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10 Tips to Successfully Outsource Software Development

 / March 15, 2019

Successfully Outsource Software Development has long been an effective way to do business, especially if it’s in the tech industry. According to a survey conducted by Deloitte, companies hope that their outsourcing partner will solve several business issues including cost-cutting (59%), technology capacity (47%), service quality (31%), etc. not to mention that they can concentrate on developing their core profession (57%) rather than spend too much time on building a website or app.

Everything, however, has 2 faces like a coin: opportunity and risk. In 2007, a survey from Price Waterhouse Cooper revealed that “69% of software development outsourcing deals fail, in whole or part”. If you need some examples then here they are: IBM-Queensland deal was one of the biggest outsourcing failures. This resulted in a $1.2 billion loss and a legal battle. In 2012, Royal Bank of Scotland once scared the crap out of their customers when keeping them from withdrawing money and checking their account “thanks” to a failed software update.

software outsourcing tips
What happened with IBM – Queensland deal?

To help you make it in the few 31% of those successful cases, here are some tips to successfully outsource software development that people at Designveloper think you may need to take action.

1. Good software development outsourcing strategy comes good results

One can never take part in any activity whether it is small or big without a good plan/strategy. In a study written by Cody Miller (Portland State University). The top three challenges in outsourcing a product are changing management in an organization. Poor project management on the software development outsourcing partner side and poor quality of delivered software product.

Recommended reading: Top 20 Best IT Outsourcing Companies in 2022

To avoid those three and many other risks, there are various types of strategies that are suggested to apply in the software development outsourcing business and your decision may depend on your company’s core goal. For example, money-driven, product-first, user-first, etc. However, thanks to its adaptability, the outsourcing-life-cycle process model developed by Sara Cullen here will help you a lot in planning detailed steps, and foresee risks and opportunities during the procedure.

After analyzing the outsourcing procedure of more than 100 companies and enterprises. The Cullen Group has conducted these 9 concise building blocks in an outsourcing-life-cycle process model:

software development outsourcing
The nine building-blocks in an outsourcing-life-cycle process model by Sara Cullen.
  • investigate: Building block 1
  • target: Building block 2
  • strategies: Building block 3
  • design: Building block 4
  • selection: Building block 5
  • negotiation: Building block 6
  • transition: Building block 7
  • manage: Building block 8
  • next generation: Building block 9

The model has been learned and followed because it is helpful for discovering and gathering information necessary to develop an effective strategy that is visible to both parties so that the two organizations can achieve their own goals.

2. Choose the contender that is most suitable

outsourcing software tips

There are two main ways to find yourself an outsourcing partner:

  • Ask for recommendations from your friends, colleagues, other partners, etc. It is a faster approach to find verified and trusted ones. However, your consideration may be affected by bias in favor of the suggester.
  • Look for the company on Google and scan its portfolio. You may have to spend more time to find a perfect one but there are more choices to look at.

One way or another, you will eventually find a partner. What you should pay attention to here is that a software development outsourcing provider may work on many projects but it does not mean that they surely have enough knowledge and ability to help you with the product. As you already know, a mHealth app and an e-commerce app is not an apples-to-apples comparison. If you don’t wanna take the risk, make sure you try an experienced one.

If you are looking for a multi-industry experienced outsourcing partner then we at Designveloper have developed several projects which are such categories as healthcare, education, finance, marketing, etc. You may have a closer look here.

3. Have your own tech experts

If you’re already a software development company (SDC) then obviously, it is easy to talk about business and tech with your future partner and have the best deal with them. However, provided that your business is not a tech-based enterprise, you’d better recruit a team or at least one person owning comprehensive technical knowledge.

Recommended reading: What Are Outsourcing and Offshoring?

The reason behind this is sometimes Google cannot explain how things work and you are not able to handle it yourself too. And lack of technology insight may lead to 2 big issues: 1, you may be cheated by your own software outsourcing company due to the knowledge gap; 2, miscommunication could happen during the process.

software development outsourcing company
Don’t make an outsourcing deal without a technical expert.
Even a giant technology company like IBM has ended in such a big legal scandal so please be really careful. Once an issue happens, chances are that you may lose a big bag of dollars like Queensland or your customers will not be impressed with the service and leave your business. Both consequences equally damage your company in terms of finance and reputation. Having a business/technical expert in your team is a good move to build a strong and practical plan for the software development outsourcing deal. On the other hand, you as a manager/CEO will have more time to focus on your main task. This expert is going to take on the responsibility of an IT manager, a CTO, a project manager or a product owner: becoming a bridge between the two parties, helping them to communicate effectively, solving technical problems, etc.

