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The Complete Guide to Outsourcing Your Software Development to A Third-Party Company

The Complete Guide to Outsourcing Your Software Development to A Third-Party Company

Over the past few years, software development has been growing at a blazing speed, resulting in a more competitive market for businesses worldwide. Amidst the growth and development, outsourcing software development to a 3rd party is one of the most discussed business strategies. According to GrandViewResearch, the IT outsourcing trends have been booming since 2020, as most businesses moved towards making a much more impactful digital presence. In 2020 alone, the valuation of the IT Outsourcing (ITO) market accounted for 77.75% of the overall market. And on that basis, the IT services sector is estimated to be worth USD 100 billion by 2025. If those are the numbers researchers are evaluating, it leaves no room to doubt that software development might rise to the top of all industries. Now that we’ve painted a picture of the importance of IT services in the future, let’s decode more about what is software development outsourcing. This guide will take you through the essentials of outsourcing your software development needs to a third party.

What is software development outsourcing, and how does it help?

All companies, big or small, need to carefully strategize and load their teams with appropriate tasks. That includes delegating your internal team as well as outsourcing for the right requirements to the right partner. So, simply put, software development outsourcing means you get another company specializing in developing software to develop the software of your needs.

There can be numerous reasons for outsourcing software needs. They can be cutting costs, increasing efficiency, filling in skill gaps at your organization, or improving quality. The company needs to identify the purpose of outsourcing before they start looking for a third party.

Benefits of software outsourcing:

  • Access to a larger pool of resources.
  • Cost-efficient
  • Find the right team of engineers
  • Diversify and complement your existing software development team
  • With a new team, you get to access new skills and experiences
  • Reduced risks and improved quality
  • Deliver quicker and minimize time at markets

What are the criteria for choosing the best company for outsourced software development?

Whenever you decide to outsource your software development needs, you will need to find a company that best fits your needs and goals. And while we are progressing with software and software development, we have witnessed a rise in these companies too. That has also added to the challenge of choosing the right one for you among the rest of the market. But how to do that, and what to look for in a company? Here are the top ten criteria for your help:

  1. Understand your needs first before you rely entirely on a third-party vendor.
  2. Find out their relevant experience in the industry.
  3. Ask about support and maintenance services.
  4. Check whether they have fair pricing.
  5. Ensure they are in line with the latest technology and tools and integrate them into the process.
  6. A detailed explanation of the software development method and approach.
  7. Check for their market reputation and gather feedback from your network too.
  8. Check whether they are customer-centric and will abide by your requirements.
  9. Opt for a test or a sample run to verify the durability and quality of the features.
  10. Most importantly, verify their reliability and security.

The Pros & Cons of Software Development Outsourcing


  • Helps you reduce costs
  • Proven workflows and processes for development
  • Quicker turn-around time
  • Gives you enough time to focus on your business goals
  • Improved scalability
  • Access to top talents in the industry
  • Simplifies project management
  • Opportunity to expand and grow


  • Risk of losing control over the project
  • It can cause miscommunication or less communication
  • Less to no control over the development team
  • Security risks
  • Possibility of failure while delivering the software
  • It may raise concerns about the quality.

5 Key Factors to Consider When Outsourcing Your Software Development

Here is a list of 5 major factors to take into account to decide which IT consulting companies will produce the greatest and most stunning results:

  1. Noting your software requirements
  2. Researching the reputation and past experience of the company
  3. Checking their portfolio of projects
  4. Check the technology infrastructure and choose the latest tech and process with agile methodologies
  5. Communicate your needs most clearly and understandably before you close a deal.


Software development outsourcing has one too many benefits. These companies already have a rich experience in project management methodologies, testing tools, robust frameworks and deployment strategies. They ease the pain of going through the process all by yourself and allow you to focus more on your business goals. It is, however, necessary to understand and communicate your needs and choose a partner wisely, whether it is an on-shore partner or an off-shore. After that, sit back and watch your project skyrocket.ent a piece of cake. Scrum and agile methodologies share similar approaches and core principles but have some key differences that separate their use cases. It’s important to know these differences to use them in distinguishing scenarios and use them for a company’s benefit. Let’s look into these two in detail and understand their different working natures.

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