The Latest Guide to Software Development from Leading Software Outsourcing Companies
- 1. What is Outsourcing Software Development?
- 2. 7 Reasons why Software Outsourcing Companies is a Smart Choice
- 3. What are the Different Types of Software Development Outsourcing?
- 4. Software Development Outsourcing – the Process Itself
- 5. The Best Countries for Software Development Outsourcing
- 6. What’s Next?
The technology is evolving at a rapid pace, pushing the software development industry to accelerate to keep up with the changing market demands. As a result, new programming languages and methodologies are introduced constantly. Industry-standard practices become quickly obsolete within a year or even months because more innovative approaches take over. It is obvious that there are skill gaps in the in-house tech team, especially when dealing with emerging technology like blockchain, cloud computing, the Internet of Things, etc. which lead to an emerging global strategy of software development outsourcing services.
Software development outsourcing providers have become so important for businesses, playing a major role in accelerating growth. Businesses of all sizes have adopted software development outsourcing as a global strategy because the expertise of software development outsourcing providers not only fills in the gaps of in-house tech teams but also allows them to focus on core activities.
As you might see from Newwave Solutions’ Success Stories, we are trusted by hundreds of clients across continents, and we are striving to drive the software development industry forward. High-quality outsourcing services like the ones we provide are allowing companies from all over the world to instantly fill any skill gaps in their teams, setting them for digital acceleration in the long term.
If you still have some doubts about the benefits of software development outsourcing services, take a look at this comprehensive guide.
1. What is Outsourcing Software Development?
Software Development Outsourcing, basically, is the process of delegating the responsibility of the planning, designing, implementing, deployment, and maintenance of software to an individual, a software team, or a specialized external agency. Despite the availability of off-the-shelf software solutions, brands often prefer custom software solutions that can help their business build competitive edges over their competitors. Bespoke software development projects are essential for small and medium-sized enterprises, and forward-thinking businesses like start-ups; however, most of them simply don’t have the budget or space to recruit in-house teams, which is why software development outsourcing comes in handy.
Many factors influence the outcome of a software development project such as identifying the project objectives and requirements, creating a detailed and clear software development brief with a specific timeframe and budget, the development processes and procedures, and the most important thing of all is regular communication and feedback among developer team and related stakeholders.
2. 7 Reasons why Software Outsourcing Companies is a Smart Choice
There are many benefits to outsourcing software development, including:
2.1 Faster Deployment Time
Outsourcing service helps shorten the time of development and deployment of the project without compromising on quality because the developers master the principles of software development projects so that they can accelerate your product’s time to market.
2.2 Reducing Costs and Risks
By hiring outsourcing software development agencies, the company only pays for labor based on the project or hour-based which decreases the pressure on commission, and other types of incentives significantly reduce the expense for the company. Furthermore, outsourcing projects to specialized agencies would free up in-house teams to focus on their core business functions and dedicate their time and resources to new services and products which increase cost-efficiency. In addition to that, an experienced team can foresee potential errors through robust testing and QA practices which reduce the potential risks of software development projects.
2.3 Bring in domain knowledge
We’re not saying that your in-house team is not up to the task. In fact, we’d be surprised if they weren’t more than capable of delivering the goods on your next software project. However, the chances are that their skill sets will not be as strong as those of a whole team of highly experienced developers from a software outsourcing agency.
Bringing in fresh minds can help to drive innovation and therefore a better project overall. This can be true for the original developers themselves, the way they work as a team, and the stack of technology that they choose to use.
When a good software development company hires staff, it will be looking to bring in a team with a wide range of skills. They’re not going to want to hire the same person twice, as any fresh head in the team is likely to bring something new and exciting to the table in some form or another. And you can make the most of this by bringing this team in.
These fresh heads could well be niche experts that can help you to understand the market from a user perspective, and this could well prove to be invaluable information. It will take some work to make sure that the team you hire satisfies this, but with the right research and interviewing, there is no reason that you cannot make full use of this exciting opportunity.
