Contact us anytime to know more — Amit A., Founder & COO CISIN
Organizations of all sizes today are seeking to establish new relationships with offshore IT companies or to strengthen existing ones to combat the unexpected twists that may result from the pandemic.
Many still have questions and inhibitions about outsourcing:
- Do we need to outsource?
- How can WE help my CTO or product manager with outsourcing software development?
- Is outsourcing software development services good for product companies, startups, and enterprises?
- How can outsourcing be successful?
- What are the potential risks associated with outsourcing software development?
- What is the best time to outsource software development
- How do we find the best software development company to outsource?
There are many more! This guide will help you to solve this problem. Before you sign up with an IT outsourcing company or third party to work on your software project, you need to answer a few questions.
This guide will answer all your questions about software development outsourcing before you sign any agreement with an outside vendor. Let's start by explaining what outsourcing is.
What is Outsourcing?
Outsourcing means your business operations are delegated to someone else to provide expertise. This is software development outsourcing.
You analyze your business operations to identify the area of software development that needs expertise. This could be specific software features or entire software development. Next, you need to find a technology partner.
They will analyze your requirements and begin the development process.
Outsourcing software development to an overseas country has been a common solution to the growing need to launch a digital product.
Outsourcing is the ideal solution to fill the technology gap, reduce development costs, meet unexpected demands, scale development, or upgrade software to remain competitive.
Everybody can benefit from outsourcing custom software development services to experts, whether startups or large-scale businesses.
Outsourcing offers many opportunities. Outsourcing is more than just outsourcing your software development to another company. It also opens up some amazing opportunities for you.
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Strategic Time to Focus: Outsourcing software development allows businesses to focus on their core business functions.
The outsourcing company will focus on your software product while you focus on your core business functions.
You can still pay attention to what's going well and what's not.
Strategic planning can help you upgrade your business.
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Cost Curtailment is one of the Greatest Benefits of Outsourcing: Strategically planning your outsourcing project can help you cut your costs by a significant amount.
Outsourcing is the best option to reduce your costs or launch your software at a low cost.
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Outsourcing the Latest Technology: Outsourcing is a great option if your project has high ambitions and requires technical expertise.
A company can bring you the most up-to-date tech stack and deliver the necessary integration.
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Risk Sharing: This allows you to reduce costs and share the risk with your external outsourcing software development service provider.
You can still have your team working on certain functions.
Still, the outsourcing team can also bring in expertise from an external source.
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Extremely Responsive to Demand Volatility: If you are trying to bring together a team for in-house operations, it can take time.
They have more flexibility and an advantage when they outsource.
Your software allows you to scale up or down your team quickly.
This chapter explains the benefits of outsourcing and outlines its meaning for organizations. But knowing the benefits is not all.
We also want to address all the issues that CTOs, product managers, and other employees face. The following chapter will discuss the subject.
CTOs' Challenges and Outsourcing: How Outsourcing Can Help
CTOs, or Chief Technical Officers, handle the majority of development work. They can work for startups, product companies, enterprises, or any other type of organization.
They are responsible for all aspects of technology within the organization and ensure that it is ready for disruption or Digital Transformation.
CTOS must face certain technical challenges while maintaining its organization's technical maturity. They have the option to outsource.
Outsourcing software development can solve most of the problems faced by CTOs.
We don't think so.
A CTO might encounter these most common problems and learn how to overcome them.
Tech Specialists Recruiting: Specialists in tech innovation are required to have the necessary expertise and be driven to succeed.
The majority of CTOs need help finding the right specialist for various reasons. One reason is the geographic limitation. The US and the UK need to gain the necessary IT skills, and the fees they charge are extremely high.
Training someone not proficient in the technology required can cause delays to any project.
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Outsourcing: Outsourcing opens up a lot of doors and opportunities for CTOs to hire the best IT professionals from around the world.
They no longer have to be restricted by geographic borders when searching for talent.
It is easy and affordable to outsource tech specialists for any technology project.
Ensuring Tech Innovation: The CTO is responsible for ensuring their team and organization are innovative at all levels.
They must lead Digital Transformation in their organizations. They need a technical team that is up-to-date with current tech trends and has new ideas. CTOs often need more technical skills, which can hinder them from innovating.
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Outsourcing can Help your Business Digitally Transform: Many offshore outsourcing companies offer their expertise in technology.
With their vast technology resources, businesses can integrate state-of-the-art functionalities and features without worrying about specialization or paying high prices.
Outsourcing to countries such as India, Ukraine, Poland, and so on can be a smart move if you want to innovate.
India is a rising tech leader.
