With the world changing rapidly, modern technologies make us develop, state new aims, and reach them. Since the business sphere is acting the same way, business owners want to save resources and adequately use them — they choose to delegate some company functions to others and concentrate on the most significant lines.


With such tendencies, Statista claims that software outsourcing is estimated to reach $512.50 billion by the end of 2024. Outsourced software development can easily become a reliable tool for achieving the required goal. It also allows companies to attract valuable resources such as experience, knowledge, and a fresh view of available questions.


And before getting engaged in outsourcing software development, pay attention to our helpful tips to help you understand how to outsource software development and prepare for it more efficiently.

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What is Software Development Outsourcing?

Software development outsourcing is a business practice in which a company enlists the services of an external provider to manage various aspects of software development projects. While businesses have the option to conduct software development internally, this approach demands skilled developers and additional resources, thereby increasing both costs and project timelines. Outsourcing presents a compelling alternative, particularly beneficial for startups and established companies that lack an extensive in-house software development team. Software development outsourcing is widespread across industries, with a Statista report highlighting a projected revenue in the IT Outsourcing market of US$202.00bn in 2024. 

Why Do Companies Outsource Software Development?

Outsourcing software development can bring a handful of benefits for the company. Before introducing you to the software development outsourcing guide, let’s look at some of its key benefits:

Benefits that outsourcing software development brings to the company

Cost benefits

Companies outsource software development to achieve cost savings and improve cost efficiency – there’s no need to pay salaries, give benefits, office space or spend training costs. Doing so lets them focus on their core business goals and allocate their time and resources better.

Fast innovations

External partners with extensive knowledge and experience in specific technologies and frameworks will bring new ideas into your workflow. This is how companies accelerate their software development process, leading to faster innovations and shorter time-to-market for their products.


Outsourcing software development allows companies to scale their development teams according to their needs quickly. Outsourcing will enable companies to adjust the team’s composition, whether requiring additional developers or reducing the team size.


Embracing diversity allows companies to tap into a wider talent pool and benefit from unique insights from diverse perspectives. And we know that diversity brings the best solutions. Outsourcing transcends geographical boundaries and allows companies to select the most suitable region for collaboration based on cultural compatibility, cost-effectiveness, etc.

Efficient hiring process

Rather than sifting through overwhelming resumes, you can now choose an IT partner with the required expertise in your specific business domain. Numerous professional platforms, like Clutch, provide a reliable resource for finding trusted software development companies to collaborate with.

Fulfilling responsibilities

Hiring the right manager for an in-house team can be challenging for any company. However, this burden is alleviated when outsourcing, as each team is already equipped with its own management structure. A seasoned outsourcing team implements robust workflow processes to ensure efficient progress monitoring, timely milestone achievement, and successful project completion.

Models of Software Development

Outsourcing Before you decide to outsource your project, it’s crucial to consider some fundamental aspects. This guide will specifically concentrate on the model governing the relationship between the client and the service provider. This emphasis is due to the pivotal role that robust relationships play in achieving business success — when the connection is well-established, geographical distance becomes less of a concern. The following are the three primary relationship-based models of software development outsourcing:

  • Staff augmentation. The client assumes full ownership of the project from initiation to completion. The majority of responsibilities lie with the client, who engages tech talents from an outsourcing company to bolster the team responsible for development projects.
  • Managed team. Both the client and the outsourcing provider share responsibility and ownership, delineating specific responsibilities for each party. The managed team functions independently of the in-house team, with an outsourced project manager overseeing daily operations.
  • Project-based. The outsourcing provider shoulders the primary responsibility and takes ownership of projects from inception to conclusion. They undertake the development projects in accordance with client specifications, ensuring completion according to the agreed-upon terms.

Different problems require different solutions and different software outsourcing models. So you make sure to know what kind of problem you have before looking for a solution. If you’re new to outsourcing, staff augmentation is a good and easy start. It gives you a feel of the outsourcing world. As your needs increase and your relationship with your outsourcing partner grows, you can try other models of outsourcing.

What to Look For in an Outsourced Software Development Company

There are several key factors to consider before partnering with outsourcing companies:

Expertise and technology stack

Ensure the potential vendor has the expertise and experience in the technologies required for your project. The team should have a track record of working on similar projects.


Review their portfolio of past projects to check the quality of their work. If possible, ask for client references to get feedback on their experience working with the company.

Project management approach

Challenge their project management methodologies (Agile, Scrum, Waterfall, etc.) and how they will manage the development process, including milestones, timelines, and communication frequency.

