Software Outsourcing 101: Definition, Pros, Cons and Partner Selection Guide

Software outsourcing is the best alternative helps you keep your company lean. Moreover, it enables to access to the talent pool to develop your products effectively.
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By | 7 min read

It’s hard to have a business that doesn’t need any software service nowadays. So there is a big opportunity for software development outsourcing company to startup and grow. Software projects are constantly increasing such as web development, web app development, mobile app development across several industries, e-commerce, real estate, hospitality, logistics to finance. When you are running specific projects on a limited budget, outsourcing is better than hiring new staffs. Thousands of companies supply software development outsourcing services all around the world. So, how to choose the best match for your business is critical and needed to be considered carefully. Don’t rush. First of all, you must dig into some basic definition and tips of software outsourcing to start to work with it properly. Let’s see.

What Is Software Outsourcing?

Software outsourcing is the term describes a situation in which a company hires a third-party contractor to do software development. By this way, your in-house team can do their best and focus on the core business value. Besides, the company can hire qualified specialists in working in your industry and types of software products.

Advantages of Software Development Outsourcing

Access to a skilled workforce and the latest technology

You can get access to global talents who expertise in skill and technology you want. Then you can expand your technical capability and achieve greater economies of scale. Your in-house team does their work and the outsourcing team can take care of your part of software development. You don’t have to spend time hiring new member, training and guiding them to catch up your team.

Minimize costs

Of course, the wage of hiring a software developer in the United State is higher than outsourcing to other countries’ software professionals such as Vietnam, India, China, Iran or Pakistan. The services of those companies are at a reasonable price with good product quality.

Maximize efficiency and flexibility

Depending on nature, the complexity and the duration of each project, you can consider to in-house or outsource. If you don’t hire more new employees, the long-term staff will be reduced the pressure of firing. The scalable team is work in this situation including balancing the workload, saving big bucks and at the same time increasing efficiency. In addition, software development outsourcing keeps shorter development time and faster time to market.

Focus on core business process

Once you outsourcing software outsourcing, your staffs will have more time to do the essential business function such as marketing, customer service, management, planning, etc. Make sure you don’t make your in-house staff overwhelmed and delegate responsibilities that they aren’t specialized in.

Well, outsourcing including onshore, nearshore and offshore. They are the only difference being proximity. Especially, offshore software development is more and more popular when the business is driving towards globalization. Find out the detail of offshore outsourcing now.

Offshore Outsourcing Definition

Simply, you can understand that you’re delegating your total software project or a part of it for a third-party supplier to do remotely in a foreign country is offshore outsourcing. Usually, the company will outsource to low-cost countries.

Pros & Cons of Offshore Software Development


Software Outsourcing 101-Pros And Cons-Fig 1-Pros
Image credit: EnvZone

Figure: Pros


Software Outsourcing 101-Pros And Cons-Fig 2-Cons
Image credit: EnvZone

Figure: Cons

How to Choose an Outsourcing Partner

There are many criteria to compare among software development outsourcing agencies that match your needs: geographical proximity, timezone difference, language requirements, and even cultural similarity. We will show you the step-by-step to evaluate potential partner. Let’s get started.

Make a list of potential candidates.

Make a list of at least five candidates, collect recommendation from a trustworthy source, conduct an organic search online and fill out in one document including the name of the company, the price, the detailed solution, your initial assessment.

Check the agency’s reputation

See the discussions about those potential agencies on different online platforms: neutral websites, chat forums, their website, their social media. Check a number of followers. If you find that they have good engagement with their followers and that most of the feedback is positive, then there’s a good chance that it’s a competent company with good values. However, don’t believe 100% on customer rating and feedback. Importantly, you should check the speed, robustness, user experience, media integration, the functionality of their official website, the optimized for mobile devices, because this is the face of the agency. If they don’t care about it, we think they don’t treat you seriously and their services aren’t good enough.

Check the agency’s finance

You surely don’t collaborate with the partner has the financial problem, do you?  You always want to work with the partner you trust. The financial stability is rather critical for your decision.

Ask the agency’s portfolio

Go through their previous experiences, the product they’ve developed in the past. Ask for references. Look their skill, their quality and their imagination. Take a look at a consolidated list of questions that you must ask your potential software development company before hiring them.

Meet the agency representative face-to-face

You should set up a meeting with the project manager or CEO of this company to get more details. You can share all your idea, requirements and quality standard, ask as many as questions to solve the problem. After that, if the initial meet is good, this agency is apart firm others, they understand what you need, and offer you the suitable technologies, infrastructures, tools and capacities, you can move the next step or choose this agency to conduct your project. Next, you have to decide which outsourcing model fit best for your project, project-based model, dedicated team or staff augmentation.

Staff augmentation

The software developer: ensuring that the team reports working on time and that their vacations and Paid time off (PTO) are paid as agreed.

Clients: defining, controlling the process, managing the projects, hiring, firing, team building, motivation, and distribution of responsibilities.

Dedicated team

Dedicated development team model is something similar to hiring a new remote team for your company. This team of experts working on a number of projects or providing a set of services is responsible for managing people, doing low-level tasks, following process quality, launching, extending and supporting various types of software.

Project-based model

The clients are only concerned about the end-result. So, this gives the software developer more flexibility to plan, define the milestones, handle the paperwork. You can choose this model in the situation such as the project duration ideally is not exceed a half of a year period and your in-house team is capable of developing a particular part of the product.


Do you understand some basic term of software outsourcing? If so, practice outsourcing process when you have an opportunity. Software outsourcing helps you maximizing flexibility. Outsourcing software development is a great option to reduce risks and grow up profit simultaneously. Lastly, it also helps businesses obtaining competitive advantage without losing focus on core value.

This post is also credited to Jyotirmay Samanta, Bruce Pham,

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  • About: Alina Vo
    As a Market Strategy Analyst, Alina is passionate about presenting ideas and conveying corporate vision for our clients. She loves solving problems for clients and has experience working and interacting…