Software development outsourcing, in its simplest sense, describes an arrangement wherein an organization opts to hire an external software development company to carry out the software development project effectively. Furthermore, software outsourcing is handing over the control of business projects to a third-party software outsourcing company that’s capable and qualified to handle the task. 

Software outsourcing services could range from developing a tailored solution or developing commercial software for customers. It could involve outsourcing only a particular task within a software development project or delegating the entire undertaking. 

When Software Outsourcing is Needed

  1. If there is a demand for specific tech specialists

The organization’s in-house team may lack some expertise to build the software at hand. Depending on the company’s need, you can opt to hire specific tech stack experts along with QA testers, project managers, and other experts who specialize in specific fields within the software development space

  1. When there’s a need to entrust full software development

This would likely occur for smaller teams. When there is too much work at hand, outsourcing would be beneficial to all who are involved. The entire development process could be entrusted to a reliable outsourcing partner, from ideation to development to scaling. 

  1. When there is a demand for an entire software development team

An in-house team may already have a lot on its plate; thus, a new project may be too much to handle. A whole outsourcing team has the competency to handle every phase of the software development process, from start to finish to avoid overwhelming the members of the in-house team. 

Furthermore, this allows scaling members up and down to meet current demands. The following may be what you need to get the project done:

  • UIX/UX designers
  • Project manager
  • QA Specialist
  • QA testers
  • Mobile or web developers
  1. Scaling an Existing App or Software

An existing software or app that’s beginning to become obsolete would need scaling up. Hiring a software outsourcing team helps implement new functionalities and tech trends, particularly with user experience and safety features. 

  1. When there is a need for a Co-founder or Tech Partner

A startup tech company may need to tap into an outsourcing partner to handle specific aspects of the software development project. Furthermore, a startup tech company may be knowledgeable about the tech hardware but need a partner to handle the software side of things. 

Common Types of Software Outsourcing


This kind involves delegating the software development project within the city or the country. The team could be invited to face-to-face encounters without a problem due to close proximity. 


This taps an outsourcing service provider located in a nearby country. This is a great option if your priority is expertise in skill sets, cost-effectiveness as well as minimal to no difference in the time zone. 


Offshoring means commissioning to distant countries. This could entail time zone differences as well as language barriers. However, this provides access to more expertise and talent, which may not be available in a home shore or nearshore setting. 


This kind involves bringing a software development team back to the home country of the organization. 

How to Avoid Software Outsourcing Risks

Work with Compatible Service Providers

The outsourcing team should align with the goals of the software product and the business. Before partnering with an outsourcing service provider, do your homework first. Work with a service provider that understands your objectives, preferred working modes, and culture. 

Perform research on the work portfolio, in-depth reviews, testimonials, preferred tools, management methodology, and so on. 

Choose the Best Pricing Model

Avoid ballooning costs by choosing the best pricing model. Models include the following:

  • Time and material model
  • Fixed price model
  • Cost-plus model

The most straightforward way to prevent growing costs is the fixed-price model. However, this does not mean that it’s the best option all the time. It’s important to write a detailed contract. This keeps the work scope well-defined and minimizes the chance of unforeseen expenses. 

Prevent Data Theft and Breaches

When working with another business, make sure to take the right steps to protect valuable data. A non-disclosure agreement is a powerful tool if you will have to share intellectual property or code. Also important is limiting access by sectioning off data within your company, and sharing only the information to your outsourcing partner for them to finish the task. 

Go for service providers that have clear security certifications and policies only. Check out their websites and ask them direct questions regarding their security priorities. 

Outsourcing Software Development Models

There are several basics you need to keep in mind before you outsource your software development project. Let’s focus on the client and provider relationship model because healthy relationships drive success. The following are three major relationship-based models. 

Managed Team

In this model, the ownership and responsibility are shared by the client and the service provider. It determines what responsibilities belong to whom. The managed team works independently of your in-house team. Furthermore, a project manager will oversee the daily workflows and operations. 

Staff Augmentation

In this model, the client owns the project from start to finish. Most of the responsibility falls on the client. Hiring tech talent from an outsourcing company reinforces the team responsible for the software development project. 


The outsourcing software development company takes most of the responsibility as well as owns the project from start to finish. Moreover, the team completes the project to the specifications of the client. 


Software outsourcing is a great way to gain access to a wide pool of tech talent all over the world. Furthermore, partnering with an established and reputable software development outsourcing company enables you to move your software project much faster and in a more cost-effective manner.  

For a software development outsourcing project to work, there are again considerations to always keep in mind. Furthermore, it’s also important to weigh the pros and cons of outsourcing a software project.