You can either outsource to India or partner with top IT outsourcing companies in India to encourage tech innovation.
Deadlines for Projects: CTOs, in particular, those who work for digital agencies and product companies, are often faced with the urgent need to meet deadlines.
These deadlines are not only for their projects but also for client projects they must complete. Not only could they limit the quality of their work, but it could also cause them to be overwhelmed by tight deadlines.
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Outsourcing: CTOs can find a technology partner who can share their workload.
They can hire remote developers or create a remote team to do the extra work.
Or they can delegate the entire project to the offshore team.
They will be able to complete the project on schedule and deliver it on time without compromising quality due to time constraints.
New Digital Tech Requirements: CTOs must embrace new technologies such as AI, Machine Learning, and RPA.
Not all regions have the technology or maturity required to make this happen. CTOs have only two options in these situations: either cancel the plan or pay tech experts to relocate to their area.
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Outsourcing can Help: Outsourcing reduces borders and opens up a global talent pool.
Not only can you find the best digital talent in your country but also across the globe.
Choose the best company for your tech product, and then get started.
Technical Debt: Technical debt is another challenge many CTOs have to face. Many CTOs have created software, products, or enterprise systems with older versions of the technology.
The company is now looking at the latest technologies and frameworks. The current developers or resources need to be more skilled at this. This could lead to technical debt.
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Outsourcing Can Help You Upgrade Or Migrate Your Technology Stack: No matter if you are looking for new solutions or to upgrade your current systems to a more modern technology stack.
They can quickly help you out of technical debt.
Many companies have outsourced successfully but need to be more independent of the company. This is known as vendor lock-in.
To ensure effective outsourcing, your outsourcing partner must be skilled in knowledge transfer after development. Outsourcing can solve many business problems but also present new challenges. With the right outsourcing strategies and a professional partner, it is possible to overcome any business challenges.
Outsourcing Strategy
It is important to have a well-planned strategy to ensure clarity when outsourcing software development. While outsourcing is common in all industries (getting services done by another company), the method you use to implement it will vary depending on the organization's working methods.
Many companies face different challenges in their operations and work, which force them to outsource software development.
Before they can develop a strategy, they must identify the problem.
Analyze Technology Gap & Set-up up Goals
No matter the type of initiative you are taking, having a goal can help you scale. It is important to establish a goal that has a realistic but challenging value.
Suppose you need a goal that aligns with your business plan. In that case, outsourcing software development could go in the wrong direction. With a goal, you will save time, money, and resources.
To ensure your outsourcing venture is successful, you must have clear objectives.
Long-Term Goals: There are many long-term goals you can achieve when outsourcing software development.
You may have many long-term goals that will benefit you.
- Outsourcing could be a way for companies to get lower-cost software development services.
This could reduce development costs.
According to many other companies, outsourcing can be a great way to scale up your team quickly.
- Outsourcing can be a great way to meet any long-term need of a developer or a group of developers.
Consider maintenance as a long-term goal.
It would help if you established a long-term outsourcing partnership with a vendor to ensure that your software is fully maintained and updated as new technology becomes available.
- You want to get high-quality codes for your software, which you can obtain from outsourcing companies that help you reduce your overall software development costs.
Goals for the Short-Term: There are short-term goals you can establish based on your needs and long-term ones.
These could be as simple as getting support or a developer on-demand for your software. A small project might be in your hands that you need to complete within a certain time frame. It is taking longer because there are not enough developers.
You can speed up development by hiring a remote developer during these hours.
Technology Gaps: Any software development team should aim to close the technology gap. Software development is common for startups, enterprises, and large corporations.
They want to incorporate the most recent technology into their work.
- An API, an application program interface, a plugin, a small module, or another item can be developed for your software.
This is a great option if the API you require is unavailable in your in-house technology or local area.
- Outsourcing can help with migration.
Outsourcing can help you migrate your website, mobile app development, or other digital products from one platform to another and upgrade them.
Outsourcing can speed up the process and make you more digitally savvy.
- An external technology partner can help you speed up your digitization efforts, even if you plan on something other than a Digital Transformation.
Once you have established your goals, it is possible to move forward with your outsourcing plan for software development.
The technical co-founder of your startup will help you decide the best strategy.
Choose an Outsourcing Strategy Based On Scenarios
Strategy is the first step to successful outsourcing software development. Your outsourcing efforts will succeed if you choose the right strategy.
If you make a bad start, outsourcing will not succeed. Businesses can choose from various strategies depending on what they need and how they work.
Every company has a gap it wants to fill through outsourcing. It could be a short-term or long-term gap, a project need, or a technology gap that needs to be filled for a client project.
