How to Outsource Software Development?

13 min read
Oct 30, 2020
How to Outsource Software Development?

Outsourcing is a growing trend in software development, and IT in general. Statista puts the income generation of the global outsourcing industry in 2019 at 92.5 billion dollars. Creating software is a critical decision. Hence, the reservation of many companies towards handling its development to a distant agency is understandable.

However, like every other endeavor, success in outsourcing software development requires understanding the intricacy of what you are getting into. These details are broken down here. This guide will help you to outsource without regrets.

Why do companies outsource software development?

Many business leaders still doubt the effectiveness of outsourcing software development, because there are a lot of software outsourcing pros and cons there. It is not hard to understand their sentiment; outsourcing is not fully mainstream yet. Therefore, with every suggestion of outsourcing, the questions that persistently lurk in the shadows are: why outsource software development? Is it worthwhile?

To that, the answer is a huge yes! Outsourcing decentralizes development and bridges talent gaps in many companies. That’s apart from the other benefits highlighted below.

Cost SavingsBy the time you add the costs of recruiting, training, and paying the salaries of permanent in-house developers, you realize that it is cheaper to instead hire freelance staff who would be paid by project or hourly.
Less InfrastructureCompanies that outsource software development have access to the required tools and other resources from the out staffed team, thus reducing expenses on new infrastructure if otherwise.
Dedicated TeamEven with an in-house team, it makes sense to outsource some aspects of development, especially when the in-house team is overwhelmed. You get a dedicated team that is focused on a single project while your in-house staff can continue with routine tasks.
Close skills gapHiring is challenging in the US because of the skills gap in IT. Outsourcing enables you to easily overcome your team’s shortcomings in terms of talent availability.
Reduce Time to MarketWhen outsourcing software development, the project is often ready to begin as soon an agreement has been reached. On the other hand, in-house developers need to be trained and onboarded first.
Fresh PerspectiveInnovation is the foundation of IT. Outsourcing helps you to gain insights from the unique perspectives of your hired team based on their distant outlook. This is particularly important if you plan to expand your company globally.

Regarding how to outsource software development, it has to be done right if a company is to fully reap the benefits above. Hence, the necessity of this guide. Most of the actions you take to make outsourcing effective are foundational.

That is, the success of outsourcing software development mostly lies in what you do before you reach an agreement with an agency or freelancers.

How to outsource software development: Before outsourcing

Determine your needs and goals

It is only wise that you outsource software development to a team or agency whose work aligns with your company’s business and the specific goals of the project. Therefore, you must first establish your software development goals.

In defining your goals, the SMART acronym easily comes to play. Your goals must be specific, measurable, achievable, realistic, and time-bound. Also, you must include plans on:

  • Addressing contingencies
  • Identifying and correcting flaws
  • Budgeting for the project
  • Testing the software in multiple environments, etc.

These are basic steps that must be taken before outsourcing. Many companies that are outsourcing development wait until they have hired the team before setting their goals. This signals a lack of direction.

Car accident

Instead, set goals first, then communicate those goals to the hired professionals. Of course, their input might help you to refine and clarify the goals, but it should not be that it is the hired professionals who would set the direction for the project. That’s your responsibility.

Choose Outsourcing Models

The goals that you have set would determine the outsourcing model that is perfect for you. Usually, outsourcing is classified into two models.

Project-based outsourcing occurs when a company lacks technical expertise and hires a team of developers to carry out a project. Usually, the responsibility of management falls on the development agency.

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On the other hand, there is the specialist model. Here, the client company most likely has a project manager, or even an in-house software team; however, specialists are hired from outside to fill in specific gaps in expertise in the company.

Of both options, the specialist model is the most preferred. Why? It’s because it is a fitting model for any software need. It is also a flexible approach to software development, as against the rigid project-based approach.

TimeframeShort-termLong-term or short-term
PurposeQuick deliveryStaff Augmentation
Rate (Payment)FixedFlexible (monthly or hourly)
Differences between Outsourcing and Outstaffing

Research Vendors: Determine the Outsourcing Location

Based on the goals you have in place already, then you research to discover the companies and freelance professionals that best fit your plans and budget.

One of the important points is the location. Where to outsource software development is particularly important due to differences in cultural orientation (including language), hourly rates, and so on. For one, it is impossible to work with people who don’t understand your language.

Also, cultural differences can create communication barriers. Before selecting a country for outsourcing, understand the cultural outlook of the people and how to prevent misunderstanding.

