Software Development Outsourcing - everything you should know
Maybe you’ve heard the phrase, “If you want something done right, do it yourself.” Maybe you agree with it. But in software development, as in so many things, it’s rarely true. If you’re a company looking to develop new digital products – web apps, mobile apps, even a web platform – you need expertise. And unless you already have hot-shot developers on your payroll, outsourcing to an external software development company is likely to be at the top of your option list. The challenge is in finding the right partner to work with.
Table of contents
- Outsourcing - a quick definition
- Reasons to outsource
- 8 benefits of outsourcing your software development
- Biggest challenges of software outsourcing
- Factors to consider when choosing your outsourcing partner
- Outsourcing software development to eastern Europe - western quality and eastern prices
- Do you need software development outsourcing services?
- Software development outsourcing - the summary
Software development outsourcing is an increasingly popular and effective strategy for businesses who want their digital products to stay ahead of the technology curve. Applying criteria such as development methodology and cultural fit can help you broaden your search for the right outsourcing partner, including other regions and territories. Done well, that search can result in a product better-suited to user needs, for a lower cost, and with a greater impact on your identified market.
This guide will walk you through all the key factors in finding and choosing a software development partner, looking at whether outsourcing is right for you, what benefits you can expect from outsourcing, and what criteria to use when considering a list of possible suppliers.
At this point, you may be wondering what qualifies us to talk about this. But instead of bragging here, we’d rather you checked out our reviews and endorsements on Clutch.co because our 36 reviews will give you the best idea of who we are and what we’ve done. For now, let’s just say that Boldare is a software development and design company with an agile attitude and 16 years’ experience to offer. We’ve worked with clients from all over the world, creating 250+ digital products along the way, and we focus on design and development that marries the client company’s business needs with their users’ requirements. Moving on…
Outsourcing - a quick definition
Just to make sure we’re all on the same page, outsourcing is the practice of using outside companies or organizations to provide a service you choose not to tackle in-house. In other words, software development outsourcing is using an external development company – often due to reasons of cost, time or a lack of capacity or skills – to create, test and deliver your digital product. The arrangement requires close communication between client and provider and a great deal of trust.
Reasons to outsource
What prompts a company to consider outsourcing its app or web development? Like any other business solution, outsourcing is used to solve a problem. Depending on the specific client, that problem might be:
A lack of time
Software development can be a slow process, especially when done by an in-house team with conflicting projects and priorities. Sometimes market opportunities have a naturally small window of time before trends move on or technology advances.A dedicated outsourced team will focus only on your project - that’s their main purpose. Such a team is able to achieve much more. For example, Boldare teams have worked on several time-sensitive projects, including creating an MVP from scratch of an e-commerce platform in just six weeks.
A lack of skills and experience
Unless you have in-house developers who maintain their professional knowledge and skills through regular personal development, then you need to look elsewhere for a team to deliver your cutting edge web platform or mobile app. As a business, software development is at best just one of the plates you’re spinning (along with sales, production, customer service, etc.) and a dedicated software development outsourcing company is almost always going to be better-equipped to deliver the best possible digital product.
Growing in-house talent is almost always worth it but it takes months and years, and you need your product yesterday. An outsourcing provider should be able to connect you with a dedicated team of experts, ready to hit the ground running, with a skillset tailored to your project needs.
A lack of money
Outsourcing is definitely less expensive than recruiting and building an in-house team of developers. It is always a more cost-effective option when compared with the long-term costs of recruiting, developing and maintaining your own in-house team of experts.
How much does it cost to outsource software development?
It depends on various factors and this is why you won’t find a fixed price list on the website of any of the best software development companies. It’s like asking how much a car costs - there are huge price differences even if you take into account only brand new cars, in only one market and one segment. But let’s focus on software instead of cars.
As with many professions, developer rates vary greatly, according to skills, experience, and the geographical territory in which they operate. For a helpful snapshot of developer salaries, and a comparison of the rates you can expect to pay in Western Europe, Eastern Europe, the US, and India, check our article:
8 benefits of outsourcing your software development
So, if the time-skills-cost triumvirate are the incentives pushing you to seek out a software development outsourcing partner, what benefits can you expect from the arrangement?
- Product ready for release quicker – Whether it’s a web platform, mobile app or other digital tool, outsourcing can get your product user-ready sooner; resulting in feedback on an MVP, a new product launch, or a scaled-up version ready to crack new markets.
- Scalability – An outsourced software development team is itself scalable. As your project needs change, so can the team, adjusting the number of developers to meet the project’s objectives.
- Off-the-shelf knowledge, experience, and skills – What’s more, an outsourced team (well, the right outsourced team) provides a broader set of skills and experience than an in-house option. Ideally, your outsourcing partner will assemble a dedicated team, handpicked to give your product the know-how it needs.