Security measures

Ensure the company follows industry best practices for data protection and cybersecurity.

Location and Time Zone

Consider the time zone difference between your location and the outsourcing company as this often impacts collaboration.

How Much Does it Cost to Outsource Software Development

The cost of outsourcing software development depends on several factors: the complexity of the project, the location of the outsourcing company, the technology stack, the size of the development team, and the level of expertise required.

Project complexity

The more complex your project is, the higher the cost is going to be. Final price will depend on advanced features, integrations, and intricate design and other elements that require more time and effort.

Team size

The number of software engineers, designers, testers, and other team members involved in your project will influence the cost.

Hourly rates

Many outsourcing companies charge on an hourly basis. Hourly rates can vary on the company’s location, expertise, and experience. To give you a rough estimate, here’s a very range based on geographical regions.

Eastern Europe                        $25-$50
Asia  $18-$40                        
Africa $20-$40
Latin America

The Best Tips for Outsourcing Software Dev

Outsourcing software development offers numerous obvious advantages. However, achieving successful outcomes requires careful preparation and a robust outsourcing strategy. So, how to successfully outsource software development?

Outsourcing software engineering is a multifaceted endeavor with challenges and potential pitfalls. Yet, with the assistance of a reliable software engineering partner and a well-defined process, you can thrive there.

Although the specifics of the process may vary across companies and industries, we can distill it into 12 key steps that shape its overall success in this guide to software development outsourcing.

1. State own objectives and goals

Mind that only some offshore companies can manage your projects. That’s why thinking quite well about your goals and state objectives is very important. This software outsourcing guide step will help find the right company and embody all ideas. Otherwise, you’ll come across partners, which will not be able to meet all requirements, and you both will waste time and money.

2. Analyze your needs

Begin by conducting a thorough analysis of your software development needs. Evaluate the specific requirements, functionalities, and features you require for your project. Conduct comprehensive research on your software development requirements, considering factors such as the technical skills, expertise, and experience needed from an outsourcing partner.

3. Define available budget

Before proceeding with outsourcing software development, define your available budget. Determine the financial resources you can allocate to the outsourcing project, considering factors like the desired quality, scope, deadlines, and other factors that might impact the overall cost.

4. Research countries for outsourcing

Conduct thorough research to identify suitable countries for outsourcing software development: the country’s reputation in the IT industry, availability of skilled professionals, cost-effectiveness, language proficiency, and legal framework. Explore popular outsourcing emerging destinations that offer unique advantages for your specific needs.

5. Have a realistic deadline

If you find yourself asking how to successfully outsource IT development, it’s essential to set realistic milestones and not go overboard with expectations. Avoid setting overly aggressive or impractical deadlines that may compromise the quality of the software or put undue pressure on the development team. Collaborate with the outsourcing partner to determine a reasonable timeline for efficient development and thorough testing.

6. Find an inspired project manager

A dedicated project manager who can effectively lead and coordinate the project is a serious advantage. They should have experience in managing outsourced projects, excellent communication skills, and the ability to motivate the team and ensure seamless collaboration between your organization and the outsourcing partner.

7. Avoid misunderstanding

It happens that companies speak different languages. Thus, to successfully outsource software development, it’s crucial to address and avoid misunderstandings proactively. Communicate your project requirements, objectives, and expectations to the outsourcing partner. Encourage open and transparent communication and promptly address any potential ambiguities during the project.

The Best Tips about Outsourcing Software Dev

8. Keep documentation in order

Maintain well-organized documentation throughout the outsourcing process to ensure clarity, facilitate effective collaboration, and serve as a reference for resolving potential disputes or issues. Don’t get lazy and document everything — oral agreements can be easily forgotten. This includes project specifications, requirements, contracts, communication records, change requests, and other relevant documentation.

9. Check quality assurance

Give preference to the company that has reliable testing support and excellent QA — it is your guarantee of the successful results. Discuss their approach to quality control, testing methodologies, bug tracking, and overall quality management. Don’t forget to regularly review and evaluate the quality of deliverables throughout the development process.

10. Communication

Strong communication and collaboration are vital for successful outsourcing. Define effective communication channels and establish regular checkpoints to provide feedback, track progress, and promptly address any issues. Your partner must have a clear understanding of your project requirements and expectations.

11. Seek a the second opinion

Let in-house developers, colleagues, or industry experts give their own opinion on the processed work — a view from different perspectives can add necessary details, provide valuable guidance, and help you develop an excellent project.