2.4 Gain access to world-class talent
Again, there’s no doubt that you can’t bring in top-quality developers through your in-house methods, but the chances are that you will not be able to reach the levels of qualities of a company that dedicates most of its time to find the best talent in the world.
And it’s not just about hiring and firing. Part of the beauty of an outsourcing network is that these companies have a much better chance of bringing in fresh talent on a more ad-hoc basis. They’ll be able to get you the right people for the job from anywhere in the world on a one-off basis with no further obligation if they are worth their weight as a company.
Companies all around the world are bringing in outsourced software developers to help develop the company, even if the aim of the company is outside the tech sphere. Whether it’s a marketing campaign that needs awesome graphics to power it or something more niche such as the in-car entertainment system in a new sports car, outsourced software developers are easily some of the most in-demand people in the world.
And they don’t even need to be in the same country, let alone room! Hiring full-time staff remotely is almost impossible, yet you can bring in some of the finest software development from the other side of the world at the click of your fingers (kind of) on an outsourced basis.
Further benefits apply as an offshoot of this, too. Top talent can not only get you to where you need to be, but they can even make your project better by pointing out any potential flaws or by bringing about innovative new ideas that serve to make the whole project better. This kind of advice really is priceless.
As long as you can utilize project management and collaboration tools, you can reap all of these amazing benefits.
2.5 Increase the flexibility of scaling your project
When have you ever worked on a project that has taken as long as you expected or cost as much as you thought it would? There are always so many unexpected variables that can make a project more expensive, longer, cheaper, or shorter than you thought it would.
At times like this, the best thing to do is scale the project. Having a massive in-house team at the point you realize you don’t need it is not going to save you any money, it’s going to waste it. Not having enough people for the job causes even more of a problem for obvious reasons.
Software development outsourcing agencies, on the other hand, can add or remove team members from the project as easy as you like. This enhanced level of scalability can be one of the richest rewards any CEO or CTO can gain from the whole outsourcing experience, and it is also something that often does not get considered when the decision as to whether to do this or not is reached.
An awesome thing about software development outsourcing is that it can give you a sense of ‘on-demand’ service. Imagine a scale between skills and cost (sure, it’s a loose idea), but this will help to visualize the freedom that you have with this opportunity. Scaling your project as and when you need it has huge benefits for time and money.
A good agency for software development outsourcing will have the ability to take into account the size of your company, the budget that you have, and the technology available (as well as, of course, the overall goal of your project), to put together a bespoke plan that you probably will not have been able to put together yourself, even with the help of a whole bunch of in-house team members.
2.6 Work with a managed team
It’s not just individual developers that can save you manpower, and therefore time and money. Management is a huge part of this too.
Hiring the right manager for an in-house team can be one of the most difficult things you will do with your company, but you don’t have to worry about that as much when outsourcing, as every team will already be managed. You’ll certainly need management to guide the project down the line, but a lot of the weight of management can be taken away from your own company.
It also takes some of the weight away from yourself. There will be no need to swoop around asking for updates, which will give you more time to focus on the overall direction.
2.7 Focus on your core business
And that brings us nicely to the final benefit of working with an outsourced software development company. Being able to focus on your core business will undoubtedly allow you to get a better result overall, as there will be nothing to distract you and lose sight of your original idea. This could well be the most important thing to focus on overall.
3. What are the Different Types of Software Development Outsourcing?
When thinking about your software development outsourcing needs, it is worth getting familiar with the main kinds of software development outsourcing that are being used by businesses around the world. Software development outsourcing can be grouped according to differences in location or how the project is handled.
a. Categorized Based on Location
Homeshoring – delegate software development projects to developers or teams located in the home country or city of the company to conveniently set up face-to-face meetings. This approach ensures the ownership of the project owner and accountability of the development team; however, it is expensive/ Thus, it is suitable for complex software development projects.
