Successful software development outsourcing, when done correctly, can provide a significant return on a company’s investment. Research from Accelerance states that businesses are expected to spend $133.3 billion on outsourced software development by 2025.
Outsourcing can hugely benefit the company investing in it; however, some sadly do not always find it value for money.
Software development outsourcing is not done right and can fail for several reasons, including that a company did not communicate effectively, they chose the wrong partner, or expectations were too far apart.
How do you successfully outsource software development projects and maximise your odds of success?
The team at Helmes has brought together our leading steps to ensure that your outsourcing experience is positive.
Software development outsourcing is when an organisation has a particular project they wish to develop out-of-house, typically to a third-party specialist like a software development company, either within the same country or abroad, known as offshore or nearshore outsourcing.
A software development outsourcing company’s services have numerous advantages, including cost reduction, improved efficiency, mitigated risk, and enhanced security.
Hiring a software development partner is highly effective for custom projects because it decentralises development and bridges talent holes for many companies.
A software development partner is an out-of-house third party with a team of developers that can aid other companies in delivering on a development project.
Software development partners are typically outsourcing companies utilised by organisations to reduce the costs and bureaucracy associated with hiring more in-house developers.
More likely than not, they will have an expanded team of developers with more skillsets than those usually not found in-house but required for a project you’re trying to develop.
Making sure your software development partner completely comprehends your project is probably the most critical part of having a successful software product.
There are numerous advantages to why companies seek to outsource their software development. We’ve listed the primary benefits below.
Outsourcing software development reduces or removes the costs of recruiting, training and paying the salaries of permanent in-house developers. Businesses realise that hiring outsourced developers who are paid hourly or via a project is less expensive.
The IT industry rapidly evolves, and it can be challenging for an in-house team to keep abreast of the latest IT programming languages and skills required to take on newer projects. Thus, it’s better to hire IT specialists who are adept at keeping updated on the latest innovations in the IT technology sector.
Only outsource what you need. At first, you will need a specific composition of developers to outsource your project. Still, should the project require new skills, you can hire more when needed and remove those developers you do not require.
Because the outsourcing development company has those skills – you can be sure to get what you need, thus scaling quicker and completing projects ahead of schedule.
Outsourced developers expand the repertoire of your talent pool and thus obtain unique insights based on different perspectives, which is crucial if you plan to grow your company globally or develop the latest innovative solutions.
Using a software development outsourcing company means learning from industry specialists who have the knowledge to enhance business performance, offer innovative ideas for project development, take the initiative, and teach your in-house team skills that you need for the future.
Before starting your process of finding the best software development partner, use these steps below to tailor a suitable strategy for your organisation.
It’s imperative to be clear with what you need from the software development company. Ask:
- why can you not develop this software?
- will the outsourced team build everything?
- do you expect them to lead?
- does it matter what technology they use?
- what problems does the intended software attempt to solve?
Be as explicit as you can. This will determine that both sets of expectations are matched.
Define your project’s scope so you will know what the finished project should look like.
Frame the precise requirements essential to satisfy you but maintain realistic expectations along the way.
To visualise what your expectation should look like, try crafting mock-ups and visual layouts of the project at the initial planning stage could be helpful.
When do you need the development completed? Defining a project’s time frame can be challenging, but you should have some ideas as to the completion date.
If you are unsure, a software development partner will be able to help you map your project timeframes. Once you both know, it will be easier to break the development down into more minor accomplishments to the final goal. It can change as you collaborate with your software development partner, so be flexible.
Identify which technologies and programming languages you will need to use for the software development and make a list to discuss with the software outsourcing partner. Be sure to describe how much you wish them to use it but remain flexible because, after discussions with your partner, they will likely suggest others from their previous demonstrable experience of such projects.
Project budgets are one of the hardest to figure out. Again, this is another scenario where your software outsourcing partner can help with any ambiguity. Money isn’t everything for sourcing quality technical talent, but it certainly matters.
Prioritise quality over quantity when budgeting for your software development partner and have more confidence in the finished product.
