Mary Burko

Mary Burko

Content Writer, Researcher

The demand for outsourced software development is increasing for various product development needs, including web development, mobile app development, and voice development. Nowadays, many companies prefer this approach to product development by outsourcing multiple services and solutions related to development and maintenance. Regarding web development outsourcing, businesses can transfer development activities to a self-managed company with the necessary controls over the project. Depending on the complexity of the software, security requirements, and other factors, a development plan is created to build and maintain a SaaS product for companies.

What is software development outsourcing?

Software outsourcing refers to allocating third-party vendors for the required software development activities. The most common services outsourced are web design and development, mobile application development, and other related development and maintenance activities. Considering modern business needs, the demand for outsourcing services is only growing. Companies of different sizes are constantly looking for a way to build new products and thus consider hiring dedicated remote resources to deliver value at a reduced cost. After considering your development needs, a decision must be taken about outsourcing software development to a software developer. In-house development enables you to employ internal software developers to create software. In outsourcing, you will use a professional provider specializing in quickly developing your project.

Why should your startup outsource software development?

Why should your startup outsource software development.png

Startups are outsourcing software development at an increasing rate. Unless you have professional knowledge of product development or in-depth technical expertise in the relevant fields, it is recommended to opt for professional services. But that's not it. Let's dive into the main reasons why your startup should outsource software development.

Benefits of Outsourcing

  • Application of the Agile methodology

The conventional waterfall process is used in traditional software development. Teams should create a clear project strategy before launching it through a linear, step-by-step development process. They have stringent timelines with no room for error. If you need to modify something later, you won't be able to; if you do, it will be pretty expensive. This is where Agile teams come in - rather than preparing the entire project ahead of time, Agile teams focus on planning continually throughout the project, giving you the flexibility to make changes as needed. And to make the best out of the Agile methodology, you need good experience in it. Software development outsourcing ensures your product is developed under the experts' supervision while utilizing the Agile method correctly.

  • Access to deep knowledge and experience

There must be more than a well-defined plan to develop a competitive product. You must follow the proper development process, adopt the most influential tech stacks, and take the appropriate architectural approach while developing a product. And that's why you need more theoretical knowledge to launch it successfully. Outsourcing software development from professionals with years-long experience ensures that your product is developed with the proper expertise. Such in-depth knowledge and experience during product development are only possible if you use third-party professional software development services.

  • Access to a superior-tech talent pool worldwide

You need a tech background with expertise and experience in diverse technical domains to understand the technological areas during the development, the relevant technical trends, their applicants, and other tech-related factors. Basic knowledge of the technologies will be necessary for quality product development. And that's where outsourcing software development works wonders. As per your requirements, budget, technical requirements, and product development requirements, you can have a lot of options to choose from, no matter where you are located.

  • Ability to assemble the best professional team for the project

You must opt for professional developers and testers to develop your product. Because no matter which type of product you are developing, the market for that is expected to be quite competitive. It is essential to have a professional approach during product development to launch a competitive product that fits the target audience's requirements properly. Opting for software development outsourcing opens the path to establishing a quality product that aligns with your startup's goals.

  • No need for micromanagement

Through software development outsourcing, you get a fully-managed software development solution that doesn't require any micromanagement or even much management from your side. The professional team looks after everything, including the development workflow, process, milestones, and deadlines. As a result, you can focus on the more critical areas of your startup instead of micromanaging everything.

  • Optimal balance of skills and rates

Having the proper skill sets is pivotal for any product development. But at the same time, it requires heavy investment to hire in-house experienced tech professionals. Furthermore, you may not need the professionals' services once the app is developed. So, instead of going through such a costly and lengthy process, you can outsource software development to have your preferred skills onboard within your budget.

  • Easy scalability

Scalability is a significant factor to consider while developing your product. How easily can you scale it up to cater to the growing demand of the end users? How well can your product adapt to the changes? How easily can you integrate it with different platforms, third-party systems, and solutions? Outsourcing software development ensures your product has all the qualities to aid in high scalability.

  • Effective communication within the team

Communication is often the key to successful product development. Software development outsourcing ensures proper communication among the team members, as all are dedicated to your project and aim to make the best out of it. You can also take timely updates and effectively communicate with the team to have a transparent idea about the development process.

Cons of Outsourcing

  • Limited motivation

Little motivation implies that the outsourced team needs encouragement to give their best or finish the project on time. It is mainly common when startups hire freelancers without proper professional expertise or proven experience, or there is a communication gap that leads to a lack of understanding of your project, or if your budget needs to be higher to motivate them. You can avoid such a scenario only by working with a professional team, preferably a third-party product development company with various services and solutions.

  • Lack of clarity

Lack of clarity can be an issue for outsourced software development if you don't plan it well or don't have a detailed contract with the outsourced team. However, it can be avoided by making a software requirements specification document and discussing every detail of your project before the development process starts.

Software development outsourcing models

It's important to have a clear idea on various software development outsourcing models. Each outsourcing model has its own advantages and disadvantages, and it is important for companies to carefully evaluate their needs and choose the model that best fits their goals and budget. Let's delve into this.

Models of contracts in IT outsourcing services

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  • A predictable outcome
  • An easy-to-manage process
  • Transparency


  • A lack of accountability
  • Inflexibility

In the fixed price model, every project detail is well-defined and fixed, including the cost, scope, specifications, and others. Also, the pricing is set for each milestone completion. This can be a suitable model if you have a strict budget or a very well-defined project scope that doesn't need much modification.

