Custom Software Development Outsourcing: Ultimate Guide

Custom Software Development Outsourcing: Ultimate Guide

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Software development outsourcing is the new buzzword in the IT service industry. With the turn of events in 2020, there is a shift in how companies conduct their businesses. Over the last few years of the downturn of economic activities, software development companies have played a vital role. With the hike in the prices of IT services, many companies have switched to Software Outsourcing companies as a way out.

Many businesses are now hiring software outsourcing companies to deliver high-quality products and increased profit margins. In this article, we will talk about what software outsourcing is, along with the benefits, types, and financial engagement models that it has.

So let’s get started!

What is software development outsourcing?

Software development outsourcing has grown quite popular over the years. Hiring software development companies for software outsourcing is basically a cost-effective and efficient way of getting things done. Software development companies engineer unique software according to the needs and requirements of the business. 

Furthermore, to put it simply, outsourcing software development is when you hire a software development company to completely take charge of your project. In this way, the business’s team is left to focus on their core responsibilities only.

It’s a win-win situation for the businesses as they get high-quality products in a faster time without any burden on the tech side.  Moreover, software outsourcing helps a business to get in touch with the latest trends, improve business yield and update operations. Let’s delve deeper to learn more!

Why opt for outsourcing software development from a software development company?  

If you look at the way businesses were done in the 19th and 20th centuries, you wouldn’t find anything such as “outsourcing”. However, the trends have changed now. Considering its advantages, it’s expected to grow even more.  There are multiple benefits that businesses enjoy with a software outsourcing company.

Cost Effective

Hiring software outsourcing companies is seen as one of the smartest and most cost-effective methods by businesses. This can be seen as one of the major reasons why businesses choose to outsource. Outsourcing prevents businesses from bearing the additional costs of hiring full-time employees. Hence, outsourcing nowadays is the most celebrated way of reducing costs and increasing profit margins!  

Experts are there to serve you!

The best part about outsourcing software development is that you have experts who take over the project. You get served by the best thus improved efficacy and focus are guaranteed. A software development company will take up your project only if they have experts in the same field. So, there is no question of delivering something less than perfect!  

Access to global talent

Outsourcing gives you the benefit of hiring global talents. You can easily get access to the globalization of talent. You have the flexibility to hire remote designers, engineers, and architects who may work from near-shore or off-shore. Thus, bringing flavor and enhancement to your business with their profound services.

Living up to customer’s expectations

Software outsourcing companies allow you to meet and go beyond your customer’s expectations. It’s true that businesses themselves are so engrossed in their functions that the benchmark of meeting customers’ expectations stays on the back burner. Thus, here software outsourcing companies come to the rescue. They help you achieve and deliver according to your customers’ demand through their high-end products.

A step ahead with up-to-date tech stacks

A software outsourcing company will help you bring innovation and sustainability to your work. They are aware of the latest market trends and will make every effort to keep you ahead of your competitors.

Minimized to no risks

Software development companies know their work like a boss! Thus, they guarantee to deliver you bug-free, high-quality products. They take responsibility for all the risks attached to your digital creation.


The main focus of a software development company is to deliver a product that is secure and is not easily exposed to cyberattacks. Software is customized in such a way that all data breaches are prevented to the max. Software development companies make use of authorized data encryptions to ensure that the product is safe from all kinds of hacking and threats.


When a project is outsourced, its entire development process is the responsibility of the hired team. Right from the ideation to the maintenance of the product.

Are there different types of software outsourcing?

Well yes, a software outsourcing company offers different types of software development outsourcing models. These types are based on three significant factors which include agreement, location, and relationship. 

Onsite outsourcing

This is the type of outsourcing where software development companies send their specialists to the location of the clients. They work on-site with the clients. This type of outsourcing is more or less similar to staff augmentation. However, hiring from local or nationwide companies is not favored.

Onshore outsourcing

In onshore outsourcing, the client hires another software development company from within the same country. However, it is ensured that the hiring is not done from the same company even if it is located in another state.

Nearshore outsourcing

As the name suggests, in a near-shore approach, the work is outsourced to the people of the same country or of a nearby vicinity/country. For example, a company based in the US will outsource its project to companies based in Mexico or say Canada. This approach offers benefits in terms of overcoming issues of operating in different time zones, language, and cultural barriers, etc. However, this approach may cost you more than the off-shore approach.

Offshore outsourcing

In this approach, the whole project or maybe some parts of the project are allocated to people from any country of their choice. It is according to the type of the project. The best part of this is that it’s most cost-effective and allows businesses to choose from the global talent pool. However, problems such as different time zones, and cultural and language differences may occur.

Multi shore Outsourcing

Multi-shore outsourcing is an amalgam of on-shore and off-shore outsourcing. This type of outsourcing is widely used by large corporations. It’s used according to the nature and type of projects that they are dealing with.

Staff augmentation model

Staff augmentation is when businesses hire specialists from software development companies to fill in their talent gaps. IT staff augmentation services are frequently rendered by companies to enhance the productivity of their current team. The best part is that it’s flexible- either you can do it for a lifetime or for a limited period of time only. IT staff augmentation services are an easy way to boost scalability and expand your in-house team.

Managed team outsourcing

In this model, the team that is hired by the client can be both on-shore and off-shore. They manage the developmental process of the company.  The operations of the team are managed by the in-house project manager of the company. The hired team reports directly to the in-house project manager.

Project-based outsourcing

In project-based models, the outsourced company is responsible for the entire developmental process. It’s up to them how they handle the project right from the ideation to the creation of the project.

Financial engagement models used by software outsourcing companies

Time and Material

In this engagement model, the client is solely charged for the time and the resources which are spent on their project. This is mostly better suited for agile development.

Best suited for companies with:

  • Changing business requirements
  • Short-term goals
  • Budget limitations

Fixed Pricing 

After the discovery phase, the client and the software development company scope out the project thoroughly and quote a fixed price. As per the name of the model, the price remains fixed throughout. However, the project’s price is revised if the scope is altered and new features are added in by the clients. 

Best suited for companies with:

  • Budget limitations
  • Smaller projects
  • Clearly laid out project requirements

Dedicated Development Team

This model is best suited for clients who have requirements to be fulfilled on and off.  They render the services and dedicated resources of the software development company every now

and then. Thus, they hire dedicated teams who remain attached to them as per their need.

Best suited for companies with:

  • Changing business requirements
  • No-budget constraints as such
  • Long-term objectives

Parameters to check for the right software outsourcing company

Always remember, the right partnership makes all the difference.  The following short checklist will help you pick the best software outsourcing company for your project.

  • Evaluate their tech stack and its proficiency!
  • Do check out their clients’ testimonials and company reviews!
  • Communication, transparency, and visibility should be there at every step!
  • Talent pool and flexible team scaling!

Let’s wrap it up!

Software outsourcing is the new normal in the IT service industry. It comes with a plethora of added advantages. It promises nothing but enhanced productivity, agility, efficiency, and sustainability. It has made it easier for the businesses to focus on what should be focused on them and that is their own core responsibilities. So what’s the wait all about?

Contact our team of professionals at Focusteck and let us get it all sorted for you!

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