Your guide to smart software development outsourcing

Your guide to smart software development outsourcing

Diego Santillan

Chief Operating Officer

10 min

In 2024, businesses are always on the lookout for smart ways to build their products while keeping an eye on the budget. Software development outsourcing has become a popular choice for many, offering a path to work with talented teams across the globe. Finding success in outsourcing is more about smart planning than just looking for the lowest price. Offshore software development offers a world of opportunities, but the real trick is knowing how to use these options to your advantage.

You can take this article as guidance on how to approach the task of outsourcing your software development team. However, it is important to recognize that this option is not available to all businesses. Companies operating under strict compliance restrictions, those in highly regulated industries, or those engaged in government contracts often find that onsite teams are their only viable option. These constraints are typically due to the need for tight security measures, direct oversight, and adherence to specific regulatory standards that may not be as easily managed with an offshore team. This being said, you might find this article much more useful if your company has the possibility to choose between having an onsite team or exploring different outsourcing options.

Choosing the right location for software development outsourcing

Offshore software development options are vast, each with its own set of benefits:

  • LatAm: Nearshore software development offers talent that aligns well with North American work culture, facilitating smooth and productive collaboration. The time zone compatibility is particularly convenient for companies based in the US and Canada. Additionally, Latin America is home to top-level professionals, with education and experience that closely match those of developers in the US.
  • Eastern Europe: This region provides a wide talent pool of highly-skilled professionals, offering a level of expertise similar to that found in LatAm. If your company is based in Europe, outsourcing your software development to Eastern Europe could be an excellent choice. The proximity of time zones is advantageous for executing Agile projects effectively.
  • India: Ideal for large-scale projects that require substantial work at a lower individual cost. India could be an excellent choice if you need to establish a large development center using the traditional waterfall model. This region is a mature player in the outsourcing industry, having developed effective processes for 24/7 support, BPO, and more over the years. While the individual cost may be lower than in some other regions, it is important to consider the overall project cost to ensure it aligns with your budget.
  • Onsite: While this option may come with a higher individual cost, the ease of communication and cultural fit can justify the expense for certain projects. However, if your company has adopted a fully remote model—whether by choice or due to external circumstances—an onsite team may not be necessary. In such cases, exploring more cost-effective alternatives could be beneficial.

Tailor-made software development

In software development, a universal solution does not fit every company. Tailor-made software is designed to meet the specific needs of your business, so usually it is the most cost-efficient option. Customized solutions provide the flexibility and scalability your business requires to adapt and succeed in a dynamic market environment. Outsourcing this type of development allows you to access a broad pool of skilled professionals in various technologies from around the world.

Here are several questions you can ask yourself to choose the right software development outsourcing strategy:

  • Are you building a product from scratch, or are you evolving an existing one? This helps define the scope and requirements of the development process.
  • What is the total budget for the project? As noted in the previous section, outsourcing in some regions may be more cost-efficient than in others. Determining your budget helps you choose a region that not only fits your financial constraints but also offers the best value for the quality of work you expect.
  • What is your planned time to market? Your timeline influences your choice of a technology partner and a methodology. A shorter time to market requires efficient processes and possibly more resources, while a longer timeline might allow for more thorough development phases.
  • What about the algorithmic complexity of the software you are building? Does it depend on complex business rules or user interfaces? The complexity of the software affects the expertise required from your outsourcing partner. Projects with intricate algorithms or sophisticated user interfaces need teams with specific skills and experience.
  • Does your product need to integrate with third party tools? If so, your development team needs to have expertise in integration and possibly in working with specific third-party APIs. This requirement can significantly influence your choice of outsourcing partner.
  • Which project management approach will you choose? For example, if you plan to implement the Agile methodology and have a Project Manager or Product Owner from your team in constant contact with your chosen technology partner’s team, having them in a nearby location is crucial, as communication will be more fluid. The choice of project management methodology affects how your teams will interact, the frequency of updates, and the flexibility of the development process.

Every digital product is unique, and so should be your outsourcing strategy. Sticking to one approach does not always work. Being flexible and ready to adjust your strategy can make all the difference in getting the results you want.

Digital Archaeology: a key player for cost efficiency

A life motto: make the most of what you already have. After all, you have already invested valuable resources in building your current software—and it might not be as obsolete as you think. Existing software can be very stable and already comply with business rules.

Digital Archaeology offers a unique perspective on existing software, where all project assets are treated as archaeological evidence with intrinsic value. The main idea behind this discipline is to make decisions based on those assets—not on subjective opinions—with the goal of saving your time and money.

Before diving into new projects, check whether you can reuse or repurpose existing assets. This is not only a smart move regarding costs, but also speeds up the process of turning your idea into a reality—and launching an MVP.

Finding the right technology partner

Based on all the points discussed and others, it is crucial to choose a vendor who is truly committed to your success. A good technology partner does not shy away when problems arise; they stand by you, offering support and solutions, regardless of whether the issue falls within their scope or not. They go the extra mile, bringing innovative ideas and improvement proposals to the table, whether asked for or not, adding significant value to your projects. By proactively suggesting improvements and innovative solutions, a dedicated partner not only enhances the quality of your project but also ensures that resources are used optimally, reducing unnecessary expenditures and maximizing return on investment.

Beyond geographical considerations, there are several attributes to look for in a technology partner. Opt for a company with low attrition rates and a high level of engagement with client issues. It is essential that the company takes full ownership and responsibility, even if the model is staff augmentation.

As a client, you should be able to connect with the decision-making areas of your technology partner. The size of the outsourcing company is also a critical factor, as it should be appropriate for your needs. A technology partner that offers personalized treatment and allows you direct access to key individuals within their organization can be invaluable, especially in situations requiring urgent attention or strategic consultations.

Choosing the right technology partner is about more than just matching technical skills; it's about finding a collaborator who is prepared to invest in your success as much as you are, with a keen focus on cost-efficiency.

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