A Comprehensive Guide to Software Development Outsourcing in 2022

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Software development outsourcing is not just another buzzword in the tech industry, but it’s a kind of disruptive outsourcing that has taken the world by storm for valid reasons. According to a recent forecast, the global IT outsourcing market will touch USD 682.3 billion by 2027, valued at USD 526.6 billion in 2021. (Source: IT outsourcing Market Size Analysis (2022-27), Mordor Intelligence). These numbers indicate how modern-day businesses of all sizes, predominantly medium-sized and startups, are leveraging the potential of software development outsourcing to their advantage. 

Before we dig into the need to outsource software development services, let’s delve into its meaning, types, outsourcing models, and services. 

What is Software Development Outsourcing?

Software development Outsourcing is when a company hires an external vendor (a third party) to delegate its software development projects instead of using its in-house resources. It allows companies to tap into a talent pool of seasoned developers, use the latest technologies, scale flexibly, streamline the development process, and reduce time to market while saving costs. 

Types of Software Outsourcing

There are three broad types of software outsourcing: 

1. Onshore outsourcing

Onshore outsourcing implies outsourcing software development to a company located in the home country.

2. Nearshore outsourcing

Nearshore outsourcing implies outsourcing software development to a company located in the neighboring country of the same time zone.

3.Offshore outsourcing

Offshore outsourcing implies outsourcing software development to a company located in another continent with a different time zone. 

Types of Software Development Outsourcing Models

1. Fixed-Price Contract Model

This outsourcing model involves entrusting the end-to-end management of your software project to the outsourced team. The outsourced team assumes complete control over the planning and execution of the project. In this model, the price and deadline of the project are agreed upon by both parties. If your project requirements are precise and deadlines are fixed, you can opt for this model.

2. Time and Material Model

In this outsourcing model, the client pays for the hours’ resources spend to develop a specific project. You can go for this model if you have small or medium projects. This model is also ideal for a project with no predetermined requirements and requires only limited resources.

3. The Dedicated Development Team Model 

In this model, the client hires a dedicated development team of specialists such as developers, designers, QA analysts, business analysts, project managers, etc., from the outsourcing company that acts as the client’s extended team. Here, the client pays a fixed monthly salary to the hired specialists, where the vendor handles all onboarding and administrative aspects. Plus, the client gets complete control of managing each team member. This collaboration model is ideal for long-term projects with unclear requirements. If your in-house team lacks the specific expertise required to handle large in-house projects, you can rely on this model.

Now that you’ve understood software outsourcing inside out, it’s time to check out a few software development outsourcing services

  • Web development outsourcing
  • Product and application development
  • UX Design
  • Software architecture
  • Feasibility study
  • Consulting
  • Software Testing
  • Quality assurance services

Top Reasons to Choose Software Development Outsourcing

Some organizations seek software development outsourcing to save money, while others take its help to diversify and innovate. Every organization has different reasons. Here, we’ve outlined the top reasons to outsource software development for your company.

1. Time to Market 

Time to market implies the duration between the inception of a product idea to the time it is launched in the market. Businesses must reduce this gap. Any delay in launch can give your competitor a first-mover advantage and make your idea futile and redundant. 

Hiring a reliable outsourced team can help you reduce this gap and launch your product in the market much quicker. 

2. Cost Benefits

It is less expensive to hire outsourced developers and pay them hourly or on a fixed-cost project basis. On the other hand, hiring in-house developers will require you to arrange for office space, set up an entire development infrastructure, manage recruitment and training costs, and pay for the monthly salaries of permanent in-house developers. 

3. Fast Innovations

Innovation is the key to success in the IT industry as it evolves rapidly. It may be challenging for your in-house team to develop their skills in new technologies and help you innovate. With outsourcing, you can bring new skills to the team and gain innovative ideas for project development.

4. Access to Superior Tech Talents Worldwide

One easy and efficient way to deal with the skills gap is outsourcing development. You’re not bound by geographical locations when looking for talent with outsourcing. You can reach out to hundreds of third-party vendors around the globe who are the most skilled to handle your custom software development projects. They apply their technical expertise and know-how to deliver a high-end product.

5. Flexibility to Scale

If you are into the IT business, you need to ensure that you have the best software developers. But, what if you run a textile business and need to develop inventory management software or may require warehouse management software? In this case, your software development needs will be temporary, and you need a flexible team of developers. 

But if you hire permanent in-house developers, you have to keep them with you even when there’s an off-season for software development. Outsourcing comes to your rescue in such situations. It allows flexibility to scale up and down. You can hire developers when you need them with absolutely no commitment.

Also Read: How Do Custom Software Solutions Help Startups to Grow?

Wrapping Up

Finding innovative and cost-effective ways to bring your product to the market faster is the need of the hour in the software industry. Outsourcing helps big-time in accelerating your software development process while saving development costs. 

So, do you wish to leverage a talented workforce to build cutting-edge software solutions and boost business growth? Get in touch with a reliable software development outsourcing company like Capital Numbers. We craft market-defining digital transformation solutions for companies worldwide using the latest technologies and world-class expertise. To explore our Software Development Outsourcing Services in detail, Schedule a call with our experts today!


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