What is outsourcing Software Development?

With the fast growth of the economy towards globalization, a huge number of startups and enterprises are finding it hard to gain competitive benefits by enhancing customer service, minimizing costs, and maximizing productivity. The solution to handle all these problems is to use technology. So how do you get started when you don’t have much experience in software development or you don’t have much time? The answer is outsourcing software development. 

To be able to work with software outsourcing efficiently, we must have deep knowledge about it. In this blog, we will walk you through every aspect of software development outsourcing. Are you ready? Here we go!

  1. What Is Outsourcing Software Development?

Software outsourcing is an arrangement in which a company hires a software development agency to effectively carry out all the tasks of a software project.

As far as the global trends in Information Technology, software outsourcing is now standing at the top of the list. The concept of software outsourcing is becoming more popular now than ever, as many companies tend to choose this way to get fast, effective, flexible, cost-efficient, and successful software development projects.

  1. Why Should Businesses Outsource Software Development?

As we mentioned in the above part, companies choose to outsource software development to increase efficiency and profits.

The software development agency has expertise in technology. As a professional, they can provide better, faster, and cheaper functions than the hiring company.

Hiring an outsourcing company can get more benefits such as their knowledge, expertise and experience.

For instance, a small company doesn’t have to spend time building an in-house development team. Instead, it will have time to focus on its core potentiality.

Besides, by outsourcing software development agencies, small companies can save some costs as they can not afford to hire full-time devs or an in-house team.

In some cases, additional tech support will be needed by other companies during busy seasons. Outsourcing provides them extra flexibility to fill supplementary orders.

  1. The Current State Of Software Development

In this part, let’s learn about different types of software outsourcing services and engagement models that are available to serve customer needs.

3.1. Types Of Software Outsourcing Services

When talking about software outsourcing in 2020s, typical services often include mobile application and web development services, as well as other high-tech and innovative technologies of Artificial Intelligence, Robotic Process Automation, and Cloud Computing – which are fastening their rooms in the IT industry and expected to have a significant effect in the future.

Additionally, many software outsourcing agencies provide a full portfolio of services that customize to customers’ demand, meeting numerous ranges of their specific business requirements, at any stage of the project as well as during the whole development cycle – from planning to defining, designing, developing, testing, and deployment, etc.

Software development agencies can offer essential resources and expertise to make sure the entire project success for their customers.

By using software outsourcing, customers can get services delivered under the remote operation models, which allow them to work with top talented IT professionals from all over the world who are a perfect fit for working on their projects.

3.2. What Are The Engagement Models For Software Outsourcing?

There are 3 ways for customers to outsource their projects to software development agencies across the world. They are Onshore software outsourcing, offshore software outsourcing, and near-shore outsourcing. We are going to review all of them in the below section.

Onshore software outsourcing

Onshore software outsourcing means customer companies working with development teams from the same country.

There are no language barriers between customer companies and software outsourcing agencies, leading to a more effective outsourcing result.
An onshore development team is potentially accessible
The development costs may be higher than that of other foreign outsourcing agencies.
They probably have the same tech-skill gap that your company may be experiencing.
Nearshore Software Outsourcing

Nearshore outsourcing development means customer companies working with software development outsourcing agencies located in the neighboring nations.

They share a similar work ethic and values as their culture is very similar to your company.
They are geographically closer to your office, enabling easy site visits when it is necessary.
They have the same time zone as you, which means they have the entire business day to manage the business and get things done.
Nearshore outsourcing companies also have some drawbacks and the most common one is related to the easy availability of resources and the cost. These are certain factors to take into account.
Offshore software outsourcing

Offshore software development refers to the act of customer companies working with development teams who are located in other countries.

It is the most cost-efficient option as it helps to save labor costs. Besides, online communications channels (VoIP phone, skype, emails, etc) make it possible to manage the projects remotely in an effective way.
Easily scale up and down
Access skills you struggle to find in your region
Running an offshore team might be laborious
Time difference

  1. How To Outsource Software Development Effectively?

When it comes to software outsourcing, there is a wide range of factors that influence the success of the project. Here below are 5 aspects which customer companies to keep in mind, including:

Define the reasons and objectives for outsourcing
Have realistic expectations
Be flexible and have an exit plan
Set milestones and frequently track progress to provide feedback
Guide the extended team

While there is no way to make sure that an outsourcing project will be successful at one hundred percent. But there are many certain things to do to help customer companies increase the chance of success.

In addition, we recommend that customer companies should work with outsourcing agencies who use Agile methodology in managing their development projects in a flexible way, to enable for better quality and enhance collaborations as well as more frequent release. Using advanced tools to manage project tasks is also recommended to help obtain visibility into project progress.


Now you’ve learned about the definition of software outsourcing, the current state of software development, and how to outsource software development effectively. If you have any questions, let us know in the comment section.

Author: Manifera Team