- A better quality product – Arguably, an outsourced software development partner will create a better quality digital product for you. Unlike an in-house team with conflicting priorities, a dedicated design and development company is focused on what’s new and what’s working now, meaning they often bring better technology and tools to bear on your project, applying the latest industry insights.
- Reduced costs – With an external outsourced team, you’re only paying for the time they spend working on your digital product. This means you’re only spending on product development and not employee-related supporting costs, such as healthcare, retirement plans, other benefits, etc.
- A longer-lasting partnership – If you’re building one digital product, you’re likely to want to build more (it’s the way the world is going!) and in that case, you’ll benefit from a long-term relationship with a trusted software development partner. When you find an outsourcing service that works for your business and your customers, you’ll want to keep them.
- More time on your core business – While the external team handle your digital product development, you and your in-house people can focus on other critical business needs.
- Knowledge transfer – More than simply producing a great digital product, a good outsourced partner will also share their specialist knowledge with you. As ‘side effects’ of the software development process go, this is especially valuable, giving your in-house people new knowledge, methodologies and experience which then can then apply to your future projects.
In fact, the Deloitte Global Outsourcing Survey confirmed that businesses outsource services in order to reduce costs (59%), focus on core business (57%), and address skills or capacity issues (47%).
Biggest challenges of software outsourcing
Just as with any other business undertaking, software development outsourcing can be challenging. From our experience we have identified the three most disruptive challenges that can occur:
Lack of understanding of the project’s business goal
We start every new business relationship with a product discovery workshop. At this event, our new partner has a chance to meet the dedicated team and speak directly with them to explain the business goal. Beware of software outsourcing companies who are only focused on building an app. It may sound strange, but software development is not only about creating software. It’s about fulfilling the business goal that stands behind the app, and both sides of the collaboration must understand it. Make sure your potential outsourcing partner can help you with setting and validating business goals and has previous experience working with them.
At Boldare, we work closely with our partners from the very first day of collaboration (using techniques such as product discovery, impact mapping, and design thinking) and we offer business support at every stage of the software development process.
This may sound trivial, but poor communication can be fatal to such a complicated endeavor as software development. Working in different time zones, language barriers, incompatible communication tools, or an inability to visit the team that is working for you might all be harmful to your project. However, these are not insurmountable problems.
When looking for a software development partner, pay attention to the country and location, its culture (is it similar to yours?), and most importantly, look for their experience working with similar companies, industries or regions to your own. At Boldare, we have worked with companies from around the globe (including North America, the Middle East, and Australia) and we understand the value of communicating well.
At any stage, if you think that the description of your mobile or web app is done and written in stone, then you’re most likely wrong! Software development is like cooking, you should always be ready to adjust the ingredients or add some seasoning - in other words, adapt, pivot and change your aims - if you want to serve up the best possible app to your users. This is why we use an agile approach with every app we make. It helps to create better, more customer-oriented software. (For more, you can read about this approach in our blog post, “This is how Boldare Development Teams process addresses your business needs”.)
Of course, these three are not the only challenges you may face. But these three are the most common risks to your project.
Factors to consider when choosing your outsourcing partner
Let’s say you’re convinced that software development outsourcing is the way to go… where do you start? Start googling and the world can seem full of software developers, all promising the latest bleeding edge technologies and techniques. How do you find your perfect outsourcing partner in all that static?
Simply put, it’s like any other recruitment or hiring process: know what you want and need, set some clear and measurable criteria based on those wants and needs, draw up a shortlist of potential partners that appear to meet those criteria, then contact each shortlisted provider to find out which of them are the best fit for the project and your company.
The following are the common factors to take into account when deciding your criteria:
Software development methodology
When it comes to the methodology used to develop your digital product, we believe (in reality, we know) that there is a clear and correct answer: use agile not waterfall! To explain further…
Waterfall is the traditional method of software development (derived from pre-digital manufacturing processes); around since the 70s and definitely obsolete. Agile, on the other hand, describes more 21st century approaches (such as scrum), specifically created for better, more flexible and open software development. The following table offers a quick summary of the differences:
Perhaps the biggest fundamental difference between the waterfall and agile approaches to software development is that in agile, the user and their satisfaction are at the heart of the project (hence the built-in flexibility) whereas in waterfall, the project plan and project documentation is king.
Skills & experience
Just as you’d check a potential new hires resume, you need to look closely at a potential partner’s portfolio. What skills and knowledge can they deploy? What other companies have they worked with (preferably in your industry sector)? Do they have case studies that you can look at? What about online reviews from past customers (Clutch.co is excellent for this, because they conduct their own analyses and interviews with listed companies; i.e. the reviews you read there are expert opinions and not just user commentaries)? When making comparisons, remember to look at what previous clients say about the experience, the process, and not just the end product. In other words, what are they like to work with? And does that fit with your own company culture and ways of working?
