Ultimate Guide to Pick a Software Development Outsourcing Partner in 2020

software development outsourcing partner

Over the past few years, India has become one of the best countries for Software Development Outsourcing. For companies looking to outsource to India, it is now very easy to find a list of companies that develop software. However, how would one go around selecting a company to outsource? Here is your answer to that. We will share all the details you need to keep in mind while selecting your outsourcing partner.

What is Outsourcing

In simple terms, outsourcing is obtaining service from an outside supplier via contract. Let us take an example of software development outsourcing – A company hires another company to complete and be responsible for software development. Now, the question arises why the company hired an outsourcing partner when they could have hired an in-house team. These are business decisions to be taken seriously.

Let us assume you are looking to develop new software or work on existing software. If you are going for in-house software development option, you first go about hiring the team for developing the said software. You need to hire software developers, project managers, business managers/ analysts, QA testers etc. Once the hiring hassles are over, you need to provide them with training, and then keep track of their salaries, tax, infrastructure investments, etc.

Therefore, in-house software development is usually an expensive and time-consuming venture. At the same time, if you are going ahead with outsourcing the said software, you will just need to go through the initial hassles of hiring a partner. You would need to select the right partner from the ones available. The advantage is that you will be able to access a more global skill set and get the job done while you focus more on your core business processes.

Pros and Cons of Outsourcing


  • You now have access to an international talent pool. For any category/ technology, you are looking for, you will be able to find the best.
  • Reduce cost. Cost for software development is lesser in Asian and Latin American countries because of lower wages.
  • You can now focus more on your core business processes if you are not an IT company.
  • Because of the above reason, you will take less time to market.
  • Flexibility when it comes to scaling up and down. You can hire a team only when your requirement is there.


  • You only have partial control. That is if you are not going with a professional and reliable outsourcing partner.
  • You may lose crucial information during the back and forth communication unless you make sure the company you are collaborating with is professional, has good communication and project management.
  • It is difficult to trust someone with whom you have not collaborated before. You can sign an NDA with the outsourcing partner and you are good to go.

Types of Outsourcing

types of software development outsourcing

There are three main types of outsourcing:

  • Onshore outsourcing – When you are outsourcing to a company in your own country or region.
  • Nearshore outsourcing – When you are outsourcing to a company in a different country or region within the same time zone.
  • Offshore outsourcing – When you are outsourcing to a company in a different time zone. This is the least expensive outsourcing option.

How to Select your Outsourcing Partner

Start by defining your goals and requirements. Document the requirements. Do ample research and figure out the prospective companies you can outsource. Research about these companies and figure out their backgrounds, expertise, etc. Get references and review previous clients. Assess the experience. Check if the company has generalists or specialists. (It is always good to have software specialists instead of generalists because of their expertise.)

Compare communication skills. Check the time zone difference and make necessary arrangements. Interview the prospective outsourcing partner and if needed, give them small tests. Once you have decided which outsourcing partner to go with, sign a NDA with them. You can sign a formal agreement for the development of your software post finalizing everything.

Below are the different outsourcing models you can go ahead with:

  • Fixed price contracts – Both you and the outsourcing partner agree on a fixed price for end-to-end management of the entire software development project. You can choose this one if all the requirements are clear and agreed upon from the beginning and you do not see much changes from the requirements you have already shared.
  • Billing on a per hour basis – Where you would be paying the outsourcing partner for the time spent on the project by their team and for the cost of the materials. You can choose this one if you have a vague idea regarding your requirement and you know that the requirements are bound to change along with the development.
  • Dedicated development team – When you are hiring a team from the outsourcing partner which would act as an extension of your current team. You can choose this one if you are looking for long term development and maintenance and support requirements.

Why Outsource to India?

Asian countries are known for lesser software development costs. When you take the case of India, the talent pool in the country is high. The number of Software graduates remains high and each year, the number of graduates added to the workforce keeps increasing. This keeps the labour cost lesser and the quality higher. India is also the second-largest English speaking country in the world. This means you do not need to worry about any communication gap.

If you are looking to outsource software development or an idea you have in mind, feel free to get in touch with us here.


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