Software Project Outsourcing Company – Why Use One?

Software Project Outsourcing Company

You have probably heard about software project outsourcing. Despite the concerns about how and when to outsource software projects and if it’s worth the effort, consider the market itself – it is estimated to spend $133.3 billion on outsourced software development by 2025.

So, software project outsourcing is worth our attention, but what is it, and how do organisations get started?

What is software project outsourcing?

In its simplest sense, outsourcing is delegating specific tasks to an external partner instead of using in-house resources. Software project outsourcing is now utilised in nearly every industry. Within the tech field, software application development is the most commonly outsourced IT function, according to Statista.

Why should a business use a software project outsourcing company?

Project outsourcing is quicker and more cost-effective than in-house development without the requirements for office space, finding software specialists or building up the entire development infrastructure. 

Other reasons to outsource software projects for businesses and established enterprises are:

1. Access to specialist talent and experience

When you outsource product development, your primary criteria can be the team’s skills and professionalism, not whether they are near your worksite.

Then you have to develop a product idea and immediately access a complete package of business consulting, data analytics, design, and software development services. 

Depending on the product type, project specifics and budget, businesses can proceed to development. They can start by building a minimum viable product (MVP) or a Quick Start to validate the idea and make initial changes as necessary. 

Business and design experts of the project outsourcing company will help design the most optimal minimum viable product and then interpret the analytical data it yields.

Outsourcing companies can do all this in-house by project planning, cost estimation, wireframing, software development, and UI/UX design. And they do these tasks all the time, almost as if it was in their DNA. 

Ensure you have the right outsourcing company by browsing the company’s case studies and references, looking up customers’ feedback, checking the reviews, and trying the company’s products. 

2. Able to have the best professional project team

For a successful product launch, organisations need not only developers to write the code and DevOps to deploy the product. They will also need business analysts, UI/UX designers, QA engineers, and consultants to ensure a smooth product release. 

Additionally, a project may require highly specialised skills, like virtual reality, machine learning or artificial intelligence. Finding a more comprehensive range of experts will take time. The time that you could otherwise spend doing the actual work on your project. 

Usually, software project outsourcing companies already have a complete team with many skill sets. At the initial phase planning stage, the project manager will propose a team capable of delivering a project and identify the approximate time needed from each team member.

3. No micromanagement

When assigning a project to an outsourcing company, the project is coordinated by a project manager who manages outsourced software projects, as the name implies. The project manager handles all product development and launch matters and will be the primary point of contact for any issues.

You will likely meet the project manager in the first stage of the project development and work with them on its implementation. Once approved, the project manager will keep to the agreed schedule and budget. Usually, the project manager has already tried and tested methodologies for managing remote and in-house teams.

The project manager’s job is to plan the sprints, manage deadlines, control the delivery and schedule, and prepare feature demonstrations. It would be best if you directly addressed changes, suggestions, concerns, comments, and complaints to the project manager, who will take the required actions.

4. Effective team communication

The importance of inter-team communication goes without saying. Fortunately, an outsourcing partner already has the tools and platforms to forge effective remote team communication and collaboration. 

Preparing a collaborative environment for a project requires minimum time and effort — whether a workspace in Slack, a project on GitHub, or a board in Jira. Once decided on which collaboration tools to use, the outsourcing company and business must adhere to them.

5. Uses Agile methodology

For any business, adhering to lean development principles is often critical. Whether a new startup or an enterprise-level organisation, delivering a product with minimal unnecessary expenses or tasks is always a plus. Excessive complexity can result in delayed products, poor communication and coordination and the wrong product developed. 

The Agile methodology favours the lean approach. 

Within the Agil model, product creation is broken down into sprints with a goal, usually a feature or functional component. After this product function is developed, it is tested and demonstrated at the end of the sprint.

The Agile methodology allows for revision and adaptation of the software development process to change requirements if necessary. Over the project lifecycle, this reduces the need to reexamine or redo finished components to a minimum.

6. Easy to scale

During project development, the project’s scope may either grow or reduce, resulting in amendments to be added. Should this occur, the initially selected team will either be scaled up or down. With in-house development, this process is arduous. 

In-house teams are more challenging to scale because it is difficult to find a suitable team member with the required skills, especially if this is only for a one-off project. 

Organisations can avoid these problems with software project outsourcing because the software partner will have sufficient staff to cover most project needs

How to set up your software project outsourcing strategy?

Outsourced software projects offer only a few benefits increasing productivity, improving product quality, and saving costs. Businesses won’t successfully outsource software development without thorough planning, so having a solid outsourcing strategy is the first step toward hiring an outsourcing partner to cater to a company’s needs. 

But how can you create one? Below are a few points to consider.

1. Define goals with the outsourcing partner

Reducing cost is a frequently cited reason to outsource, yet basing an outsourcing partner solely on price is narrow-minded. Other benefits of outsourcing include capitalising on advanced technologies, streamlining processes, and reducing the risk of business expansion. 

Ultimately the project’s goals should set the tone for finding the right outsourcing partner, not the cost. 

