How to successfully outsource a software development project
IT outsourcing
19 March 2024
John Radford
Client Services Director
Outsourcing software development has been around since the dawn of time but there are as many horror stories as there are successes. Particularly for non-tech folk, it can be a minefield. Who to trust, what to look for etc. I’ve tried to break down some of the more common things to look for and given an overview of how and why you should consider outsourcing. Spoiler alert - just looking for the lowest price isn’t the way to go!
Recognising potential benefits, including accessing global talent, cost-efficiency, and the ability to prioritise core business functions, CEOs, CTOs, Development Team Leads, and startup owners are increasingly looking to outsource. Hiring and firing is a tough gig! Leave that to us.
By implementing effective strategies and partnering with the right outsourcing providers, successful outsourcing can become a cornerstone for growth and allow you to focus on your core business and do what you do best.
Why Outsource Software Development?
Outsourcing software development offers numerous advantages. Here’s a few:
  • Access to Global Talent: Outsourcing provides access to a vast pool of highly skilled developers worldwide, ensuring you get the best project talent.
  • Cost-Efficiency: Outsourcing can often be more cost-effective, reducing overhead expenses related to hiring and maintaining an in-house team.
  • Focus on Core Competencies: By outsourcing software development, your in-house team can focus more on strategic tasks and core business operations.
  • Scalability: Outsourcing allows businesses to quickly scale their operations up or down based on project requirements.
  • Exposure to the Latest Technologies: Outsourced teams often have broader exposure to the latest technologies and frameworks, ensuring your project stays on the cutting edge. For instance, at Loginet - we cover over 5 different backend languages, including Go, Python, Node.js, PHP.
How to Successfully Outsource Software Development
You’ve got to get your ducks in a row here and avoid a lot of the common mistakes. Think about the long term benefits rather than just an initial ‘feel good’ from a cheap price tag.
1. Create Proper Outsourcing Goals
Identify your outsourcing objectives, whether it's cost reduction, leveraging specialised skills, or increasing development pace, based on your unique circumstances and requirements.
2. Onshore, Nearshore, or Offshore?
Choose between onshore, nearshore, or offshore outsourcing based on factors like cost-effectiveness, cultural compatibility, and timezone considerations.
3. Research Outsourcing Destinations
Investigate potential outsourcing destinations based on factors such as technology infrastructure, political stability, talent availability, and proficiency in international business languages.
4. Adapt to Emerging Trends and Technologies
Stay abreast of emerging trends like cloud computing and robotic process automation (RPA), which are reshaping outsourcing dynamics.
5. Research Companies in those Destinations
Evaluate potential outsourcing vendors based on their reputation, past projects, client testimonials, and technical expertise.
Possible Risks of Software Development Outsourcing
There are always risks and like I said - everyone has heard of the horror stories. The reality is that developing software is hard. Particularly if you are non-technical.
So if you have never managed a project before, please do consider someone who can advise and guide you through the process. Just choose someone who just says ‘yes sir’ to every request. You need a partner who can add value and challenge you to ensure what you are building is what you need and fit for purposes.
Here’s a few other risks to look out for:
  • Communication Barriers: Misunderstandings due to language barriers or time zone differences can lead to delays or misinterpretations.
  • Quality Concerns: Ensure outsourcing vendors meet expected quality standards by evaluating their previous work and establishing clear quality metrics.
  • Data Security: Evaluate outsourcing providers' data security protocols to mitigate risks associated with sensitive data.
  • Dependence on the Vendor: Maintain control over critical project components to avoid excessive reliance on external providers.
  • Hidden Costs: Transparently outline all costs involved in outsourcing projects to avoid unexpected expenses.
  • Cultural Differences: Invest time in understanding vendors' work cultures to mitigate misunderstandings.
How Much Does It Cost to Outsource Software Development?
The million dollar question. Sadly there is no straight answer for this. Several factors can impact the overall cost. However as discussed above, the decision on your partner should never be just based around the cost.
It’s important to measure the ‘true cost’. For instance, if a business can deliver the project within 4 months (allbeit for more money) than a lower cost provider delivering in 6 months then how much is 2 months worth to your business?
If there is a partner offering something cheaper and faster, then alarm bells should be ringing!
A typical project for an MVP with Loginet can range from £30,000-£50,000 for a functioning ap or web app with designs, market research and thorough user profiling and segmenting. It’s custom code that will allow you to scale without rebuilding.
Below I break down other factors that can impact the cost.
Factors Impacting the Cost of Software Development Outsourcing
  • Scope of the Project: The complexity and size of the project significantly influence costs. A simple app will cost less than a complex software system requiring sophisticated technologies and diverse expertise.
  • Rate of the Software Developers: Outsourcing rates vary based on regions. For instance, developers in North America typically charge higher rates than those in Eastern Europe or Asia.
  • Experience Level of the Team: More experienced developers and teams may charge higher rates but often deliver faster turnaround times and fewer errors.
  • Type of Engagement Model: Project-based, dedicated team, or time & material models each have unique pricing structures and implications for project costs. I will write about these in another article.
  • Project Duration: Longer projects generally cost more, but longer engagements may lead to reduced per-hour or per-day rates due to economies of scale.
  • Maintenance and Support: Post-development services like system updates, bug fixes, and user support add to the total cost of outsourcing.
  • Additional Costs: These may include project management fees, software or hardware costs not covered in developers' rates, and expenses related to compliance with regulations or certifications.
Conclusion
Outsourcing software development is obviously a good choice for companies and startups to leverage global talent, achieve cost efficiencies, and focus on core competencies. However, it’s super important to go in with your eyes wide open and don’t just race to the bottom. Remember - you get what you pay for. And if you don’t have the budget for your preferred partner, consider reducing your scope slightly. Better to launch something lean and quality than try to launch a huge product and risk not delivering at all.
If you're seeking a reliable outsourcing partner, give us a shout at Loginet for a informal chat about your requirements and we can see how we can help.