Q: Why do companies outsource software development?

According to <a href="https://www2.deloitte.com/us/en/pages/operations/articles/global-outsourcing-survey.html" target="_blank" rel="nofollow noopener">Deloitte</a>, 70% of companies outsource their projects to reduce costs. Companies also outsource software development because it allows them to: <ul> <li>Access specialized knowledge and skills </li> <li>Eliminate the need for time and resources to hire in-house staff </li> <li>Tap into a global talent pool </li> <li>Gain flexibility to scale projects as needed </li> <li>Benefit from a dedicated and structured team for each project </li> <li>Ensure continuous development without interruptions </li> <li>Leverage the latest technologies and methodologies </li> <li>Mitigate risks with shared responsibilities </li> <li>Achieve faster time-to-market for products or services </li> </ul> BairesDev&rsquo;s case study demonstrates the effectiveness of software outsourcing. Rolls Royce, recognized for its advanced engineering in the power industry, needed remote monitoring of nuclear safety systems. It wanted to develop a mobile solution to extend the capabilities of its Safety Data Sheet (SDS) website, which was previously limited to on-site use in power plant control rooms. The collaboration with BairesDev resulted in a user-friendly mobile app and a Progressive Web Application (PWA), allowing Rolls Royce customers to monitor real-time safety data of its nuclear systems from any location. The innovative solution included multi-site monitoring, customizable alerts, and comprehensive data analysis, significantly improving safety and decision-making in the nuclear sector.

Question 1

What is a software development outsourcing company?

Accepted Answer

A software development outsourcing company is a service provider hired to develop and manage custom software solutions. By partnering with software development outsourcing companies, businesses can access specialized technical expertise and complete their projects without expanding their in-house teams.

This is incredibly relevant to modern businesses as information technology is one of the biggest contributors in terms of revenue on a global level, making software development outsourcing a strategic and financially viable choice for modern businesses. Revenue in the software outsourcing market is expected to reach $460.10 billion in 2023 and $777.70 billion by 2028.

Question 2

What does a software outsourcing company do?

Accepted Answer

A software outsourcing company designs, develops, and maintains software solutions for a specific set of users, functions, and organizations.

The primary software outsourcing services are:

Requirement analysis and project scoping
Web application and website development
Mobile application development
Custom software design and development
Agile and iterative software development
Quality assurance (QA) and testing
Software maintenance and support
Integration with existing systems or third-party services
Cloud computing and deployment solutions
Compliance with industry standards and regulations
Continuous updates, improvements, and scalability
Intranets, HR systems, and employee onboarding programs
Communication solutions
Customer relationship management programs
And more

Question 3

What are the advantages and disadvantages of software development outsourcing?

Accepted Answer

The advantages of software development outsourcing include the following:

Access to a diverse pool of expert talent
Improved efficiency with faster turnaround time
Increased focus on core business goals
Cost-effectiveness
Simplified project management
Expansion and growth opportunities
Flexibility in scaling up or down based on project requirements
Access to the latest technologies and methodologies
Risk-sharing, as the outsourcing partner shares the responsibility

The disadvantages of software development outsourcing are:

Security risks, especially with sensitive data
Quality control challenges
Potential failure to deliver on time or as per expectations
Different time zones
Less understanding of specific project requirements compared to an in-house team
Poor communication and misunderstandings due to cultural differences
Dependence on an external collaborator for critical operations
Hidden costs or unforeseen expenses
Potential intellectual property issues

Question 4

How much do software outsourcing services cost?

Accepted Answer

The cost of software outsourcing services varies significantly based on the region. On average, eastern European states like Ukraine and Poland charge $10-15/hour less than Central European countries like Austria and Germany.

Region	Overall average hourly rate
North America	$49 - $210
Latin America	$28 - $105
Central/Eastern Europe	$21 - $108
South Asia	$21 - $82
Southeast Asia	$21 - $61

The top 50 software development outsourcing agencies on DesignRush charge an average of $49/hour. Roughly 5.4% of the software outsourcing companies on the platform require a minimum budget of $1,000, while 5.6% require a $50,000+ minimum.

Question 5

Where can you outsource your business functions?

Accepted Answer

You can outsource your business functions to an onshore, offshore, or nearshore service provider, depending on location:

Onshore outsourcing: Within the same country
Offshore outsourcing: In a foreign country
Nearshore outsourcing: In a neighboring country

The location of an outsourcing partner influences costs, communication, and legal and regulatory compliance. Offshoring to countries where labor is inexpensive will invariably result in significant cost savings, but the distance, time zone differences, and language barriers may affect the quality of the work product. Nearshoring, on the other hand, may result in moderate cost savings but has the benefit of time zone proximity and closer language and cultural alignment.

Question 6

Why do companies outsource software development?

