$92.5 billion — that's an estimation of the outsourcing software development market. It only grows as even more companies start widening their team opportunities.

Prominent market players like Slack, WhatsApp, and IKEA have already experienced all the perks of outsourcing software development services. Let's puzzle out what is software development outsourcing, how to successfully outsource software development, and how you can benefit from it.

What is software development outsourcing?

Software development outsourcing services — employing not single developers but working with third-party providers (outsourcing software development companies) to run services. Such work is in high demand as it has many benefits for companies, from money saving to better security.

How to outsource software development?

There are several most common models of outsourcing software development.

Set Price format

A set cost format means a predetermined sum of money for work. Instead, the outsourcing software development companies agree to carry out a predetermined scope of work. To meet the contract, the service provider can't change the pricing or miss the deadline, and the client — change the specifications of the project.

It's not your option if you are unsure of your project's features or how the current system will respond to the modifications you intend to make.

Hourly/Time and Material format

The most commonly used format today. The service provider estimates the number of hours needed to develop the project and multiplies it by the working hour cost. The idea is that the client covers costs for the hours the dev team spent. Here the customer can add tasks and modify the scope of work. Besides, the outsource services provider can change the number of team members pursuant to the requirements. It's the most flexible model as amended at any time.

Devoted Resource format

Such a working model means hiring a team of developers who work on nothing but your project. Finally, the agency assists the client in gaining access to a fully functional team focused solely on the client's activities while considering the client's needs and project goals.

Why do companies outsource software development?

Software development outsourcing services are a benefit-provider. Some of the advantages of outsourcing software development services are listed below:

1. Cost saving

Did you know that 38% of startups crash because of money shortages? That's why saving money is the first reason to try outsourcing software development services. The research by Deloitte states that 59% of companies choose to outsource to decrease money spending. This saves money for other business areas like HR, upgrades, etc. Furthermore, this way, you don't have to pay for keeping an employee like sick pay, training, etc.

Top companies already use outsourcing. For example, WhatsApp outsourced to develop an application. It compensated greatly as 1.5 billion active users each month use the app.

2. No time waste

All companies do their best to meet the market needs in a timely manner. The problem they face is the lack of resources. Custom software development outsourcing assists you in saving a great amount of time. Why? Outsource software development helps to avoid recruiting, hiring, and training new employees in the company culture. Profs have a wide experience and solid tech stack to meet all your requirements when you can focus on other non-tech staff.

Glassdoor says you'll need 23.7 days for a job interview. To start working with an outsourced software services company, you need 1 call.

3. Skilled Talents

Outsourced software development opens an opportunity to cooperate with top-rated developers. Specialists from outsourced services companies have experience handling various projects. Wide tech stack and even wider experience results in effective work. Building such an in-house team takes much effort when outsourcing providers have already done it. You only open up the collection of talents with no geographical limits.

One more advantage — no boundaries for tech opportunities. Sometimes companies have limits due to budget constraints. Outsourcing companies usually operate better development tools.

4. Flexibility

The opportunity of scaling up and down is an essential reason to choose the outsourcing work model. Imagine the project is finished, and you still have a development team you don't know what to do with. It can greatly difficult resource management. Another option — you work with an agency providing you the development team till the second you need it. In this case, there's no reason for you to hire specialists full-time and go through all the employment challenges. The service provider makes the team according to the working hours and tasks needed, minus one problem.

Let's look at the example. In the early stages, BaseCamp didn't know how to cope with the fast growth. It made them lose focus. This became an issue leading to performance issues. The BaseCamp team understood they couldn't go far with it. BaseCamp had to study how to grow appropriately and avoid preventing errors, so it hired a group of freelance engineers to work on its software.

5. Transparency
The principal rule of working outsource is running transparency. The outsource software development team should report the workflow regularly and keep it clear for the customer. Open collaboration is key. Software development companies usually set up regular calls to update the client and be on the same page.