Here’s a tip: you should know (and be able to meet and talk to) each individual member of your outsourced development team. What’s more, that team should include more than developers; your product may (and probably will) need designers, quality analysts, and testers.
Ideally, the team allocated to deliver your mobile app or web platform is dedicated to your project, i.e. not working on anything else at the same time. That dedication, coupled with regular and direct contact between team members and you, the client, helps ensure that you get the right product for the right market, at the right time.
Just to reinforce this point (which we feel cannot be overstated), communication between client and development team members is crucial to project success. From some form of initial meeting or workshop to discuss and agree the project vision and priorities, to regular reviews, and the need for easy, direct contact when questions arise, the quality of your communication will directly influence the quality of the final product.
The key question is, do you have access to the project and team members at every stage of the development process?
It’s a digital product, almost certainly accessing both user and company data, therefore your outsourced provider’s information security arrangements are an important factor. It’s a key area to explore with a potential provider: Where do they store data? What security measures do their servers have in place? What are their business disaster recovery plans, should the worst happen?
You’re looking to develop digital products in a digital world, and in terms of geography, the world is your oyster. However, while you can work seamlessly with a software development outsourcing partner on the other side of the world, it’s worth considering time zones. Especially if you’re set on an agile project approach which encourages communication with the client regularly and often. Maybe it’s not a dealbreaker but it can be inconvenient if your outsourced team of developers doesn’t have experience of working with clients at such a distance.
Different legal frameworks
If at any point, there is a dispute between client and provider, clarity is needed over which territory’s legislation applies. One clear benefit of EU clients outsourcing to providers in other EU countries is that both parties are operating within the same, familiar legal framework.
Building on the previous point, more and more, companies are drawn to foreign providers for low-cost software development. And yes, the best-suited development partner is often in a different country or region. That may carry distinct advantages in terms of costs and efficiency, however, working with people from a different culture to your own does throw up some additional issues to assess:
- Do they have experience working with clients in your country/region?
- Are their working methodologies compatible with yours?
- How stable is the team? Often, countries offering lower prices also have lower living standards, which means the possibility of economic migration and the most gifted developers being attracted to working elsewhere for greater reward… leaving you potentially paying less money for less talent.
- How innovative are they? By nature, software development is an innovative process, so how does the provider’s home country score on innovation? One option is to check an innovation index, such as the Bloomberg Innovation Index, which takes into account a country’s political, education, infrastructure and business factors.
- Where do their programmers rank? Take a look at international coding and programming competitions to get an idea of where the top talent is these days; such as Google Code Jam, Microsoft Imagine Cup or the Central European Programming Contest.
Outsourcing software development to eastern Europe - western quality and eastern prices
When looking to get the most ‘bang for your buck’, you’re looking for a team that can offer high product quality, with a rapid turnaround, at a low price. As already mentioned, balancing this trio of goals leads many companies to look abroad for software development services. Bearing in mind the factors mentioned above, it’s fair to say that Eastern Europe has emerged as one of the world’s software development hotspots; this is why…
- Language skills – Language is a potentially huge barrier to working across borders. The current reality is that in Western countries, English is still the lingua franca. Countries such as Poland, Hungary, Romania and the Czech Republic have a history of high scores on the EF English Proficiency Index.
- Business environment – Legislation and regulations determine how compatible the provider’s home country is in terms of doing business with foreign clients. The Doing Business annual report, from the World Bank Group, assesses 190 economies based on business rules property rights.
- Technical talents – Based on thousands of developers tackling online coding challenges, HackerRank offers insights into where to find the best programmers in the world. HINT: Eastern Europe has three countries in the top ten (#3: Poland; #5: Hungary; #9: Czech Republic).
- Innovation – Referring to the innovation indices mentioned earlier, Poland is the leading country for innovation in Eastern Europe.
Do you need software development outsourcing services?
The answer depends on the resources you have within your organization. Based on our experience, we can say that most companies that want to develop an app from scratch or scale existing solutions, would benefit from outsourcing.
But there’s also a group of companies that have all the necessary resources, and trying to convince them to outsource something that they can do in-house would be unprofessional. If you want to explore this topic in more detail, see the following article:
Software development outsourcing - the summary
Naturally, at Boldare, we’re in favour of outsourcing software development but not only due to self-interest (honest!). In reality, our years of developing products for clients all over the world means we know exactly what the advantages of outsourcing are, and how to leverage them fully with our clients:
- High level project skills (coding, analysing, testing…)
- Comparatively low costs.
- Dedicated development teams.
- Quality products.
- Condensed timescales.
However, in order to reap these benefits, the right outsourcing partner is required and if you’re aiming for the best possible product, developed with the least possible pain, flexible collaboration is the way forward and an agile approach to digital product development (such as scrum) is the best indicator of that flexibility.