We have used different scenarios to illustrate the requirements of different organizations. These are the topics we will be discussing in this section.
Scenario 1: When You Require Specific Tech Specialists
These organizations have a core group of programmers or developers who work in their offices but need more technical knowledge.
They require a particular technology to be added to their project. It could be a new technology or something your in-house team needs. Many people have technical problems that in-house teams need help solving.
Remote developers can solve this problem. They can find and hire the best tech talent from around the world.
Hiring for custom software developers or establishing an extended team are the best options for filling a short-term technology gap.
Depending on your needs, you can hire core developers or a team of designers, developers, project managers, QA testers, and other staff. Hiring developers, building extended teams, and adding expertise to your projects are easy. You don't have to hire developers.
You can also create your team for full-stack software development. Remote team members can be an asset to your company and help you maximize the value they can provide.
Scenario 2: When You Require A Complete Development Team
Many companies need a team of technical staff in place for product or software development. It could be costly to get the infrastructure and software and hire a team of developers, QA specialists, and testers.
The client will need to hire a highly-motivated team focused on the project at a low price. This is the best part about this arrangement. There would be a project supervisor who oversees the team to ensure everything runs smoothly.
Outsourcing is great because you can choose from different engagement models depending on your technical requirements.
For your project, you can create dedicated teams that include developers, project managers, and designers, as well as quality assurance engineers.
You can allow your organization as much participation as you wish. It can communicate with the project manager to discuss the requirements and ensure the work is completed as agreed.
If necessary, it can meet with developers.
Scenario 3: When You Have To Give Over Complete Development
When you have too many things to manage the development of this product/software, these companies either need a software outsourcing company to develop their software or to hand over a project.
They require a reliable vendor to develop and manage the software until it scales. You will need a team to manage product development from start to finish and hand over the product.
Startups and SMEs with smaller teams and only a few managers may find managing an offshore team or remote programmer more challenging than rewarding.
This is where outsourcing complete project management comes in. You can have end-to-end product creation depending on your needs and how involved you are.
- Idea: Creating a product strategy and roadmap, prototyping the UI/UX, and developing the MVP.
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Development: The stage in which the developers create the actual software.
Outsourcing development allows you to transform your software idea into a fully-fledged product with all its APIs, web, cell, and cloud apps.
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Scaling: Your software is current and ready to dominate the market at this stage.
This would cover everything you need about inbound and outbound strategies to generate demand.
Outsourcing the entire project to a software outsourcing firm is a great way to reduce friction and ensure clear deliverables.
You only need a clear goal and a well-drafted outsourcing contract outlining the scope. This will allow you to develop the software faster and more efficiently.
A company may use the managed product development approach in such cases. The company will discuss your product idea and the requirements.
The vendor handles everything from MVP development through scaling the product and launch.
Scenario 4: Scaling Existing Software
After a seed funding round, most startups find themselves in this situation. The MVP is a basic version of their product.
This was enough to validate and display their idea but not enough to get funding.
They need to scale up their product and develop new features and functionalities with their existing resources. They need the expertise of technology partners or a technical co-founder to scale their product.
Product managers can scale their products easily without expanding their tech infrastructure. This is possible by hiring extended teams.
Extended teams can be provided by IT offshore companies that work in the same way as your team but are located in another country. Now that you have an MVP-building team, you will need additional developers, engineers, and technology experts to scale it.
You can easily do this by partnering with a software outsourcing company.
Scenario 5: When You Need A Technology Partner/Cto/Tech Founder
Startups often seek assistance from offshore IT companies when they launch a product that does not require the necessary technical expertise.
They will need a partner in technology or a technical co-founder to assist with all things technology. They are open to disruption but must be better-versed in technology terms, frameworks, and libraries.
These situations require that the company hires technology partners. Many IT companies assist startups in building their MVPs, ensuring cash flow, and obtaining validation.
Scenario 6: When You Have To Upgrade Your Software
Another scenario is when a company wants to modernize legacy applications. They must upgrade their software and systems using the latest disruptive technologies.
Organizations look for an outside software development company to manage their project. The company might be required to develop a specific module or assist with Digital Transformation.
They will need to hire a Digital Transformation facilitator. These companies can provide any kind of support, such as:
- Modernization of Applications.
- APIs, Microservices, and Serverless Architecture.
- Single-Page Application.
- Embracing New Technologies like AI, ML, Blockchain, IoT, RPA, etc.
- Digital Transformation
- DevOps & Cloud Migrations.
- Mobile Responsive
This is where you may need an interface to your software or a new plugin created using new technology. This strategy is great because you can keep your internal team focused on the core software.
