A Guide to Software DevelopmentOutsourcingChoose the right technology partner for your business

Table of contentChapter 1: Introduction

Chapter 2: Outsourcing Software - Service and Business Models

Software Development Outsourcing

Outsourcing Business Models

Outsourcing Service Models

In-House Development

Onsite Model

Staff Augmentation

Software Development Outsourcing vs In-House Product Development

Offsite Model

Dedicated Team Model

Offshore Model

Project-based Model

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Regulatory and Compliance

Customer Reviews

Chapter 4: How to Collaborate with anOutsourcing Software Development Company

Chapter 5: Pricing and Engagement Models

Sign Non-Disclosure Agreements

Check Company’s Awareness With Risk Management

Ensure You Are Acquainted with the Pricing

Set Up Communication Channels

Develop Trust With Your Outsourcing Partner

Chapter 3: Selecting the Right Software Outsourcing Company

Expertise and Experience

Communication and Management

Creativity

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Chapter 1

Introduction

Software Development Outsourcing

In-House Development

Software Development Outsourcing vs In-HouseProduct Development

Custom software development is an immensely complex process and there are two ways you can approach it: in-house development and outsourcing.

Software outsourcing is a practice for businesses and organizations to handle some or all of their software development needs to a third-party vendor. This could be an individual freelancer or a software outsourcing company.

In-house development refers to conducting software development operations within a company by hiring a team of software engineers. A firm uses its employees for development purposes instead of outsourcing.

In-house development is a conventional and extensively used approach. Outsourcing, on the other hand, is relatively new and has seen a significant boom in the last five years.

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Current trends clearly show that companies prefer outsourcing over in-house development. For instance, according to a recent study by Statista, the IT outsourcing industry in the US alone is 132.9 billion dollars in the year 2020!

Here are a few reasons why software development outsourcing beats in-house product development:

For an organization to develop software on its own, dedicated human resources and IT infrastructure is required that may lead to high costs. On the other hand, due to tough competition in the market, outsourcing companies offer friendly costs to their clients and ensure product delivery on time. So in comparison, the outsourced product development is cost and time-effective.

Software development outsourcing companies keep up with the latest technology and trends to stay relevant in the market. On the other hand, organizations need to allocate separate finances on hiring the new staff with expertise on the latest technologies and/or training of their staff.

• Outsourcing software is cost and time effective

• You can find expert teams, proficient in the latest technology

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Outsourcing software development ensures high quality and flexibility to the customer as an experienced outsourcing company makes correct technological decisions giving high-quality products. It has dedicated infrastructure, services, and a qualified team to work with.

Data security issues are termed as one of the major drawbacks of outsourcing software. However, keeping data in-house doesn’t make it completely safe from the vast cyber-threat landscape. A wise decision in this regard is to outsource software product development to a security-aware organization following data security protocols.

• Outsourcing provides quality and flexibility in software development

• A good software outsourcing company will ensure data security

“To conclude, outsourcing software seemsa better choice provided that the outsourcing

company keeps up with the technological trends,is security-aware, and understands the

customer’s requirements/culture.”

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Chapter 2

OutsourcingSoftwareService and Business Models

Outsourcing Business Models

There are various ways to outsource software development; outsourcing overseas versus outsourcing to domestic companies. While offshoring, factors like culture, time zone, and language barriers are not much important. You don’t care if the company you are outsourcing to operates from the other side of the globe. The only thing that matters is the expertise they provide. However, in nearshoring these factors are taken into account along with data protection laws. A team of skilled outsourcing app developers is present on the client’s premises.

Here are a few outsourcing business models:

The two parties work closely with direct communication with each other. In this model, implementing project changes is easier as compared to other models. This is similar to the client choosing an out-staff model for outsourcing. In this case, the client is responsible for managing teams, their working times, and, in some cases, salaries. As for the app development company, they would only allot manpower to their client.

The software team resides near the client’s location. This location can be within the same locality, region, or even state/province. The logic is to be in closer proximity to the client than in the offshore model. The software team has a more ‘free-hit’ role since the project requirements are not comprehensively defined. The development team can discuss to decide what is best for the client.

Onsite Model

Offsite Model

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This is when the outsourcing team is neither staying with the client nor near them. Instead, this project team is situated in a different country or global region. Such teams require complete details of the project before they begin. Since offshore outsourcing teams can even be continents away from the client, the best methods of communication are through emails, phones, and video calls.

The pricing of the dedicated team model depends on the number of members and hours. To hire software developers temporarily to augment the capacity of your organization; this is staff augmentation. The range of reasons due to which companies may choose is:

Offshore Model

Staff Augmentation

Outsourcing Service Models

• To increase workforce capacity

• To gain specialized skills

• Form a bridge until permanent hiring takes place

• For strategic reasons, where the team is flexible and gives a competitive advantage.

