically. For companies looking to outsource long term software development projects, it can be helpful to create relationships between liaisons. Moreover, it can also be helpful for designers and developers to get a sense of the environment and audience they must target, especially if the project is in the hospitality or travel sector.
Share a vision: it can be helpful to over communicate when outsourcing. This is because businesses can have a vision for a certain product or campaign that only exists in the team leader’s mind. The breath of the project should be properly explained and understood by both sides so that a realistic and appropriate timeline of work can be established. By sharing everything from opinions, inspirations and goals- businesses can limit delays caused by having outputs that don’t align with their core vision or brand image, as well as allow the outsourcing firm to only go with elements that are known to be properly suited for the client’s tastes and needs. Thus, nothing should be spared when communicating with service providers.
Don’t Micromanage: once a vision has been shared and the in’s and out’s of a project are decided upon in a formal proposal, it is important for businesses to let the outsourcing team work. If they have done their research and selected a team or freelancer that is best suited to work with, management should pass over the reins and allow the outsourcing firm to do its job. Micromanaging from hundreds of miles away is unfeasible, and can often result in delays rather than efficiency. Outsourcing is a tool for businesses to focus on core activities, and should be taken as such- without having to also manage experienced service providers that are acutely skilled to carry out such projects themselves.
Best tools to use when offshore outsourcing
Finally, technological advancements in the IT industry have led to a host of platforms and tools that can be used to optimize the outsourcing process. Here are some of the most widely used communication, coding and scheduling tools that help in creating a clear flow of work between partners.
Gmail, Google Docs, Google Drive and Google Calendar
Skype, Zoom, Google Meet, Microsoft Teams, UberConference, GoToMeeting and Join Slack, Trello, Basecamp, GitHub
Ready to outsource software development yet?
Ultimately, the decision to outsource software development is dependent on a host of factors that range from budgets to skill shortages or business requirements. To Outsource software development can seem like a big step with many different complications, but by following this guide and others similar to it, this becomes a simple process. There is a diversity of talent across the globe and it is up to firms to determine whether such talent can serve them adequately. Thus, the one key take away from this blog is to do the research. Without an in-depth understanding of the internal needs of the business, as well as how to go about finding the right outsourcing partner, any project is doomed to fail. Fortunately, there is a dearth of information that can help firms through the process, and benefiting the most from their outsourcing ventures.