Besides, countries vary by the average rates charged. For instance, Asia is more popular for outsourcing than Europe, and its average rate is typically less compared to European companies but the professionalism may be similarly low as well. Take this into account and how it affects your budget. Don’t simply go for the simplest option you find.

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In general, the most popular companies for outsourcing software development include Ukraine, India, China, The Philippines, Vietnam, Mexico, etc. You might want to start from one of these.

Evaluate Agencies

Once you have found agencies that match your goals and budget for your software development project, the next step in how to outsource it is to evaluate them. Factors you should consider include the following:

  • Portfolio: review projects they have handled in the past to understand their skills and expertise. A general overview is good. At this point, you should be looking to ensure that the team has handled a similar project to yours.
  • Reviews: the portfolio might not say all that you need to know. You might want to get insides about a company’s previous works. Here ratings and reviews platforms come in handy. You can type the name of the agency on Google and read independent reviews on websites like, GoodFirms,, Hubspot Agency Directory, etc. With the mentioned websites, it’s easy to get information about the agency’s relationship with its clients, its time management, attention to detail, and general expertise. For example, you can check out what our customers are saying about ProCoders on Clutch.
Summary of a review on Clutch
  • Past Clients: Sometimes even reviews can’t draw you the whole picture about collaboration with the vendor. An extra step of reaching out to the agency’s past clients (phone calls, emails, etc.) can give you detailed and more honest information about the agency’s work. Using ratings and reviews platforms you could find the agency’s past clients’ contact information and reach them out. When calling past clients, you can figure out all the abovementioned workflow details.
  • Team Members: since you are hiring a whole agency, rather than individual freelancers, you have information on the specific members of the team. Are they senior developers, junior developers, or a balanced mix? What kind of experts are available and how are they useful to your project? Apart from developers, do they also have engineers, designers, analysts, etc.? In essence, how skilled is the agency?
The same person as a different specialist meme
  • Infrastructure: one of the major benefits of outsourcing software development comes from not having to spend on new infrastructure. Therefore, it only makes sense that the agency you are hiring has the required infrastructure that your company lacks.
  • Past Projects: This usually comes at the latter stages of evaluation, once you have met with the team members. Here, you want to understand the individual projects in-depth. You might want to have a tech expert at hand if you are not well versed in code and the intricacies of software development. Look out for the code/architecture, design, functionality, etc. to assess the competence of the agency.
Aragorn helps to choose outsourcing vendor

Choose the Outsourcing Software Development Company

After researching the agencies you prefer, the next step would be to reach out with them and discuss. This could be a physical meeting or held via video conferencing. Consider it the equivalent of interviewing a job applicant.

The aim of this is to understand the work conditions of the development agency and agree on the details of the project. The following factors could guide you:

  • Access to Source Code: as the client company, you should have access to certain files on the project, particularly the source code. Possessing the source code means that your in-house team of developers (if you have one) or another team of professionals can adjust, update, and correct the software at the code level, if necessary. But don’t assume these things. Ensure that the agency details all the files you would have access to throughout the duration and upon completion of the project.
  • Price, with Services Included: it is important to understand the full range of services you would be getting, as well as how it affects the overall price. The payment structure and rate also depends on the agreement reached. The rate may be set per project, per milestone, or hour. The most important thing is that you are getting value for your money.
The Simpsons are protecting money
  • Time Estimate: the complexity of the project would determine how long it would take until completion. If you are a non-tech person/company, don’t assume that the time you have planned would be the exact period it would take the developers. At this point, allow the developers to choose a realistic time frame for them while you both reach an agreement that both parties are comfortable with.
  • Failure Response: what happens if the project fails? Who takes the responsibility for the various risks applicable to the project. Many overlook this aspect but it is very important. Both parties must delineate each other’s responsibilities before setting out.

Test the Developers

All your actions up to this stage have involved assessing the outsourcing agency as a team. Now, it is time to assess individuals. Are the developers experienced and as skilled as claimed? Only testing would reveal that.

First, you must screen each one of them, the projects they have contributed to, and the value of their contributions to each. This screening should include a phone/video interview. This allows you to meet the developers upfront and assess their abilities.

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Ultimately, you would get to the actual testing stage, where you give the developer a small task, simply to assess their abilities further. This helps you understand how the developers tackle problems and how they cope with complexities.

Making a final decision

The important documents to sign are explained in the table below.

