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4 Steps to Find The Right Software Outsourcing Company for Your Project

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When a company chooses to have specific software solutions created by a third party, this is referred to as software outsourcing. Outsourcing software development offers many benefits, including cost savings, increased productivity, reduced risk, and better security.

Hiring a software development firm may be a difficult process, but it doesn’t have to be. 

This post will provide you with “4 Steps to Find The Right Software Outsourcing Company for Your Project”. It doesn’t matter whether you’ve already decided to outsource or not—you may utilize this list to find suppliers of virtually any kind. So keep reading to make an informed choice regarding your company.

These 4 steps are:

  • Step 1: Define software outsourcing landscape
  • Step 2: Framing and scoping your project
  • Step 3: Researching and contacting software development company
  • Step 4: Selecting, negotiating and contracting

Step 1: Define software outsourcing landscape

It is critical to understand the many kinds of software outsourcing firms that exist. When you fully understand what is available, you will make a good choice. 

Depending on a number of criteria, each kind of software agency may be a suitable match; and have a significant effect on the project’s delivery and quality. There are 3 common types of software outsourcing for SMEs such as: 

  • Onshore software outsourcing company
  • Offshore software outsourcing company
  • Nearshore software outsourcing company

Onshore Software Outsourcing Company

When a firm outsources work to a company in the same nation, this is referred to as onshore software development. For example, a company in New York may need the services of a mobile app developer and opt to outsource the job to a company in Boston that specializes in that sector.

For companies, onshore outsourcing is the most geographically convenient choice. Companies that are under-resourced or overburdened with work often outsource to onshore developers for ease. It frees up corporate time to concentrate on day-to-day operations and may assist in guaranteeing that goods are delivered on time.

However, even geographical benefits are obvious, from an hourly cost perspective, onshore companies will be more expensive. You can estimate onshore rates to be approximately three times more expensive than offshore/nearshore resources. As an SME, this solution can be a burden on your budget. Moreover, with the current technology development to communicate, you would find other alternatives from outside the border. 

Offshore Software Outsourcing Company 

Offshore software development entails outsourcing work to a third party in a geographically distant area from the host nation. For example, a company in the United States may outsource to an offshore software outsourcing team in Vietnam.

Companies have always outsourced to take advantage of cost-saving. However, recent trends indicate that businesses are becoming more concerned about quality.

One of the primary advantages of offshore software development is that it gives businesses access to a bigger talent pool of developers that would otherwise be unavailable to nearshore and onshore enterprises. Businesses are not limited by the abilities of their immediate workforce.

Offshore development may be beneficial for projects with limited finances or that need specialized knowledge that is difficult to obtain. In addition, this is also a chance to explore new markets and expand your business. As an offshore team work internationally, they would provide multiple solutions that satisfy different cultures and insights. 

Nearshore software outsourcing company

When a business outsources work to a nearby nation that is geographically close to its own, this is referred to as nearshore software development. Many US businesses, for example, outsource software development to Latin America, where nations such as Colombia, Mexico, and Argentina have work hours that are consistent with US time zones.

Nearshore development allows businesses to efficiently expand their teams by providing quick access to software developers in the same time zone. Nearshore businesses often have comparable linguistic and cultural characteristics, resulting in a fruitful working partnership.

Cultural compatibility helps ensure that developers understand the project’s fundamental concepts, reducing the chance of misunderstanding.

Once you know your options, it’s time to point out the needs of your project. Clear requirements and expectations will save more time and money to figure out the right software outsourcing company.

Step 2: Framing and scoping your project

When choosing a software outsourcing company, it is critical to scope the project.

Imagine telling a waitress you want something savory and receiving a sweet meal. Some people may like it in a restaurant environment, but not so much when it comes to software.

Spending time deciding what you want to purchase can only benefit you in the long run. The more preparation work done ahead of time, the more accurate the estimate and expectations from the software development firm will be.

Budget Backwards versus Feature Forward

Every software project has three variables: budget, scope, and schedule. As a result, we have two main kinds of projects that define a product’s lifetime.

Most projects fall somewhere in the center of these two methods, but it’s critical to determine which variable is known and which is the greatest priority in order to fill out the remainder of the equation.