6. No focus lost

For non-tech brands working with an outsourcing services provider is the best solution. The top management of such companies doesn't have proper experience hiring developers and running tech processes which adds risks of resource waste.

Outsourcing lets you implement all your tech plans without losing focus on the crucial working areas. Professional outsource teams will make the development easy and clear for you, driving excellent results.

7. Security

There are some guarantees of effective work from the provider's team. The most common is — an agreement signed by both sides.

To compare, when you hire an in-house specialist, you don't have such guarantees. Furthermore, there's always a risk that the worker will receive a better job offer and quit.

8. Deadlines

It's OK for the developers to get ill and ask for sick days, for instance. As a human, you understand it, but as an employer — you need a high-effective specialist who won't affect your deadlines.

On the other side, outsourced software suppose strict deadlines meeting. You can be sure there will be no work disruption as software development outsourcing services providers always have extra developers.

9. Risks decline

Even when the marketing team is sure that a new tech product or solution has a good chance of succeeding, there are many risks. They are usually about software development and delivery. It can be challenging not only for small startups but for big companies.

A company spends a great number of resources, but the crucial ones are time and money. It hires specialists in-house and covers their work for several months. But the product can still break down. In the worst scenarios, this can turn out catastrophic and make it difficult to recuperate.

Instead, hiring outside firms to design software works amazingly well. Collaborating with a specialist using a leading project management system, building an effective workflow raises the opportunity for a reliable return on investment and provides excellent product development.

One of the really popular communication systems on the market, Slack depended on programming outsourcing for efficient beta testing. It now processes more than 1 billion messages each week.

10. Speed

One more reason why companies outsource software development is a quick time-to-market process. You may deploy products without relying on your internal team this way. Once you've hired remote devs, project management won't take up much of your time with the service provider. As a result, you may benefit from a shortened development period and devote more time to your company's marketing efforts.

11. No micromanagement rush

A project manager oversees all of your needs for product development if you outsource your project to a software development firm. No rush, no deadlines set, no tasks checking, just relax and watch your ideas going live.

When to outsource software development?

Starting a new tech project is a challenging way. But outsourcing software development services can become a reliable tool to make it easier to handle.

So the primary triggers for cooperating with an outsourcing software development company are:

Limited cost for software development
Tight deadlines
Need for experienced staff with the wide tech stack
Desire to reduce the security risks

How to successfully outsource software development?

1. Firstly, Identify and establish your objectives.

Evaluate the product just at the outset and specify the main objectives, specifications, and demands. It can assist you in selecting an organization with the appropriate background and expertise. It can be a business that develops websites or mobile applications ideal for your objectives.

2. Explore

You must be aware of the limits and realize how long it takes to develop the project, analyze, and create a scope of work in order to properly evaluate the task.

A smart business will constantly ensure that they and their customer are on the same page. They review your company's objectives and, using them as a basis, create technical execution, set scope, and calculate the cost.

3. Research the business

Inspect the business's social media, website, portfolio, and reviews as thoroughly as you can. The best approach is to check clients' reviews. It is essential since you must be certain that the software development outsourcing company drives business results.

4. Talk about the project.

Share the concept, the needs, and the objectives with the business company or a spokesperson of it. Be free to request a projected cost. An excellent approach is assessing their capacity to communicate, as well as their openness, honesty, and transparency. Do not be afraid to explain anything in detail.

Finally

We've just figured out the terms, the reasons why to outsource the software development process, and the best way to do it.

Hiring an outsourced team with the necessary knowledge base to develop a tech product can result in paying significant dividends. Finding such providers working on a project basis is now simpler than ever, and every business should seize this opportunity as quickly as possible.

We advise you to think of Software development companies in Ukraine to outsource, as the country has more than 252,000 technical specialists and was chosen for outsourcing by over 100 Fortune 500 companies.

Common Mistakes Startup Founders Make