Accepted Answer

According to Deloitte, 70% of companies outsource their projects to reduce costs. Companies also outsource software development because it allows them to:

Access specialized knowledge and skills
Eliminate the need for time and resources to hire in-house staff
Tap into a global talent pool
Gain flexibility to scale projects as needed
Benefit from a dedicated and structured team for each project
Ensure continuous development without interruptions
Leverage the latest technologies and methodologies
Mitigate risks with shared responsibilities
Achieve faster time-to-market for products or services

BairesDev’s case study demonstrates the effectiveness of software outsourcing. Rolls Royce, recognized for its advanced engineering in the power industry, needed remote monitoring of nuclear safety systems. It wanted to develop a mobile solution to extend the capabilities of its Safety Data Sheet (SDS) website, which was previously limited to on-site use in power plant control rooms.

The collaboration with BairesDev resulted in a user-friendly mobile app and a Progressive Web Application (PWA), allowing Rolls Royce customers to monitor real-time safety data of its nuclear systems from any location. The innovative solution included multi-site monitoring, customizable alerts, and comprehensive data analysis, significantly improving safety and decision-making in the nuclear sector.

Question 7

How do you evaluate a software outsourcing company?

Accepted Answer

Follow these steps to evaluate a software outsourcing company:

Examine its portfolio of past projects, focusing on complexity, scalability, and the technologies employed.
Look for dedicated and experienced IT services companies that can produce the desired results.
Read the reviews to ensure the company has a track record of meeting client’s goals.
Confirm the technical skills and experience of the team members who will be working on your project.
Check general feedback on platforms like Google and DesignRush. Pay extra attention to reviews that highlight its technical expertise, problem-solving capabilities, and adaptability to tech challenges.
Ask what communication and collaboration tools the company uses for project tracking. Some top choices are Jira, Slack, and Trello. Meanwhile, code reviews are typically managed on GitHub or Bitbucket.
Find out what development methodologies the software outsourcing company employs. For instance, Agile or Scrum involves regular updates and iterative work, while DevOps integrates software development with IT operations for quicker outcomes.
Ensure the company follows the latest security practices to avoid data leakage or breaches. It must prioritize data encryption and be familiar with authentication tools like JWT.
Check the agency’s pricing structure, whether it’s based on time and materials, a fixed price, or a hybrid model. It should have explicit charges for additional technical requirements that might arise mid-project.
Narrow down the selection and send a software development request for proposal (RFP) to formally ask the outsourcing companies to propose a solution for your project. After receiving proposals, interview the best candidates.
Establish clear collaboration terms to address time zone differences, if any. The software outsourcing company must adeptly manage deployments, updates, and critical issues, ensuring seamless operations across varying time zones.
Review contract terms, especially intellectual property rights, confidentiality, and dispute resolution clauses. The contract should also have clear technical clauses, including provisions for code audits, tech stack changes, and addressing technical debt.
After a thorough evaluation, select the software development company that best fits your needs.

Need help? Share your project with us and we'll suggest the most suitable agency partners for free. Visit the Marketplace for more details.

Question 8

What should I ask software development outsourcing companies before hiring one?

Accepted Answer

Ask software development outsourcing companies the following questions before hiring one:

Expertise and Experience

What programming languages, frameworks, and technologies does your team specialize in?
Does your team have certifications or affiliations that validate your expertise in specific technologies or methodologies?
Can you provide references, case studies, or examples of software applications you've developed, especially those similar to my requirements or industry?

Services

What services do you offer to help my project succeed?
What tools do you use to measure the success of your projects?
How do you manage API development and third-party integrations?
What QA processes do you employ?
What's your disaster recovery plan?

Project

Will the software be fully custom-developed, or will you be using pre-existing frameworks and templates?
How much involvement is expected from our team during the development process?
What tangible results and milestones can we expect to see throughout our collaboration?
How will you integrate our existing systems or data into the new software?
Can we make direct edits or updates in the software interface or backend on our own?
What are your strategies to ensure the scalability and futureproofing of the software?
What measures do you take to ensure the security and privacy of the software?
Do you provide post-launch support and maintenance?
How long does it usually take for you to complete projects like ours?

Communication

Who will be our main point of contact during the project? Will we have a dedicated project manager?
What tools will you use for communication?
How frequently will you be communicating with my team?

Pricing

How much do you charge for specific services and how do you want to be paid?
What are your pricing plans and tiers? Do you require to be paid per project, on retainer, or according to time worked?

Question 9

What are the best software outsourcing agencies in the U.S.?

Accepted Answer

Agency	DesignRush rating	Google rating	Top clients
Saigon Technology	4.9 (48 reviews)	4.6 (71 reviews)	DMI YPO One Harvest MTM Genesis Sun
Kanda Software	4.7 (15 reviews)	4.7 (7 reviews)	OneSky Imprivata Lionbridge CBRE College Interactive
Admios	4.7 (6 reviews)	5.0 (8 reviews)	Converse Salesforce CouchSurfing Terraformation Conductor
BairesDev	4.8 (25 reviews)	4.3 (27 reviews)	Google Salesforce IBM Autodesk Rolls-Royce
Azumo	4.7 (10 reviews)	4.6 (12 reviews)	Discovery Channel Facebook Twitter NCSoft ScreenScape

Scroll up to learn more about these service providers and discover other leading software outsourcing services in the US. If you want to narrow down your search, you can sort agencies by location, budget, hourly rates, and reviews.

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