Nearshoring – delegate software development projects to developers or teams in a country/ city that is close and can be easily accessible in terms of location from the company. This is the most popular form of software development outsourcing because it meets the demands of project owners in many ways, namely access to diverse skill sets, reasonable costs, similar cultures, time zones, language, and currency.
Offshoring – delegate tasks to distant countries such as China and India which comes with different kinds of pricing for businesses in different sectors and depends on project requirements. This kind of outsourcing service decreased in popularity due to different time zones, language barriers, long transport times, and customs issues which has caused major problems for core business once problems emerge.
Onshoring – move software development tasks from near or offshored back to the same country of the company due to a variety of reasons such as a new partnership opportunity or requiring hands-on involvement of the project owners in the project.
b. Team-based Category
Staff augmentation – delegate the task of building bespoke software and handle the day-to-day running to external providers; however, the project owner will retain control over hiring, firing, team building, and distribution responsibilities.
Dedicated team – the outsourcing software development provider will gather a dedicated team who retain control of all aspects of the project and manage the team’s efforts.
Project-based – is the most popular kind of contract for software development outsourcing in which the client briefs the software team with all their requirements and allows them to make all critical decisions relating to the development with regular reports on the progress.
4. Software Development Outsourcing – the Process Itself
As you know have a clearer vision of the types and benefits of software development outsourcing, let’s dig a little deeper into the process itself.
a. Step 1 – Decision to Outsource
At this step, the company thoroughly examines the needs as well as available resources and skills to determine whether outsourcing is the right choice. It would help if the company can create a checklist to evaluate the skills sets of the in-house team and outsourcing team to identify the gaps in capabilities. Once the needed skills are determined, the company can create a project specification, how it would perform and how the development process should be executed.
b. Step 2 – Choosing the Partner
The company must invest a substantial amount of time and effort to choose a trusted partner who will be the central hub for a software development project. The decision centers around the types of outsourcing – onshore, nearshore, or offshore; shortlist of potential partners; gather recommendations to filter the suitable partner before publishing a Request for Proposal which outline the parameters of a successful software project and invites the shortlisted candidate to send you proposal and price quote. The next stage would involve a comprehensive candidate’s capability based on past projects, detailed proposals, and ability in terms of communication, reliability, and time management to choose the one that stands out.
c. Step 3 – Contract Signing
A proper, legally binding contract is a must to reinforce the agreed details of the project and protect both parties in the event of conflicts and disagreement. The common contracts are fixed-price – one-time price for the whole outsourced software development project; and target cost – suitable for a large-scale, ongoing project with uncertain scope to increase the flexibility of both parties.
d. Step 4 – Implementation
Upon the implementation of the project, the company and development should agree on members of the Project Team, especially the Engineering Manager and Team Leaders to ensure that milestones and responsibilities are met. Also, choosing project management tools to track progress is no less important. There are many available platforms such as Basecamp, Trello, and Jira to support communication between the client and developers through calendars and messaging threads.
In addition to that, while the outsourcing partner gets on with the project, the company should carefully monitor the following aspects:
Risk Management – which is the things that might go wrong in a project, such as employee absenteeism, changes in the market, and customer preference based on which, the company develops a strategy for any bumps along the way.
Software Development Cycle – comprises gathering, system design, analysis, coding, quality control, and testing which would be helpful to understand the process, how it moves from one stage to another, and know what to expect after each iteration.
Testing – is important to make sure the project aligns with the predetermined vision. The outsourcing partner should document each testing stage and list all the issues for further improvement. Most important of all, the project team should consult with the in-house team to make sure the project meets their expectations.
e. Step 5 – Monitoring and Maintenance
Despite the software development outsourcing partner is accountable for the success of the project upon deployment, the ownership belongs to the company initiating the project which means a savvy business should put in place a proper monitoring system to make sure the project progresses as planned in terms of time, cost, productivity, reporting, and so on.
f. Step 6 – End of Contract or Renewal
Commonly, the software development contract is extended or renewed to upgrade the ongoing project (e.g. support and maintenance) or to develop other projects/ services if the IT outsourcing companies deliver good quality. In case, the contract is not extended or renewed, the company should develop exit strategies to ensure proposer transition. It is good practice to build lesson-learned documentation to refer to in the future.