  • Budget/Timeline Backwards: These projects have maximum money or strict delivery timeline, and the project team works backward to determine what can be completed in the time or budget allowed. In order to stay under budget or on schedule, these projects often compromise features or quality.
  • Feature Forward: These projects concentrate on the scope and work backward to establish a schedule and budget depending on the scope and features needed. It is okay to spend more in order to launch the desired scope, and the team is ready to pay more in order to get more.

Going from feature list to final product

We’ll go through a commonly utilized software development method. When contacting a software development firm, it is critical to understand where you are in the process so that you can choose the best possible partner.

It consists of many stages, each of which is described below. As you go through these steps, you will know the needs of the project and it is able to observe and ready for the next steps.

  1. Software Strategy (also known as “Discovery”)
  2. List of Prioritized Features
  3. Designs having Technical Requirements that have been annotated
  4. Advancement (Sprint Plan)
  5. Launch Feature Enhancement (Repeat Steps 1-5)

How much is it going to cost?

Without a basic framework, it is impossible for an agency to estimate the cost of a software project, which is why it is critical to specify the scope of your project.

Consider the following scenario: you want to know how much it would cost to construct a bespoke house but don’t know how many bedrooms you need. What about the restrooms? Should I tell one or two stories? Is it a renovation or new construction?

As you are aware, knowing your project is critical. After you’ve nailed down a few key factors, deciding which kind of company to employ becomes a lot simpler.

The ‘Magic Triangle’ is a useful graphic when discussing cost. According to theory, you can’t extend one side of the triangle without impacting the other two. Time, money, and scope are not mutually incompatible concepts.

Clearbridge Mobile’s Project Management Triangle.

The following are critical questions for every project:

  • How much money do you have?
  • Is it feasible for the scope we desire?

In summary, a professionally developed app would typically take 4-6 months to complete and will cost between $150,000 and $550,000, depending on complexity.

Variables affect the pricing. If you understand the factors, you will be a lot less startled if a quotation or timeframe changes.

For young businesses, offshore outsourcing would be the best solution for budget problems. You can find outsourcing with high-quality, up-to-date technologies and innovative solutions but still unsure the professional works within your budget. When compared to India and China, outsourcing software development to Vietnam may save up to 50% on operational costs. According to CIO Magazine, this may save up to 90% in expenses when compared to the US.

Step 3: Researching and contacting software development company

When looking for a software outsourcing company, it’s useful to know what to look for. Signing a contract indicates that you are purchasing something from them and have faith in what they are offering. We wish there was a quick solution, but if you’ve never worked with a reputable company, you’ll need to do your homework, ask for references, and study reviews.

You should go through 4 stages: 

  • Creating an initial list of software development companies
  • Initial company assessment
  • Creating a short(er) list
  • Contacting each software development company

Step 4: Selecting, negotiating, and contracting

You understand the terrain, you’ve scoped your project, you have a budget and schedule in mind, and you’ve identified a few prospective partners.

How do you choose one?

This may be particularly difficult if you like all of your choices. Plan to finish the decision-making process in less than a month.

There is no one criterion that will identify the best applicant. However, there are certainly good indicators and concepts you may use to assist make the choice a little easier.

Evaluating proposals/partners

You want to have a few choices. Examine the agency landscape and try to comprehend the distinctions between proposals. Large pricing disparities indicate a lack of understanding of the project’s scope.

Alternatively, a business may propose to provide much less than you would anticipate.

Always be truthful with the firm – “We are talking with X businesses, here is what we like about each company, and this is how we will make our choice.”

Explain who they are competing against and what the advantages and disadvantages of these relationships are. This may assist to clear up any confusion about deliverables.

The company’s salespeople maybe your greatest buddy and a strong negotiator for you. A software project’s terms are not necessarily hard and fast. Count on the sales team to come up with innovative ideas that benefit both parties.

Contracts and negotiations 

You will be required to sign a contract or a series of contracts. The contracts you will most likely be required to sign are listed here. We’ve attempted to summarize the essential elements and supplied the contracts we use as references.

  • Confidentiality Agreement (NDA)
  • Masters Services Agreement (MSA)
  • Statement of Work (SOW)


How well your future application or software performs is determined by the competence and experience of the software development firm that creates it.

We hope that these “4 Steps to Find The Right Software Outsourcing Company for Your Project” would help you find a suitable solution for your project. Choosing the appropriate agency is thus critical to accomplishing your business objectives and ensuring that your consumers receive a bug-free, highly performant, and useful piece of technology.