Time and Materials


  • Dynamic work scope
  • Ability to change
  • Better timing


  • Low budgeting control
  • Deep involvement

The time and materials model is a famous software development outsourcing model. This model is based on the hours required from the developers and the relevant resources to be used. This model is easy to adopt and offers high flexibility to a startup to change or modify their requirements related to the project development, such as their features, solutions, scope, and others.

Dedicated Development Team

A dedicated team model lets you hire a full team that includes developers, testers, QA engineers, designers, and others utterly devoted to your product development. As this model doesn't require hiring an in-house team and enables you to launch a quality product without much hassle, it is often the first choice of startups.

Should be used when:

  • Projects require a team of a tester, developer, QA engineer, and others.
  • Projects that require high expertise.
  • When you need an in-house developer team.
  • Complex projects for competitive markets.

How to set up your outsourcing strategy?

Once you are ready with your preferred software development outsourcing model, you must set up your outsourcing strategy. The following steps will let you nail it like a pro. How to set up your outsourcing strategy_.png

Define your goals

A well-defined set of goals helps you throughout the software development process and ensures that your product is developed exactly as per your requirements. The following pointers will help you with this step.

  • What is the primary goal of developing the product?
  • What are the required features, solutions, and overall product quality?
  • What is your target market and audience?
  • What is your targeted market positioning for the product?
  • What are your available resources and budget?
  • What expertise do you have relevant to product development?
  • Do you have an in-house coder, tester, or anyone with proper technical knowledge?
  • Do you have enough exposure in the product category and the associated market?
  • What are your preferred outsourcing location and upper cap of budget?
  • What are your expectations from the team regarding product development approaches, process flow, and others?

A transparent idea of all these will help you develop a proper outsourcing strategy.

Define tasks for delegation

Defining your tasks ensures that all your requirements are met, and there is no confusion during or after the development process. A well-defined study implies that all the project-related information, milestones, specifications, criteria to meet, quality to maintain, and others are detailed and conveyed to the team for smooth execution.

Determine your technological profile

Undoubtedly technology plays a crucial role in software development. And it would be best if you determined your technological profile so that the relevant technological prowess can be classified as per a predefined system or scale. It will also help you strategize the technical aspects of the product development process. It will ensure that the technical expertise of the outsourced team is efficient in bringing out the best in your product.

Create a positive work environment

Looking after what the outsourced team feels while working on your project is essential. You can only optimize its efficiency when the work environment is motivating. This applies to more than just onsite work and even to remote work. To establish a good job climate, you must be transparent about the work policies, rules, and ethics while maintaining good communication, timely payout or rewards if needed, and a delicate and neutral working approach. These all together will help you strategize your software development outsourcing process.

How is software development usually done?

Even if you opt for software development outsourcing, you should know the software development process to monitor and assess the progress for good product development. Let's take a look at the steps of a software development process. How is software development usually done_.png


In the software development process, ideation is the first step, meaning one needs a clear idea of what software product to develop. You need to have a clear concept from the product type and category to its key or competitive features. Apart from defining your product's functional and non-functional requirements, you need to focus on the competitiveness of all its features and solutions. For instance, what can be the USP of the product or what's unique in its solutions, etc.?


In this phase, one needs to plan everything about software development. What will be the starting point for the software development, which architectural method will be followed, what will be the project development approach, which tech stacks or programming languages will be used, and what will be the milestones and the respective deadlines - these all are planned in this stage.


Software design is the next step which is a more technical approach to define and represent the whole software architecture, design, and related specifications. In this phase, a professional mainly outlines and designs a software artifact to align with your product development goals.


In this phase, the developers begin coding and building your product. The programming languages or tech stacks, and the coding approach are all determined in the previous phases. Based on the design, architectural method, and product development requirements, a developer opts for the coding best practices for fast, smooth, and quality product development.


The product is tested for any possible bugs, issues, or loopholes in the testing stage. And they are fixed and tested again to ensure the final product is error-free and efficient. Some of the most popular software testing methods are Unit testing, Environment testing, Regression testing, and Automated testing, to name a few. The professional tester chooses the most suitable testing method for your product.

Deployment and maintenance

Once the above phases are completed, now is the time to deploy your product and maintain it thoroughly to keep it updated, efficient, and relevant. Apart from reviewing the technical aspects regularly, you must consider the current market trends, audience demand, and other competitive factors. You need to maintain, modify, and update your product accordingly to keep it relevant.

How much does outsourcing cost, and where can you find it?

Now comes the most crucial question, where and how to outsource your software development to launch a high-quality product? You have a specific set of requirements in mind. You already know what you want to achieve. Budgets and timelines have been established. Finally, it's time to seek a software development firm capable of translating your specifications into high-quality software. Also, knowing the cost efficiency is essential as it will help the business get the best developer at affordable prices. Moreover, the business house must know how and when to spend to maintain the balance of cost efficiency. To reduce costs, you should never compromise on product quality. It is not a healthy business practice and will take you nowhere in the long run. Below is a table that will give you a bigger picture. This table explains how regional differences impact the hourly rate of software outsourcing companies.

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Benefits of Outsourcing Software Development: Final words

Software development outsourcing isn't just a cost-effective technique anymore. It's a common practice among both established companies and startups that benefits business growth. It helps you develop, test, and launch the product faster. You cannot do software outsourcing with your eyes shut, but preparing for it reduces risks and ensures your expectations are met.

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