When deciding to outsource, the location of the software company will determine price, ease of doing business with, communication, efficiency and quality of work done. Organisations that outsource software development have identified three categories dependent on company location:
- Onshore outsourcing. Selecting a vendor within your own country.
- Offshore outsourcing. Choosing an overseas outsourcing partner, typically based in a distant country.
- Nearshore outsourcing. The vendor is abroad but in a country close to your own location.
You can read our complete guide on the advantages of each here.
Next step, once you have decided on the location to outsource your development, compile a list of companies to assess. Here are a few pointers to consider when composing your list.
- Company size. How big is the development firm? Does the company have enough developers to deliver what you need?
- How long have they been in business? We recommend a company that has been operating for several years at least, so there is little chance they will close in the middle of your project.
- Tech stack experience. Does the company have technical expertise with the technology your software product needs to employ?
- Software development methods. What software development methods do they use, and are they the most suitable for your in-house team? Are they able to use Agile, Waterfall, or other methodologies that work well with your existing methods? Or do you prefer one method over another?
- DevOps. Does the company have previous experience completing projects using the DevOps model?
- English proficiency. A high standard of English is more significant than you may first think. Still, suppose you decide on offshore or nearshore outsourcing. In that case, discussing strategy, design, planning, and execution will be vital in a language you all understand, like English.
- Time zone. Imperative that software development is completed on your time zones and requests, hence why nearshore outsourced software development is very popular.
- Industry experience. Has the company previously developed software for similar industries as your intended product?
- Portfolio. Does the outsourced development partner have a portfolio of clients they are prepared to show you and that they can contact them or references? Have they worked for any recognisable brands or leading companies in their sectors?
- Pricing. Is their pricing transparent? Will it contain any hidden costs?
- Post-development. Should further development be needed, does the partner offer post-development support services? How available will they be for your company in emergencies?
Once you have considered the above, you can select your list and begin contacting the companies directly.
Once you have shortlisted 5-6 software outsourcing companies, you should request a free consultation and speak to their specialists, asking about their work portfolios, case studies, services offered, and methodologies used per the list compiled from the above step.
Typically, these conversations should involve discussions around:
- Software requirements
- How long will the collaboration be?
- Development time and cost estimates
- Development strategy and roadmap
- Validation and feasibility
After getting an idea of what type of software outsourcing partner you’re looking for, it’s up to you to make the first contact. Interview potential partners to determine your top candidates.
Alternatively, some software development partners will let you trial their developers for a short period.
Naturally, evaluating your software development partner before deciding which is vital in choosing the right outsourcing team.
The main emphasis for data contracts should be security and project delivery.
No one wants their data to leak into the hands of a third party. Hence strict rules will have to be put in place to protect the company, employees, customers, and data.
Both parties should put NDAs and SLAs in place to mitigate those risks. If there isn’t trust between the two sides, data access should be limited and extended if required.
A Non-Disclosure Agreement (NDA) is an agreement between two parties that promises that none of the parties will share confidential and critical data or information with a third party.
The primary elements of an NDA document identify:
- Critical and confidential data in the document
- Information that is not confidential and can be shared
- Software project’s Intellectual Property (IP) rights
- Duration for which the NDA is valid
- The consequences of breaking the NDA
A Service-Level-Agreement (SLA) is between two parties on what to expect based on industry-specific performance metrics.
The primary elements of an SLA determine:
- Key Performance Indicators (KPIs) for measuring delivery and performance
- Communication, reporting, and process monitoring
- Support, maintenance, hosting, infrastructure, and development terms
- Information around backups and recovery protocols
According to research from Deloitte, cost reduction is the number one objective for companies choosing an outsourcing software company.
Still, others include flexibility, speed to market, agility, and technical expertise surrounding the tools and languages used to create some of the most successful products today.
Even if you have had a previous negative experience with outsourcing, the benefits of development outsourcing far outweigh the risks.
Various companies differ in collaboration methods, so what may have failed previously does not mean it will fail again. Teams like those at Helmes have witnessed this from our clients who have seen their projects fail, and we understand how to avoid these pitfalls.
In Helmes, we believe in long-lasting partnerships that enable both sides to grow. Speak with our IT specialists and contact us for a free consultation.