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In this model, the outsourcing company provides you with a dedicated team of experts that can help you build your software product. These experts include software developers, designers, UI/UX experts, QA engineers, etc. This team ensures that the software product development process is running smoothly. The outsourcing company might provide you these professionals onshore, or they may also work remotely according to your requirements and feasibility.

In the project-based model, you hand over the entire project to the outsourcing company. Now it’s the company’s headache to manage the outsourced project development cycle. You just need to set up a budget and time for your project.

Dedicated Team Model

Project-based Model

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Chapter 3

Selecting the Right Software Outsourcing Company

To ensure successful a successful outsourced project, you must check the following factors before selecting the company:

Expertise and Experience

Communication and Management

Creativity

You do not want to give away your software project to a bunch of rookies. Check the portfolio of the software development companies. Evaluate the expertise and experience of the teams you are going to work with.

How are the outsourcing company representatives communicating with you? Are they listening to your ideas and apprehensions? Do they seem cooperative and helpful? How do they resonate with your organization’s culture? Furthermore, keenly observe how they manage time to respond to you, how effectively they communicate. These factors are crucial for your project to be a success.

Software development teams should be creative. Evaluate the creativity of the outsourcing software development company. See their portfolio, website, marketing strategies, blogs, and product demonstrations. See how differently they work from the rest.

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Regulatory and Compliance

Value for Money

Customer Reviews

It is crucial to check whether the outsourcing company takes care of regulatory and compliance. Do check if the company understands and implements security standards such as GDPR or HIPPA.

Take quotations from different software development companies and observe which outsourcing company provides the best value for money. Furthermore, remember that time is also money. So set a feasible budget and time with the third-party product development organization.

The customer’s review tells a lot about the organizations. Check client testimonials and customer reviews on third-party review forums and websites as well. Reach out to other clients of the software outsourcing firms and learn about their experience working with the company. You can also ask the company if they have worked with clients from your country. In such cases, it would be easier for them to work under the same time zone and collaborate with your team easily.

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Chapter 4

How to Collaboratewith an OutsourcingSoftware DevelopmentCompany

Once you find the right company to outsource your software development project; it’s time to make sure everything is clear before collaborating. Here are some important things you should take care of:

1. Sign Non-Disclosure Agreements

2. Check Company’s Awareness With Risk Management

When you involve an outsider in your business, even if it is a new employee, your confidentiality risks increase. Outsourcing is no exception. Some entrepreneurs or businesses do not want to share confidential data about their technology. That’s why they are afraid of hiring dedicated technical teams.

While choosing your outsourcing partner, think about the risks and problems that might pop up during the development. And ask the outsourcing vendor if they have the resources and experience to manage these problems. Because it is important to conduct a risk analysis of every project to identify and manage risks.

However, the easiest and most common method to mitigate these risks is to sign a nondisclosure agreement (NDA). Such agreements set out terms and conditions under which proprietary data is to be kept confidential. This data usually includes the development process, source code, and any discussions related to the product. The agreement specifically highlights the consequences of disclosing confidential data to any third party. A signed agreement is necessary to ensure that your data and project information is secure.

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3. Set Up Communication Channels

4. Ensure You Are Acquainted with the Pricing

5. Develop Trust With Your Outsourcing Partner

Ask your outsourcing team, the communication channels they use. You can create your communication channels as well. For instance, your Slack channel or maybe weekly phone calls.

You do not want your project to stick in the middle because of disagreements over finances between you and the outsourcing partner. Different companies offer different pricing models and you need to identify the models that best suit your needs. You also need to find out the additional expenses that might occur and who will be covering those costs.

When you hire professionals to do some work they will need the liberty to do things their way. Micromanaging and over-controlling them can destroy their productivity. So you must trust your team and let them work their way and keep you informed about the development of the project.

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Chapter 6

Pricing andEngagement Models

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Key Milestone

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Timeline

Cost Estimates

Full Time

Hourly

Part Time

Fix Gigs

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Founded ten years ago in Toronto, Canada, InvoZone has become a leading software outsourcing company helping businesses grow. Team InvoZone is a culturally diverse family of skilled and passionate professionals aiming to give life to your ideas.

We provide technology solutions and dedicated services including software development, eCommerce development, UX/UI designing, quality assurance services, DevOps, security consultancy, and digital marketing. We cater to a variety of industries - eCommerce, Fintech, Healthcare, Education, Food & Groceries, Travel & Tourism.

We believe that growth and success are always mutual. Together with our amazing clients, we strive to add value to businesses.

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hr@invozone.com +1 (647) 548-7866 www. invozone.com