12. Start with a small project

If you are still unsure how to outsource IT development, consider starting with a smaller pilot project before committing to a larger initiative. That allows you to assess the outsourcing partner’s capabilities, communication, and compatibility. Keep engaged in the process to ensure they do their best and treat the project well. This initial collaboration helps build trust and confidence before embarking on more significant and complex projects.

Risks of Outsourcing Software Development

Outsourcing software development also comes with certain risks. And by being aware of them, companies can take appropriate measures to mitigate them and maximize the chances of successful outcomes. Here are some common risks associated with outsourcing software development:

Risks of Outsourcing Software Development

Intellectual property and security issues

Sharing sensitive information and source code with an external party raises the risk of unauthorized use, leakage, or potential infringement. Additionally, security breaches could compromise valuable data, including customer information or proprietary algorithms.

Lack of experience with remote developers

Companies may face challenges in effectively communicating project requirements, tracking progress, and maintaining a cohesive development process with a team in a different location — miscommunication, cultural differences, and time zone disparities can slow the smooth execution of the project.

Involvement and dedication

The outsourcing team may not fully understand or align with your project goals, which leads to a lack of commitment and lower-quality deliverables. Besides, communication gaps can hinder real-time collaboration, causing delays and misinterpretations.

Less control and handleability

When outsourcing, the development process can result in challenges regarding real-time collaboration, communication, and oversight of the development activities. The absence of direct control makes it challenging to ensure that the project progresses as planned.

Hidden outgoings

These could include additional charges for changes in project scope, unexpected hardware or software requirements, cultural barriers that lead to miscommunication, or legal and regulatory compliance costs.

Why Choose Inoxoft as Your Outsource Development Company?

Inoxoft is an ISO 27001-certified software development company creating top-notch solutions for clients worldwide. For nine years, we remained a trusted partner, committed to project success and providing clients full support and security throughout development.

At Inoxoft, we understand the importance of making the right choice when it comes to outsourcing your development needs. We take pride in offering exceptional services that might actually set us apart from the competition. If you’re still wondering when to outsource software development, let us provide compelling reasons why should choose us as your outsource development company:

  • Keep your in-house team focused. Let our team handle your software development while you focus on key levers that drive your business forward.
  • Skip recruitment delays. Hiring the right talent is time-consuming. We assemble and onboard the right experts in record time.
  • Maximize your management productivity. Our teams work autonomously. You set the direction and milestones, while they manage the day-to-day delivery.
  • Access a broader range of skilled tech specialists. We’ve already done the rigorous testing for technical, logical, and soft-skill abilities so you don’t have to.
  • Ensure product quality. All projects go through intensive testing to bring you high-quality, robust, and error-free software.
  • Scale on demand. When your business grows, you can easily expand your capacity to handle larger volumes of work by hiring an offshore team.

With our company, you gain a trustworthy partner who takes full project ownership and responsibility. We value the decisions made during development and ensure they align with your goals and objectives. Our focus is on achieving your project’s success – the ultimate metric that truly matters to us! Contact our team to discuss more details and get started.

Summing Up

Choosing a great software development team is not an easy task — it demands many resources, including time and money. And while following our guide to software development outsourcing, you should be attentive and know everything about possible risks in order to prevent them (if necessary). Nevertheless, it is still worth the effort, as outsourcing has a lot of various advantages for the company. Among them are:

  • enhancing delivery speed
  • a chance to get more talents
  • extra time for focusing on the definite product
  • pushing costs down

Ready to unlock the full spectrum of benefits? Then don’t waste time and go to outsource software development with a dedicated team to enjoy pleasant results.

Frequently Asked Questions

What is the best way to outsource software development?

The best way to outsource software development is to carefully vet potential partners, clearly define project requirements, establish effective communication channels, and use agile methodologies for flexibility and transparency in the development process.

How to outsource software development safely?

When outsourcing software development safely, vet partners rigorously and establish clear requirements. Ensure transparent communication, use legal measures to protect intellectual property, and start with a small project for a trial. Set milestones, prioritize quality assurance, and verify compliance. Regular progress reviews and a contingency plan help navigate potential challenges efficiently.

How to manage an outsourcing development team?

Define clear goals and expectations, establish open communication channels, use project management tools, set regular progress checkpoints, foster team collaboration, provide adequate resources and support, and monitor performance closely to ensure quality and efficiency.