4. Always ask for details in software development outsourcing

During the proposal step, it’s crucial to question your contenders. It’s free, so take the chance to get to know how they do business as much as possible.
On one hand, a well-prepared company will get ready for everything to gain trust. And prove that they are into details and have enough technical or business knowledge to be a quality partner. There is no better way to define a perfect contender than a detailed questionnaire. On the other hand, the questions you provide will help them connect the dots and may have a better insight into the project.

The questions may be about the partner itself, their working procedure, business knowledge and if possible, their technical abilities.

5. Frequently check your product

Once you and your software development outsourcing provider reach the deal. It’s time to put all the blueprints to real business. One big note you have to give scrupulous attention to is testing and checking your product frequently. Your technical guy will play a crucial role in this step. They need to cooperate and point out what is not fit or missing from the plan.

software outsourcing tips

When you engage in this activity closely, you give your plan a chance to be in the right direction, your product. Whether it is an app or software, definitely will be launched in time. (maybe late a bit but it wouldn’t be another disaster like the IBM-Queensland deal).

Soon enough there will be a milestone that your business needs its own software whether it’s for the internal team or for your customers. In case you don’t want to set up a technical in-house team then we recommend you look for a software outsourcing company. This vendor will either profit your business by saving many types of costs and increasing productivity.

But is this the first time you try outsourcing software? If so, here are 5 tips from Designveloper to make things work.

6. Have specific planning for the project

No business could survive without defined goals and objectives, especially when you are planning to do something big like software outsourcing.

software outsourcing
Image: SoftwareSuggest.

When performed precisely, planning does not only give your partner a better insight into the project but also helps both parties evaluate the quality and productivity of the work. At the same time, this crucial task might save us from unimportant tasks and OT hours.

Furthermore, a clear set of objectives can define the necessary resources and tools for each milestone of the project.

More importantly, provided that your company has established proper objectives, it will result in better alignment of work between the two organizations.

To set objectives successfully, companies can use the SMART framework: goals must be specific, measurable, achievable, realistic, and time-bound. For example, in case you are planning to develop an e-commerce app, then one of the important objectives could be “Payment feature (VISA, Paypal) should be deployed on June 15th, 2019”.

7. Do some research

Of course, researching is a must before starting any project. However, when it comes to software outsourcing business, companies need to inspect a lot more, from your project then the partner to the type of technology you are going to use, etc.

software outsourcing
Image: Interact Intranet.

First, let’s talk about your future outsourcing partner.

Everything you need to do at the moment is to list out all the criteria that the contender should have. For example:

  • Which country/area they should come from?
  • How are their language skills?
  • Which roles should this team have?

And then grade them with your list of questions by taking a closer look at their web, portfolio, social network sites such as Facebook, Twitter, LinkedIn, Dribbble, etc., or ask around in your industry for reputation.

The deeper you dig, the more successful a partnership might be. Furthermore, this task also helps to make a better deal in terms of the cost, when you perfectly know about your outsourcing vendor.

When you have the shortlist of contenders, take a trip or make video calls to understand them better. This time, you should consider their flexibility, their past projects, and the quality of their code. Don’t forget to question their technical skills as well as their understanding of the business.

Related article: Software Development Company: 7 Tips to Choose the Great One

Second, let’s talk about your project.

Your initial idea is not always that good so doing research to see whether this one may work well, in reality, plays a big role. You should analyze these things before getting down to business:

software outsourcing
Image: Harvard Business Review.
  • The possibility of your idea.
  • Your target audience.
  • The core features of your software.
  • Industry’s restriction, data security & other regulations.

And here is an important recommendation: if you are not so familiar with the project’s business, it’s time to hire a business insider to gain domain knowledge from them.

