5-Step Proven Process How to Outsource Software Development

Consider your needs and requirements when deciding whether to outsource software development or construct an in-house team. Outsourcing may be the best alternative if you are on a tight budget and need to get your product to market fast. It can free up time for you to focus on other elements of your organization. It provides you access to professional developers specializing in areas like mobile development and cloud computing. The following steps will increase your chances of success while outsourcing software development, whether you hire developers nearby or on the other side of the world.

1. Deciding between onshore, offshore, and nearshore outsourcing

When selecting an outsourcing partner, the location of each potential vendor is an important consideration that can affect not only price but also communication, efficiency, and the overall quality of the end product. Companies that outsource software development have recognized three categories depending on company location to assess and weigh options: onshore, offshore, and nearshore outsourcing.

  • Onshore Outsourcing (also known as onshoring) is the process of selecting an outsourcing partner situated in your country.
  • Offshore outsourced (also known as offshoring): Selecting an outsourced partner in a distant country.
  • Nearshore outsourcing (also known as nearsourcing/nearshoring) is the process of selecting an outsourced partner headquartered in a nearby country. 

Although onshore and offshore outsourcing opportunities are common within a country, the benefits of nearshore software development involve cost-effectiveness and allow the company to get access to a broader range of high-quality service providers and outsourcing partners.

2. Choosing the right model 

Staff augmentation, managed teams, and project-based outsourcing are the three types of relationship-based outsourcing. You can choose the finest model for your needs, budget, and long-term goals.

Staff Augmentation

This technique entails temporarily bringing in people from another organization to accomplish a project. This is done mostly to bridge your organization’s talent gap. The outsourced personnel works under your supervision and assists your team in reaching the finish line.

Managed  teams

The managed teams approach is a cross between staff augmentation and the project-based model. With managed teams, you hire a whole team of professionals to handle some or all of your projects, including Business Analysts, Designers, QA Engineers, front-end and back-end developers, and others. This team will frequently collaborate with your in-house team and will report to your in-house Project Manager. Unlike the Staff Augmentation approach, this methodology often does not require you to manage individual employees on a daily basis. 

Project-based model

This model delegated team management to your outsourcing partner’s Project Manager, who will collaborate with you to set timetables and communicate your requirements to their colleagues. Project-based outsourcing does not imply relinquishing all control. You will continue to have a say in crucial choices, such as feature development and priority. You will not be responsible for managing the outsourced crew. It is the least invasive approach available.

3. Shortlisting Companies 

Once you’ve decided which country you’ll outsource software development to, you may restrict your search. An in-depth internet search is the first step in vetting software development firms. Also, talk to your industry friends and colleagues who have outsourced software projects. Their expertise might assist you in shortlisting a few agencies with experience in your industry. If they are familiar with what you do and have a track record of achievement, your chances of success will skyrocket. Some need you to list the specifications and budget for your project, while others require you to contact specific providers with your requests. You may frequently look through profiles and set filters based on area, budget, and other variables.

4. Evaluate Providers

Once you’ve narrowed down your suppliers to a chosen few, it’s time to interview and evaluate each one more in-depth. Here are a few things to think about.

  1. What is the size of the development firm? Do they have enough developers to meet your requirements?
  2. Does the company have prior experience with the technology that will be used in your software product?
  3. What software development approaches are they willing to employ in response to your requirements? 
  4. Does the organization have prior experience with implementing Continuous Integration/Continuous Delivery (CI/CD) pipelines?
  5. What is the company’s overall English proficiency?
  6. Does the software outsourcing firm meet PCI-DSS, GDPR, or HIPAA compliance standards?

5. Sign the contract and start

Once you’ve found a software development nearshore outsourcing partner who meets your needs, the next step is to draft agreements such as:

  • NDA (Non-Disclosure Agreement)
  • Services Level Agreement (SLA) Master Services Agreement (MSA)
  • Work Statement (SOW)

 After everything has been approved, the final phase in the software development process is to select communication routes for tracking development progress.


It is critical to ensure the security of your data when outsourcing software development. This entails collaborating with a partner who has a proven track record of data protection and employs industry-standard security procedures. Whether you want to build a SaaS company or develop internal software, outsourcing software development to the proper partner is cost-effective and can result in high-quality solutions.