How to Choose Software Outsourcing Company [2023]

What is software outsourcing and when do you need it

The software development market encompasses a wide range of services that assist enterprises and small businesses in implementing, managing, and operating various software products.

According to Statista, global IT spending is projected to reach 5.1 trillion dollars by 2024. Digital transformation involves <medium>leveraging artificial intelligence, process automation, and migrating data to the cloud<medium>, among other aspects. These initiatives are driven by strategic investments aimed at achieving efficient workflows, advanced user experiences, and more.

The demand for software development outsourсing has increased. Embracing such services is now the only viable strategy for many companies and startups facing an economic crisis. It presents the most profitable approach for them to <medium>realize projects or handle separate software development tasks when it's costly to hire an in-house team<medium>.

However, in recent years, companies have turned to outsourcing solutions to <medium>achieve a variety of other goals, beyond just a cost reduction<medium>.

So, what is software outsourcing, and how can you benefit from it? Let's find out!

Businesses have the opportunity to hire outside contractors for a variety of software development works and ensure efficient project completion. IT outsourcing companies had embraced remote work approaches long before the Covid-19 pandemic and work-from-home trends. As a result, their <medium>infrastructure, tools, and processes are well-prepared for seamless distance collaboration.<medium>

Software outsourcing can be beneficial for various types of organizations, including <medium>startups, small and medium businesses, large enterprises, businesses with financial constraints and tight deadlines<medium>.

Here, we share our experience to show how businesses can benefit from outsourcing IT services and what outcomes they receive.

Main software development outsourcing services

In this section, we've provided a brief description of various outsourcing services, outlining their advantages and disadvantages.

1. Staff augmentation

It's a flexible outsourcing strategy that allows you to hire tech talents worldwide. You can 'borrow' the provider's IT specialists for however long you need them, combining existing resources and contracted staff to achieve all your business goals.

Pros of staff augmentation model

Cons of staff augmentation model

2. Dedicated team

Within this outsourcing model, you and your outsourcing partner share ownership and responsibility for the project and its deliverables. It's an intermediate solution that falls between Staff Augmentation and a Project-Based approach.

Pros of dedicated team model

Cons of dedicated team model

3. Project-based outsourcing

Finally, with a project-based approach, you delegate the requirements to the development partner for complete management and implementation of the entire process based on the specifications you provide. It's the most 'classic' of the three types of outsourcing engagements.

Pros of project-based outsourcing model

Cons of project-based outsourcing model

Outsource vs freelance: what is difference

Another option to delegate work to offshore IT specialists is freelancing. It refers to the practice of hiring individual IT professionals typically working on a contractual basis.

For contractors, this model implies earning by working independently, while outsourcing involves getting a job done by tech specialists through a third party.

Freelancers typically may work for multiple clients simultaneously or focus on one project at a time, offering flexibility and specialized skills to fulfill the client's needs.

Sure, bad things happen, and sometimes things go wrong (missed deadlines, non-compliance with requirements, etc).

Let's compare the <medium>IT outsource model vs IT freelancing <medium>: what is the difference and how to choose between them.

IT freelancing

<medium>Hiring for part-time:<medium>you can recruit software developers and other specialists for short-term projects or even particular tasks.
<medium>Rapid assessment testing:<medium>you have an opportunity to evaluate quickly the freelancer's works align with the declared experience and expertise (and to break up on time without extra drama).
<medium>Shorter time-to-market:<medium>working with a freelancer significantly speeds up time-to-market as tasks are directly assigned.
<medium>Cost efficiency:<medium>hiring freelancers is often more cost-effective than outsourcing..

<medium>High turnover:<medium>self-employed specialists typically lack long-term contracts, so they may accept more appealing offers elsewhere, leading to potential turnover and delays with hiring new specialist.
<medium>Multiple projects at once:<medium>freelancers can take on unlimited offers simultaneously. This potentially leads to an overwhelming workload, which may affect the quality of work delivered.

IT outsourcing

<medium>Advanced project management:<medium> you can hire a 'full set' team, including project manager who will relieve the burden of routine management. Issues are resolved internally within the team, minimizing client involvement to essential cases, allowing clients to focus on other critical business tasks.
<medium>Dedicated team:<medium>with a professional dedicated team, there's no need to train your members, introduce them to each other, or familiarize them with internal processes. Such a team comprises experienced, battle-tested players well-versed in IT outsourcing practices.

<medium>Knowledge sharing:<medium> сollaborating within the team enhances productivity and empowers employees to work effectively and smarter. An outsourced team can provide valuable insights and advices based on their extensive experience and knowledge pool.
<medium>Guaranteed results:<medium> outsourced IT services are performed with guaranteed results safeguarded by legal agreements.

<medium>Higher cost:<medium>due to valuable expertise, significant scope of work from conceptualization to the release, and high level of engagement, overall rates in software development outsourcing can be higher.

Where to look for IT outsourcing company

Businesses are continually looking for a reliable software development company capable of <medium>delivering a fully-fledged product on time.<medium>

So where to look for the best outsourced team and how not to be mistaken?

The key searching channels are:

Upwork
Linkedln
Google Search
Online communities
Business platforms, like Clutch, The Manifest or GoodFirms
Networking and personal recommendations

From the very beginning of the search, you should have a clear vision of your product's requirements and expectations from an IT company, including the tech stack, rates, time zone, language proficiency level, etc.

Now, you can optimize your lists and conduct the 'pre-filtering' of applicants. There are some main criteria you should note first

How to choose software outsourcing company

When the shortlist of 10-15 IT outsourcing companies is ready, move on to the key process of selecting the right IT partner.

Before initiating contact with potential candidates, prepare specifications and other documents to clearly <medium>define your business needs<medium>. This will help save time during messaging and meetings.

Pay attention to the time taken by the company representatives to respond. How prompt and thoughtful are these responses? Is this team proactive enough? (not to be confused with annoying 🙂)

<medium>In good communication we trust<medium>. Firstly, it's about:

Mutual understanding
Active listening and feedback
Client's data safety and security
Regular updates and reporting
Clarity and transparency

Takeaway

We believe that a professional outsourcing company should be a <medium>versatile, multifunctional, and reliable partner<medium> offering a range of services from business consulting to turnkey software development. Such IT providers have the <medium>suitable tools and efficient approaches<medium> to foster clients' product growth.

At Freshcode, we are ready to help you by providing software development services that meet your requirements and your customers' expectations.

Are you looking to explore more digital solutions for your business? Let's discuss all possible opportunities. Please, book a free consultation here.

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