One of Designveloper’s biggest clients is developing a mHealth product. We all know that tech guys understand code but how about medicine stuff? Agh, even if your team is a skilled one, it does not mean that they have a precise and accurate understanding of the medical industry.

8. Have your partner carry out the project estimation

Do you know that one of the most common causes that make many projects failed is inaccurate estimations? A classic example you may already know is IBM – Queensland deal. In 2007, IBM pitched a crazy bid of $6 million to develop an application to administer payroll for Queensland’s health department.

Shortly after that, the company faced a lot of hidden business obstacles and technical challenges. In the end, the application could not work properly and the cost for this project was 200 times higher than the estimation.

This case study has shown you how crucial an estimating activity is to software outsourcing development companies and their clients.

In other words, a business needs estimations to plan and prepare its resources such as humans, time and money. Thus, when planning estimations, we are able to find risks, opportunities, and hidden obstacles which may happen during the process. The more detailed and insightful your estimations are the more chances that your budget and time plan fit the reality.

Furthermore, you may find it useful that estimations will help your team or you and your partners reach agreements and commitments about requirements, proposed functions, etc. easier.

On the other hand, you and your team are able to check if your soon-to-be outsourcing partner has enough knowledge and experience in technology. The team that is good often comes up with more detailed and comprehensive estimations because they have done numerous projects to master this.

However, please note that the estimation is not a free service. Some vendors may charge you approximately $300 – $1000 for detail estimation and consulting. This fee may be subtracted if the company and the outsourcing vendor reach the final deal successfully.

You know what? Right now you can try to estimate your idea with Designveloper here.

Want to know more about project estimation? Read it here.

9. Adopt Agile

It is essential to mention that the philosophy of Agile is all the tasks, whether it’s big or small, all must be completed by a small group of people. As a method developed from Agile, Scrum works the same.

While Agile is an umbrella term used to talk about several software development approaches. In a smaller scale, Scrum is seen as a popular Agile project management framework that helps teams, companies or organizations work more effectively in terms of internal/external collaboration and final results by operating projects unit by unit (task, sprint, etc.). The ability to learn from experience and improve the processing time after time is what makes Scrum become one of the most adopted sub-set frameworks of Agile.

As if it was only yesterday when there were mere software development companies and technical-related enterprises implementing Scrum in their organization. According to a report in 2018 about Scrum by Scrum Alliance about practicing Scrum worldwide, 94% of respondents use Scrum in their working process. These participants came from many different industries such as advertising, healthcare, education, etc. The expansion of Scrum happens due to its effectiveness and helpfulness which works across industries. Partially, the success of Scrum lies in these six specialties:

  • Product quality is optimized as it is developed.
  • Your product is improved and updated frequently and continuously.
  • Scrum saves you a lot of money.
  • Increase transparency.
  • Encourage teamwork.
  • Get feedback frequently.

For more details, please visit our blog: “The Importance of Scrum to a software product”.

10. Appreciate the importance of communication

Do you know that communication is the initial cause of various issues?

This is just not any common problem. Communication can affect your performance, raising and resolving issue ability, etc. And the possible outcomes are conflicts, complaints, poor quality products, missed deadlines, etc.

software outsourcing
Image: Unesco.

And our first resolution for this is not to make any assumptions when collaborating. In fact, even you and your colleague could get the wrong idea about each other. That’s why we should question and verify confusing information. And in return, you must give your outsourcing partner a detailed explanation for every task or request.

Second, you as a client must also consider this business as a two-way street. It’s not always your partner’s mistake, so don’t raise complaints like “They don’t understand us!”.

Last but not least, if the communication issue is really happening then it’s time to hold a meeting between the two parties to align each other understanding.


We hope this article could help you with executing an excellent outsourcing deal. And if you are looking for a high-quality software outsourcing company then Designveloper may be the best choice! Our goal is to deliver the best and most cost-effective software services to our clients. Designveloper’s services range from web/app design and development to VOIP.

Designveloper recommends to you if you are looking for a perfect outsourcing partner for your future project. But hey, before you leave, let’s take a look at our portfolio to see if we are the most suitable one for you. Our work stretches from mobile application building to website development. Across industries like fin-tech, health care, education, etc.

Author: Huyen Pham.

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