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Tips for Successful Outsourcing Software Development Services in 2021

Outsourcing is a trend as everyone, from a big tech giant like Microsoft to a small startup, likes to outsource to cut operational costs and resources.

Even though many entrepreneurs like the merits of outsourcing, others have sworn off due to horrible experiences in the past.

But, our view is different.

Those who do not like outsourcing, maybe they lack the right outsourcing practices. Or, else Google, Microsoft, Boeing, Ashton Kutcher, and many others would have never outsourced their software development project to offshore regions.

So, if you like to outsource software development, you need to explore the right outsourcing ideas and tips to make successful outsourcing. So, we have decided to end your dilemma by providing you with the right tips that you can follow and grab all the benefits that it has to offer. But, before we dive deep into the outsourcing practices, let’s get some basics first.

What is Outsourcing?

Outsourcing, in general terms, refers to hiring an individual professional, a team, or a company to work on their in-house or clients’ projects outside their offices. Even though enterprises outsource their work process or projects for various reasons, cost-cutting is the prime reason. Outsourcing does not often mean offshore; it can be onshore or even nearshore. Let’s understand these different terms of outsourcing.

Types of Outsourcing:-

There are three main types of outsourcing. They include;

  • Offshore outsourcing
  • Onshore outsourcing
  • Nearshore outsourcing

Offshore Outsourcing:- refers to when an enterprise or individual hires a professional or company from a distant country. For example, a firm in the USA has an outsourcing partner in India.

Nearshore outsourcing:- is when a firm hires professionals, a team, or a company from a neighboring country to work on their behalf. For example, a firm in Canada hires professionals or a team from the USA or vice versa.

Onshore outsourcing:- refers to when an organization hires a team of experts outside of their firm in the same country. For example, a firm in Toronto hires professionals from Ottawa.

Out of these outsourcing terms, offshore outsourcing is widely popular due to quality work and the lowest labor costs. It doesn’t make any sense to pay $150/hr or $250/hr to someone local when you can get the same work done for a quarter of the costs or even lower offshore.

Global Outsourcing Market at Glance

According to Grand View Research, around 90% of organizations outsource at least a part of their project. Whereas the overall global outsourcing market is projected to reach $405.6 billion by 2027, reports GVR.

As far as outsourcing software development is concerned, around 60% of tech firms outsource projects to offshore regions.

Deloitte reports that around 78% of respondents (those outsourced projects to offshore regions) expressed their satisfaction with outsourcing.

The research suggests that around 59% of organizations outsource to cut operations costs, while 57% stay more focused on their core business functions. Let’s look at the image given below; it gives a complete picture of why people outsource.

Motivations to outsource

Source: Deloitte

5 Quick Tips for Outsourcing Your Software Development Projects Offshore

Outsourcing is the best optimization strategy, but it can be the trickier one if you do not know how to outsource. Undoubtedly, it has both advantages and disadvantages, but you reduce the disadvantages and enjoy the perks it provides following the right outsourcing practices. So, let’s go through the tips that you should look at before outsourcing;

Define Your Outsourcing Goal

The first thing you need to do is figure out what you want to outsource and a complete project or a part of it. Determining your needs and expectations will not just help you find the right partner but also help you accomplish your outsourcing goals conveniently. At the same time, you can also decide how you want to take the outsourcing needs forward, which may even include the development method.

Do Your Research

Research is what determines the success of your outsourcing software development needs. Your research should include;

  • Finding the right outsourcing regions
  • Research the hourly development cost in the region
  • Selecting the right outsourcing partner
  • Research about technology stacks

These are the most important parts of your research. Before choosing your technology partner, make sure you have compared all service models, expertise domains, portfolios, reviews (from clients), and others.

Focus on Value Over Costs

No doubt, the primary goal of outsourcing is to save costs and make more profits. However, it should not be the ultimate goal for outsourcing. Or else you may end up choosing a company providing compromised quality services. When you explore outsourcing companies, you may be plenty of such IT firms that offer lucrative pricing models (even less than $10/hr), but when you hire them, you may find freshers working on your projects.

Consider Flexible Pricing Model over Fixed Costs

Fix cost is lucrative as the company (the outsourcing provider) bears all the financial risks. You may not have to worry about your project security and control. But, there are drawbacks to the fixed cost model. First, the vendor will add costs for all the possible risks and uncertainties in the fixed costs. Second, project scope changes occur in 99% of projects. You cannot stop it, as determining every single detail beforehand is impossible.

And, when it occurs, your outsourcing partner may overcharge you. That means every change will invite a time-consuming negotiation. The third possible issue with fixed pricing is quality projects. Your outsourcing partner will focus on hitting the price agreed rather than the quality of work.

Collect Signed NDA and Detailed Written Contract

First, you must get a signed NDA document before you handover the project to your outsourcing partner. It’s legally binding contracts that protect your project and establish confidential relationships. Meanwhile, do get a detailed written contract signed from your outsourcing partner. The contract should have all the details, even the smallest details so that you do not have any technical, communication, and management issues once the project starts. The written contract should include detailed project scope, tech specs, technology stacks, features & functionalities, and the deadline.

Final Thoughts

If you are looking for the best Outsourcing Software Development Services in India, then let us know your needs in detail so we can help you come up with a solution and start off quickly.

When it comes to outsourcing software development, selecting the right partner is the name of the game. The outsourcing outcomes will entirely depend on the partner you select. Hence, put more emphasis on selecting a partner. Do not shy away from taking help from an expert, your friends, or whoever understands the nitty-gritty details of the outsourcing industry. We have tried to provide all the tips you need to have a pleasurable experience; refer to this article again for better clarity.

 

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