Why and How to Outsource Software Development

Hans Vallden
November 18th 2019
Outsource software development activities that are not the core element of your business. When properly utilized, outsourcing can help streamline your business operations more strategically and help you gain a competitive advantage.

When to Outsource Software Development?

Here are some typical reasons why companies outsource software development.
The first and most obvious reason is lack of internal software development talent. Most companies don’t have any in-house talent for a good reason – software development isn’t a core competence for them. Even the companies that have software developers may not have talent specific to a required technology or solution. It’s also common that internal software developers are permanently dedicated to other tasks or that work load temporarily exceeds the internal capabilities.
Software has become a fundamental factor of production in many industries. Developers are in high demand globally. Typically this presents itself as local talent shortage which can make hiring in-house developers slow and difficult if not impossible.
In software development, outsourcing can yield the highest quality results most efficiently. Like all knowledge workers, the best software developers prefer working with likeminds to drive professional learning and personal growth. It can be difficult for a company to attract or retain the highest quality talent if software development is not its core business or the company culture isn’t developer-friendly.
Outsourcing software development is the solution when you need access to rare technologies. Many projects require or benefit from the use of a specific development stack or language. There are more than 2000 different programming languages. Any company or person can only master a small subset of them. Learning and mastering a rare technology in-house can take too long. It makes more sense to outsource to qualified specialists who are able to apply the rare technology expertise within set deadlines.
It’s common that an outsourcing partner has accumulated expertise in working with specific industries or types of software products. An experienced partner can leverage its expertise for higher quality software and faster time to market.

How to Outsource Software Development?

1. Go global or play local? Do you prioritize lower cost over prime quality? Are you prepared to deal with potential miscommunication due to cultural and language divergence? Can you accommodate to working at unconventional times due to different time zones? Can you allocate resources to increased project management and supervision? Do you favor Google Hangouts meetings over side-by-side collaboration?
These questions highlight some of the challenges of off-shore software outsourcing.
Off-shoring can be a viable option for the experienced professional buyer. However, its risks and problems are often downplayed in the context of the typical SMB company’s resources. Usually the argument for off-shoring relies exclusively on significantly lower nominal unit price. Keep in mind that productivity isn’t measured by the hour.
A smart buyer focuses on the results instead.
Outsourcing to a local software developer escapes many of the issues of off-shoring. A local partner can integrate to your organization more easily, is familiar with your operating environment, and often better equipped to understand your business requirements. Selecting a local partner also helps duck data security, legal and intellectual property cruxes.
2. Get personal
The selection of a supplier is very similar to employee recruitment. You publish an ad, wait for replies, invite a few applicants for an interview, and make your final decision based on recommendations, psychological tests and the impression you got from the interview.
Yet all too often, software suppliers are selected based only on their written replies, tenders, and résumés. For some strange reason, buyers want to keep the relationship distant up until their final selection.
Yet you are hiring experts to work for you. Résumés alone don’t tell you much about the supplier’s level of expertise or attitude. As a client, it’s worth your while to get a feel of the supplier organization, up close and personal.
3. Don’t bring solutions to the table (bring questions)
How do you initiate conversation when you contact a potential supplier? Do you hand them a wish list of features and give the desired release date?
Remember that sometimes what you want isn’t what you need. Don’t limit your outsourced software development partner’s creativity by presenting them with an itemized list of tasks. Instead, present them your problem, encourage asking questions, and leave room for creativity and fresh ideas.
4. Embrace agile methodologies
Simply put, agile is a method that allows for construction to begin before the result is fully specified down to the last details. For obvious reasons, agile methodology doesn’t work with, for example, building construction. But it’s great for software development as it allows for both minor and major changes to be made to the functions and the architecture of the software throughout the project.
Agile methodologies allow companies to keep a finger on the production’s pulse and work swiftly and adaptively during a project's life cycle. Agile software development produces better results because it’s based on an iterative and participative style of work whereas traditional methodologies require the customer to provide a detailed description of requirements in advance and often miss out on value-adding innovation during the process.
5. Trust and collaborate
Are you trying to compensate for a lack of trust with contracts and processes? How many of your suppliers would you work with based on trust alone – without a written agreement?
You and your software outsourcing partner should be on the same team. If you are not willing to collaborate without reservations and create the software together, you’re not going to get the best possible results. Open and constant communication between the parties is a prerequisite to success.
The road to collaboration heaven isn’t paved with good intentions only. You also need the right tools. Common agile collaboration tools in the software business include JIRA, Basecamp, Trello, and Slack.

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