Non-Disclosure AgreementThis agreement is important if you are going to be exchanging sensitive and confidential information with the agency. It precludes them from sharing such information with unauthorized parties for a certain period. Note, though, that there are certain legal obligations for disclosure, such as in the case of legal proceedings.
Service Level AgreementThis defines the conditions, expectations, and levels of service required from a service provider (such as a software development agency) to a client. SLAs detail the service(s) to be provided, metrics for assessment, obligations, penalties for defaults, and so on.
Statement of WorkLike the SLA, an SOW details every information regarding the project. It includes such information as the purpose of the project, its scope, milestones, deliverables, schedules, payments, standards, and testing, and so on.
Software Requirements SpecificationInformation contained in the SRS is regarding how the software should run once developed. This includes the behavior of the software, criteria for evaluation, and use cases that define user interaction. It helps to establish a clear idea of what the final software product would look like and work like.

How to outsource software development: After outsourcing


Doctor who

In outsourcing software development successfully, communication is everything. The factors that ensure the success of communication are the following:

  • Frequency: make sure to communicate with your remote team as often as possible. At the least, each party should continually revert with updates on their work. And even when not communicating, all relevant stakeholders should remain connected to others to facilitate the smooth passage of information.
  • Clarity: to avoid misunderstanding, all information should be communicated as simply as possible. Because each party is distant from each other, you must speak the language (literally and figuratively) of the developers to ensure that they fully understand.
  • Trust: build an atmosphere of trust and collaboration. Everyone’s contribution should be valued and considered on its merit. If team members get the feeling that they are not free to contribute as they deem necessary, a breakdown is not far off.

Part of the criticisms of outsourcing is that communication is difficult due to cultural and particularly time-zone barriers. However, you can easily use this to your advantage. If you have an in-house development team as well as an outsourced team, then you can easily ensure round-the-clock work on the project.

Ukraine time now
Local time now
common working time

This requires you integrating the outstaffed team with your in-house team properly so that they can work together, not against each other.

Embrace Agile Methodology

The agile approach to project management requires a high level of collaboration as well as CI/CD (continuous integration and continuous delivery/deployment) and DDT (data-driven testing). The four values of the agile manifesto are:

  • Individuals and interactions over processes and tools
  • Working software over comprehensive documentation
  • Customer collaboration over contract negotiation
  • Responding to change over following a plan

Embracing this superior methodology begins by hiring developers or an agency with an agile mindset. That is, they must be innovative and constantly looking for improvement opportunities. With distributed agile, communication is very important and you must ensure that your communication channels with the offshore team are always open.

Developer is coding in the middle of a street

The agile approach focuses on continuous delivery and speedy updates, so it helps to automate routine tasks to save time. Some of the important aspects of the distributed agile that you need to implement include pair programming (two people working on the same code – writing and monitoring), even workload distribution, and DDT.

Lastly, the tools you use are important and must be agile-friendly. Some examples include GitHub for programming code, Miro for brainstorming, Google Drive or Dropbox for file sharing, Asana or Trello for task management, Slack or Microsoft Teams for instant messaging, Zoom for video calls and meetings, etc.

Create a clear road map to completion

Building software is a very complex process and even a book cannot fully explain the realities, including the challenges and opportunities that you would encounter. The experience is unique for each project.

Software development live-cycle

Therefore, you must create a clear road map to guide the entire process. The protocols should be established with the input of the offshore company so that you might reach realistic agreements on the status of the project and the path to completion.

The roadmap covers the work calendar as well as methods to monitor and assess performance. It helps to keep the team members focused on their responsibilities to ensure smoother delivery.

Silicon Valley - This is Scrum

Note, though, that while the roadmap serves as a pillar to see the project through, it should be more flexible than rigid. Things do not always go to plan, and no matter how much you try, it would be impossible to capture every possible detail.

Therefore, create a roadmap that can be easily adjusted and updated as the status of the project changes without affecting the process adversely. That is how to successfully outsource software development.


Are you ready to outsource? It is easy to learn how to outsource software development, but note that outsourcing is not a shortcut in any way. It still requires the rigorousness and efficiency that applies to software development in general. It also requires a healthy partnership between both sides (the out staffed company and the client company). Eventually, you might want to consider another cooperation model for your project. If so, we suggest you comparing compare outstaffing vs outsourcing and find out which one will suit you better!

Let’s schedule a call to discuss all your needs!

To make outsourcing work for you, you need a software development company that will value your business and your project. At ProCoders, our sole mission is to deliver the best software products for our clients. You can use our amazing talents and resources to step up your game and take your company higher than you have imagined with world-class software.


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