How to Outsource Software Development: a practical guide
Venturing beyond your team? This is how to outsource
software development the right way in 9 practical steps.
Why do so many companies outsource their software development? There are a number of reasons:
- Your organisation needs specific skills but wants to keep headcount down;
- Your business isn’t ready to start or expand an IT department permanently;
- Your in-house teams aren’t mature enough in your specific field;
- Your organisation needs to speed up time-to-market;
- Your internal team is needed for more pressing goals or projects;
- Your company simply doesn’t have the manpower for a large project.
Among many other valid reasons. The solution? A software development team that can work on this project for you with or without the collaboration of your in-house team. At this point, it is worth asking how to outsource a development team. The process itself isn’t too complicated but there are some steps you should take.
What you will learn:
How to Outsource: the 9-step guide
Get your notes ready and start planning, these are the 9 steps you should go through:
1. Identify goals, needs, and requirements.
One of the main reasons software development fails is the lack of clear goals. At this stage, try to be as clear and thorough as possible, and consider:
- What is it is that my organisation lacks that is stopping us from doing it ourselves? (the answer here may be very direct like time, skills, expertise, numbers, infrastructure, etc. or a combination of these)
- Why does my organisation need this software?
- What problems will this new software solve?
- Does it matter what technology the outsourcing partner uses?
- How much control do I want my outsourcing partner to have?
- How involved do I want my organisation to be?
The clearer, the better, for both your organisation and your outsourcing partner. Also, keep in mind that the company’s needs in terms of software development and project requirements need to align with your business goals.
2. Define the scope of the project and end product.
To understand how to outsource software development, start by defining the project and product – and treat them as two different things. The project scope refers to the work needed to get a finished product, while the product scope refers to all the components, features and functionalities of the end product. A clear scope (project and product) will provide the outsourcing partner with a clear understanding of the how and the what that meets your organisation’s expectations. In turn, if your outsourcing partner understands the expectations, the outcomes are much more likely to measure up to your standards.
Your Outsourcing partner will help you through the different stages of the project, including to define the scope, overview of the project and budget. Nevertheless, it is important you already have some of this some of these criteria thought up. If the project is quite complex or large, or both, your Outsourcing partner might need to create detailed documentation for the first stage of the project (also dubbed a project charter or project initiation documentation).
3. Define your budget.
And we mean total budget. You need to consider not only development costs, namely hourly rates, one-time project fees, or other team models, but also additional costs such as investments in project management tools, communication software, and others the team might need to execute the project swiftly. You should also keep a contingency budget in case there are sudden changes to the project or even unforeseen circumstances like, say, a pandemic, changes in industry regulations, or even new laws around privacy, for example.
For example, Do you know how expensive tech debt is? It refers to the cost of having to rework faulty or poor-quality software. It is expensive, demotivating, grinding work. It is also, for the most part, avoidable.
4. Define time requirements.
Deadlines are a challenge when it comes to software development projects. Companies easily underestimate how long a project will take, and often times the deadlines need to be adjusted to a more realistic timeframe well into the project. This in turn, affects time-to-market and, of course, the overall budget. Breaking a large project into smaller, iterative chunks, often embraced by methodologies like Agile, helps estimate how long each step will take, define clearer deliverables, and also identify possible bottlenecks earlier in the development cycle.
At Near Partner, our teams undergo regular Agile training to be able to adapt and incorporate the latest changes in the methodology. But is Agile still relevant? Short answer: yes. It is and will continue to be the project management standard for organizations around the world for the foreseeable future. Still, Agile keeps evolving – and we should all be paying attention.
Here’s our view on how to manage projects the right way.
5. Choose an outsourcing model.
For the project at hand, with the defined budget and deadlines, what outsourcing model fits your organisation best? There are several relationship-based model, such as an extended team, dedicated team, project-based, staff augmentation, fixed price, time & materials, and so on. Picking the outsourcing model is a big step on how to outsource right, so be sure to read upon the various models.
At Near Partner, we believe in healthy, long-term relationships with our clients. This allows us and our clients to evolve and adapt objectives and positioning. Despite the different outsourcing models (for example Nearshore), we believe that close and flexible collaboration are values that help us achieve better results in line with our clients’ challenges.
When looking for a new partner, it’s always beneficial to schedule a call to explore what the outsourcing company stands for. Don’t forget to pay attention to how they communicate, are they clear about where they can help you? Are they transparent about how they work and communicate with their clients?