In contrast, your remote team can work on smaller projects or build independent modules.
Depending on your situation, you may only need one remote developer to support your in-house team or require a whole team, including testers, designers, and developers, to make your software idea a reality.
For some projects, you may have all the details down. You could even give the whole project to an offshore software development company.
Outsourcing Tips for Success
You must have a clear vision and follow up with your clients from the beginning. Here are some tips to help you overcome your doubts and apprehensions about outsourcing software development.
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Learn What to Outsource and Skip: It is important to know when to outsource and when you should skip.
Some tasks or operations should be handled independently.
There are stark differences between outsourcing and in-house product development.
One can only reap the benefits of outsourcing when one knows how to do it.
It is best to keep the core functions in-house and outsource only what you are unfamiliar with.
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Secure Seamless Onboarding: You must pay more attention to onboarding your team for outsourcing services.
The remote team should be treated the same as any other team you have on board for in-house operations.
You should share information about your company and its culture, introduce them to others, and delegate tasks.
It should all go as smoothly as an in-house hire.
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Get a Trial: It is crucial that you first ask your company to complete a test project before you hire them.
Ask them to start working on a small module or project to see how communication works.
You should also check their honesty and trustworthiness in the process and delivery of promises.
Also, assess how fast they are developing it.
Even a prototype or smaller product can be used to start development.
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Communication Tools Using Leverage: Communication is much easier when developers and team members are within proximity.
It would be easy to tell them everything and ensure they understand what you are asking.
This is a problem when working remotely with teams.
- Ensure that at least 25% of your communication time is given to outsourced teams.
It is impossible to assume they will know all about your software, company, how things work, or what you expect of them.
Make sure you are clear and don't make assumptions.
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Get involved and give feedback: To succeed in outsourcing software development, the next tip is to get involved as much as possible in the project.
As a member of an in-house team, you would be fully involved.
Please don't worry about your outsourcing project, thinking the project managers will handle it all.
- They will take care of everything, but it is your responsibility.
Make yourself available for weekly meetings.
It is also important to give feedback early on any issues or changes that must be planned.
Outsourcing allows you to be flexible and communicate with them about any required changes.
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Encourage feedback exchange: Encouraging feedback exchange is another important tip when working with external teams.
You will see where they are at work and where they are stuck.
Feedback exchange is not only a great way to get fresh perspectives and new eyes on the project.
External team members might have better ideas or opinions about software development, which could help improve the product.
Find the Right Software Outsourcing Company
Once you have created a checklist to help you choose the right company to outsource software development, let's talk about how to go about finding the right company.
Let's discuss the steps you need to take to find the right company to meet your needs and work within the scope of your software.
1. Shortlist Companies
You can search for software outsourcing companies on several platforms, including Clutch and Google SERPs. You can shortlist companies according to your project size, tech stack, and other offerings.
2. Share Requirements
After you have selected the companies, create an invitation for proposals and share it with them. Discuss what you want in a project partnership and your specific requirements.
3. Discuss Engagement Models
The next step is to discuss the engagement models, depending on what type of requirements you have. It is important to determine whether they require a single developer or a team of specialists.
If so, the company should offer that option.
4. Get Estimates
Once you have identified the companies that offer the type of engagement you desire, you can evaluate them based on their costs/project budgets, and launch times/timelines.
You also need to consider your tech gaps/their resource requirements.
5. Negotiate Pricing
After you have analyzed the cost and all other factors, it is time to negotiate a price with the companies that are shortlisted.
Here you will analyze the quotes to find the company offering the best price.
6. Interview Developers
After you have narrowed down the list to the top 2-4 companies, it is time to begin interviewing developers. Many professional outsourcing companies offer resumes and allow you to interview them before you hire.
7. Finalize and Sign the Contract
Signing and finalizing the contract is an important step in any outsourcing partnership. The contract covers all information necessary for the agreement and the partnership.
It doesn't matter if it's a time and material contract, fixed-price outsourcing contract, or dedicated team outsourcing agreement; you need to ensure it is foolproof before signing one. Every contract component must be clear, such as project scope, service level agreements, asset transfers, IP protection, timelines and payment structure, and subcontracting or exit strategy.
Conclusion
We hope that you now have an idea of how outsourcing software development companies can benefit your business. We are a software outsourcing company that has helped hundreds of thousands of companies, startups, CTOs, and other organizations to build their software.
This helps them in their Digital Transformation journey. We have won a lot of praise for our ability to help clients save money, create state-of-the-art software, and speed up development.
Outsourcing to our software development team will allow you to infuse your project's talent with high-quality code and seedy development.