5. The Best Countries for Software Development Outsourcing
Among over two hundred countries in the world, which one is the ideal location for investing your resources in outsourcing services. To target your search effectively, we recommend the following key criteria besides your project’s goals.
Rapidly growing IT market: This ensures a diverse talent pool of IT experts and the government creates favorable conditions for developers to grow and for external companies to work with domestic companies, e.g., an educational curriculum that supports IT training, tax, and regulations that encourage cross-border collaboration.
Different locations and time zones: They are a challenge for enterprises and outsourcing partners in terms of traveling and regular communication which potentially affect the project outcomes.
Languages: Although English has now become the protocol language in the IT industry, there are cases where the native is not proficient in this language. Therefore, it is better to choose a country that can speak the native language of the enterprise or at least be proficient in English.
Cultural differences are challenging; however, there are solutions through respecting each other’s culture while communicating each other’s expectations to eliminate misunderstanding. It would be more convenient to choose partners in a country that share some common cultural norms or understand the cultural norms.
Based on the above factors, we recommend the best 3 destinations as follows:
- Services Cost: 20–40 USD/hour (cited in Glassdoor)
- English Proficiency: Intermediate to Advance
- Time Zone: GMT+5:30
India is the second-largest English-speaking country which increases its competitiveness. In addition to that, there are nearly 3 million STEM graduates annually; thus, there is an abundance of tech specialists who are proficient in app development initiatives – both native and hybrid, machine learning, AI/ AR, GIS, and blockchain technologies.
- Services Cost: 20–40 USD /hour (cited in Glassdoor)
- English Proficiency: Intermediate
- Time Zone: GMT+8
The IT environment in China is rapidly growing, home to some of the leading IT companies in the world, and nurtures nearly 5 million tech graduates each year. However, the limited number of English-speaking developers is a big obstacle for Chinese software agencies.
- Services Cost: 20–40 USD /hour (cited in Glassdoor)
- English Proficiency: Intermediate to Advanced
- Time Zone: GMT+7
In recent years, Vietnam has become an emerging IT outsourcing market for companies in America, Europe, Australia, and Japan due to cost advantages, an increasing number of IT graduates, and software companies.
Recently, the IT outsourcing market in Vietnam has become more attractive than ever due to cost advantages, the talent pool, and its strong technology base. Besides, the government has created a favorable condition to attract investment and collaboration with foreign companies. To be specific, despite having a relatively short time joining the IT workforce, Vietnam has over 400,000 IT engineers and nearly 50,000 annual graduates from 150 IT-focused institutions.
Besides, they are young and being actively updated with emerging technology such as Machine Learning, Artificial Intelligence, and Web Applications. The global real estate adviser Cushman & Wakefield (C&W) ranked Vietnam as the top software development outsourcing location in 2015 for many global partners, including Apple, Bosch, Microsoft, IBM, Intel, Samsung, etc. due to affordable labor costs. The market size is quickly expanding which is estimated to generate US$300 billion in 2025, making it the fastest-growing destination for software development outsourcing services.
Last but not least, the Vietnamese working culture is considered dedicated, passionate, disciplined, and hardworking – which are ideal characteristics for software development outsourcing.
6. What’s Next?
Are you ready to choose to outsource your software development needs? Open yourself to new opportunities for transforming your business and contact a partner for consultation. They will give you valuable consultation for your project and which type of outsourcing and process is best fitted for your project.
Why Choose Newwave Solutions?
At Newwave Solutions, we have over 10 years of completing and delivering software development projects to clients across the globe, both in developed and developing countries. We are among the leading software development outsourcing companies in Vietnam providing high-quality software development outsourcing services and projects of any size and scope, customizing to customers’ needs.
Get in touch with Newwave Solutions now to learn more about our services!