2. Define tasks for delegating 

Whilst some companies are known for coding excellence, others offer superior consulting services. Defining which tasks to outsource is critical to find a perfect outsourcing partner.

From the outset of a company’s outsourcing requirements, delegate tasks that are less important to your organisation. 

3. Determine the technological profile

Since software project outsourcing usually takes place in a remote setup, your partner must have a technological profile tailored to the company’s needs. Begin by making a list of the resources a project needs, and do not forget about security and data protection since data leakage can occur.

4. Cultivate an excellent project environment

Foster good relationships between in-house teams and outsourced project partners:

  • Inform the in-house team of the outsourcing goals.
  • Avoid rumour and speculation.
  • Close any cultural gap between the in-house team and the partner’s team.  

How are outsourced software projects usually done?

Software products, despite their complexity, must be flexible, easy to maintain, and upgradeable. Together, you can achieve this by planning each step, from brainstorming to maintenance. The software development phases differ from partner to partner. They could include a number of the following: 

  • Ideation
  • Planning
  • Design
  • Coding
  • Testing
  • Deployment and maintenance


Every project starts with an idea. However, ideas don’t come out anywhere. Once a business need is identified, organisations can move to the project initiation phase, which typically includes the following: 

  • Conduct a feasibility study to evaluate the likelihood of a successfully completed project
  • Determining the project’s scope
  • Identifying deliverables (the project’s expected results)
  • Identifying stakeholders
  • Developing a business case that justifies undertaking the project
  • Creating the project’s objective, scope, and how it will be delivered


The planning phase will include: 

  • Creating a project plan
  • Building the team
  • Identifying each team member’s role
  • Budget estimations
  • Ensure both in-house and outsourcing partner has the necessary resources (both hardware and software) 
  • Anticipate risk.

Another cornerstone of your success is well-organised documentation. Documentation consistency is pivotal at each phase for maintaining proper communication, work processes, reporting, and facilitating interaction between team members.

It’s strongly recommended that a summary is done during the planning stage with a software requirements specification (SRS), which specifies what a product should do and how it will be developed.


Design is crucial to the software project’s lifecycle and could include: 

  • Architecture — the product’s overall design
  • User interface (UI)— the way users will interact with the product and how it will respond
  • Which platforms will the product run (for instance, for mobile development, will it be Android, iOS)
  • Security — measures to protect software from data leakages, like SSL encryption or password protection

The design phase may involve visualising how a product looks or works, even creating a prototype. 


Coding is about ‘translating’ the product’s design into the existing software. 

Whilst a little project can be completed by a single developer, all tasks are divided amongst team members based on their skill sets for enterprise projects. Therefore, a front-end developer builds the product’s UI and communication with the server; database administrators add all the necessary data to the database.

It is equally vital to ensure that the code meets the project’s requirements and lives up to the stakeholder’s expectations. No wonder this stage is the longest. Yet, it’s also the easiest if the ideation and planning are carefully completed. 

This phase aims to build a working prototype with a source code document.


Once a development phase is completed, developers will test each development component to determine if it meets the requirements. Testing will include:

  • Performance testing will determine how the software performs under heavy workloads
  • Functional testing verifies whether the software performs its stated functions in a way users desire
  • Unit testing ensures that each module performs as it should
  • Usability testing will determine if the software is intuitive and responsive
  • Security testing to make sure the software is free from risks and threats that can cause a data leakage

Once an identified error is fixed, developers forward the software to the QA team for re-testing until the entire product is bug-free. 

Deployment and maintenance

As soon as the testing phase has removed all bugs or product imperfections, it is ready for beta testing. 

During beta testing, the support team will collect user feedback, and if any problems arise, the development team will remedy them.

After the product is fine-tuned in response to user feedback, it is finally rolled out to the market. Its life cycle does not end there. Instead, the product is regularly updated to improve performance and cater to the ever-changing needs of its users.

Where to outsource?

Cost optimisation is one of the primary reasons why people outsource. Factors including project price, taxes or the cost of office space vary from country to country. 

However, partners with the lowest cost may not deliver the best quality. Analysing different countries based on the following criteria will help you identify the optimal balance:

  • Tech education opportunities
  • Positions in global ratings of IT destinations
  • Time zone difference
  • The level of English proficiency
  • Resources availability and tech competency diversity
  • Cultural mindset

Based on these criteria, Estonia is considered one of the best for hiring a nearshore software development team

Estonia’s extensive educational backgrounds and comprehensive skill sets paired enabled Estonian software development outsourcing to consistently demonstrate their ability to produce a high-quality end product and provide services to meet their customers’ needs.

Moreover, you can find the latest technology, whether you need customised software development, mobile app development, or even modernising legacy software.

The advantages listed above make Estonia an attractive country to outsource a project. So, it is no surprise that enterprise giants like OECD, Kuehne+Nagel and Telia are leveraging its rich IT ecosystem.

We are a digital innovation partner

We provide software development for leading telecom operators, banks, insurance, retail and mobility companies, healthcare providers, startups and government institutions.
Contact us

More on the subject...