6. Decide on your tech stack.
Depending on your project and final product you will need different tech stacks, that is, sets of technologies including programming languages, frameworks, frontend and backend tools, databases, testing software, and other support tools.
Although there are better-known technologies, be open to different approaches to your problem. Technology evolves at lightning speed, and what you thought was the perfect solution to your challenge may no longer be. Be open to other approaches with different benefits and use cases, but always ask. Your outsourced team is there to help you navigate the endless world of technological possibilities. There are no empty or useless questions.
(And do not forget, when deciding what tech stack to use, you also need to consider short, medium, and long-term maintenance and support costs associated with each choice, and how much you will rely on the outsourced team to maintain the software.)
Do you have a project to develop from scratch and don’t know how to start? We can help you understand the different possibilities to your use case.
7. Low-code or traditional development?
You may be asking, is low-code for your industry? If you are looking for the long answer, here’s Demystifying low code: the e-book. Low-code and traditional development both achieve the same results, albeit via different routes. Low-code focuses on speed and usability, while traditional development focuses on customisation and control. However, there is also a middle ground between the low-code and the traditional approach: hybrid development. Check out more on the differences between low-code and traditional development.
And if the doubt persists, check what you can build with low-code platforms.
8. Investigate potential partners.
Finding the right outsourcing partner is a bit like matchmaking. Except, easier. (Phew!) You need to research your potential partners and their teams. Specifically, you should look into the team members’ tech stack – individually and as a whole. Are they experts in a particular technology? Is the team diverse in terms of skills? To evaluate a possible outsourcing partner, first, head on to their website; secondly, check their customer reviews and success stories, and thirdly, evaluate their portfolio.
It would be important, as mentioned above, to set up calls and align your company’s values with those of your outsourcing partner, as well as aligning expectations, in addition to all the technical requirements of your project.
9. Choose your best-fit outsourcing partner.
The most complicated thing about how to outsource is to choose the right partner for your use case. To choose the best partner possible, you must make sure they tick all the above boxes, in terms of pricing, technologies, portfolio, team, work ethics, and so on. However, you should also ensure that both your organisation’s and your partner’s company cultures are compatible. Remember, teams are made of people, and to have the best relation possible between in-house and outsourced teams, there has to be cultural compatibility as well as a certain “chemistry” between them!
Check four more tips on how to outsource efficiently.
FAQs
1. How much does an outsourced team cost?
It really depends on the project or work you need done, on the team model, and on the type of contract. Assuredly, it will be more affordable than the cost of putting together a dream team. Check out Near Partner’s project cost simulator.
2. What types of projects can be outsourced?
Virtually any type of project can be outsourced. From databases and networks to final-product web and mobile applications, pretty much anything is a candidate for outsourcing.
3. Is outsourcing a one-and-done deal?
If you choose so, it can be. However, it isn’t uncommon for companies to maintain long-term business relationship with their outsourcing partners and use them for the majority of their projects. It will depend on the contract you sign with your partner. Long-term partnerships
4. How can I protect my organisation’s intellectual property?
When outsourcing software development, there might be intellectual property involved. These terms are to be defined within the contract you and your partner sign. Normally, if your organisation is to be the sole owner of a software created with the help of an outsourced partner, then the rights and compensation need to be negotiated accordingly.
5. Should I choose an iterative approach like Agile?
Again, this will depend on the outsourcing partner you choose, on their company culture, and on their way of working. This is why it is so important to familiarise yourself and your organisation with your prospects, in order to make a more informed decision. Check out 8 project management skills to look for.
6. My organisation deals with sensitive data: how do I go about privacy and confidentiality?
Any good outsourcing company will have a strategy in place to protect their customers’ data. However, this needs to be discussed and not assumed.
7. Can my outsourcing partner train my in-house team?
Absolutely! This is, again, negotiated during the contract phase, but it should be possible for your partner to train your team, especially if the technology used in the project is a bit out of their comfort zone.
At Near Partner we believe it is important to transfer knowledge to end users, write user guides, documentation, and provide training. Providing training to clients after the software project is developed is crucial for ensuring its successful utilization. This training serves to familiarize users with the functionalities of the software, teaching them how to navigate it effectively, troubleshoot common issues, and maximize its potential benefits.
By investing in training sessions, clients can empower their workforce, enhance productivity, and ultimately optimize the return on investment in the software solution. Moreover, comprehensive training fosters a sense of confidence and proficiency among users, which is essential for driving adoption and ensuring long-term success of the software within the organization.
Check some of the Outsourcing myths that nobody talks about
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