How to Have the Best Strategy for Software Development Outsourcing Projects?

Joel Pham

Software development outsourcing has been a strategic trend in business growth for years. Some companies even outsource their entire company to others, and that trend is continuing to dominate. But do you understand what is a software development outsourcing project and how to have the best strategy for software development outsourcing projects?

In this article, we explore the important areas of software development outsourcing to help business owners properly plan their IT projects. In the end, we also provide some tips to find the best software outsourcing company that fits your requirements and expectations.

What Is Outsourcing Software Development?

Software development outsourcing is hiring a third-party service provider to handle software development projects. These projects can vary from developing custom software for internal use or developing commercial software for other customers. By entrusting software development services to other outsourcing partners, the internal IT teams can focus on core competencies such as growth and innovation.

What is Outsourcing Software Development? 

It has been many years since software development outsourcing became the strategic move of businesses. Some of the IT outsourcing trends are: 

  • Quality comes first.
  • Focus more on communication.
  • Moving to Cloud.
  • Outsourcing software development is for every business, from small to big.
  • Business core preservation.
  • Cutting-edge technologies application.

Type of Software Development Outsourcing Projects

Choosing the right outsourcing model allows companies to invest in their projects most optimally. Before diving into the details of software development outsourcing, company owners need to understand different types of software development outsourcing projects.

Let’s get into them to get yourself the evaluations. 

Local Outsourcing

Local outsourcing, also known as onshore outsourcing, involves contracting with a service provider in the same city or region as the client’s business.  This could mean a company in New York City hiring a development team also based in New York City.

The primary advantage of local outsourcing is the proximity of the service provider, which can lead to better communication, easier collaboration, and a strong local business relationship. It’s particularly beneficial when the project requires frequent face-to-face interactions or when the client wants to contribute significantly to the development process. However, Local outsourcing has a big disadvantage in that it is more expensive than outsourcing to another country.

Offshore Outsourcing

Offshore outsourcing provides an additional alternative when compared to other types of outsourcing. These types of contracts include operating at a distance from a supplier. It’s always the simplest method to save money on labor and materials. Furthermore, offshore outsourcing will allow you to access a particular skill set better than anywhere else in the world in a specific country. Last but not least, you’ll be allowed to travel freely inside your nation without any limitations

Offshore Outsourcing

Offshore outsourcing might be hazardous if you pick a low-cost supplier. Before committing to a transaction, read the provider’s feedback carefully to prevent this issue.

Onshore Outsourcing

Onshore outsourcing refers to the practice of delegating software development tasks to a company or team within the same country as the hiring organization. This type of outsourcing is often chosen for its advantages in communication, cultural alignment, and similar time zones, which can greatly facilitate project coordination and collaboration.

Type of Software Development Outsourcing Projects: onshore outsourcing

For example, a U.S.-based company might outsource its software development needs to another company or independent team located in the United States. This arrangement allows the business to support local industry and often ensures a higher level of understanding and responsiveness to the company’s needs, as both parties operate under similar legal, social, and business environments.

Nearshore Outsourcing

Nearshore outsourcing is located squarely in the middle of local and offshore outsourcing. By using nearshore outsourcing, you can reap the benefits of both onshore and offshore outsourcing, minimizing their negatives. So, for example, you’ll be in the same time zone, but you’ll benefit from the reduced operating costs in a different nation. In addition, there will be less chance of delays while delivering products. Finally, for entering neighboring markets, nearshore outsourcing is useful and is also the logical next move for companies.

The Benefit of Software Development Outsourcing

Establishing or growing a software development infrastructure can be costly for businesses, particularly startups, due to expenses like recruiting developers and securing extra office space. Opting to outsource to a software development firm often proves to be a more economical alternative than maintaining an in-house team. Now, let’s explore the primary benefits of outsourcing software development.

Cost Savings

Outsourcing software development offers substantial cost savings as one of its primary benefits. Creating an in-house team not only involves salaries but also the purchase of hardware, development tools, and other overhead costs. There’s also the need for ongoing training and team management. Essentially, a complete infrastructure for software development requires a significant upfront investment. Outsourcing mitigates these initial and ongoing expenses considerably.

The Benefit of Software Development Outsourcing: cost savings

By opting for outsourcing, businesses can avoid the expenses associated with hiring, training, and maintaining a physical workspace. In regions like the US or UK, employee costs are notably higher compared to those in popular outsourcing destinations like India, Brazil, or Southeast Asia.

Software development companies in these regions are known for delivering high-quality work at a fraction of the cost, offering a compelling financial advantage for businesses looking to develop software efficiently and cost-effectively.

External Experts’ Assessment

Outsourcing software development opens doors to collaborating with top IT talent globally. This not only ensures your requirements are met but also fosters knowledge exchange, enhancing your team’s skills and understanding. It allows you to select from the best software engineers worldwide, ensuring quality isn’t compromised.

When choosing an outsourcing partner, reviewing their portfolio and customer feedback provides insights into their capabilities. Additionally, their flexible models often mean projects can commence without delay, providing an efficient pathway to leveraging external expertise.

Focus on What You Do Best

Outsourcing software development allows businesses to concentrate on their core competencies rather than spreading themselves too thin. For those not specialized in software development, the task of setting up infrastructure, recruiting developers, and managing a separate team is not only daunting but also time-consuming. An in-house team might struggle with tasks or projects beyond their expertise, leading to inefficiencies.

Focus on What You Do Best

By outsourcing software development, companies can alleviate the burden of an overwhelming workload. Tasks can be segmented and delegated to specialized outsourcing teams, enabling businesses to focus on their strengths and primary operations. This approach not only enhances productivity but also ensures that each aspect of the business receives the attention it deserves from experts in that field.


Outsourcing software development reduces the management overhead associated with an internal team, such as tracking progress, dealing with absenteeism, and constant reminders of duties. This often leads to a more focused and productive environment, as employees spend less time on reporting and more on actual work.

When you partner with a software development company, you typically communicate with a project manager who oversees all aspects of your project. After agreeing on the project plan and budget, the manager ensures everything runs smoothly, freeing you from the need to micromanage and allowing you to focus on other critical aspects of your business.

Latest Technology Access

Outsourcing software development provides direct access to the latest technologies without the need for businesses to constantly update their skills and tools. The swift pace of technological advancement can be overwhelming, especially for companies not specialized in software development.

Latest Technology Access

By partnering with a software development firm, businesses can tap into a global pool of expertise and innovative solutions. These firms stay at the forefront of technology trends and bring a wealth of experience from various projects around the world, ensuring that your software is built with the most up-to-date and efficient tools and methodologies available.

This not only enhances the quality and performance of your software but also gives your business a competitive edge in leveraging the latest technological advancements.

New & Fresh Perspective

When working with outsourcing firms, the differences in the business core, culture, and working style can help you vary your products and services.

During the collaboration, the outsourcing team can offer a wealth of ideas, drawing from their broad experience and different perspectives, to enhance the final product in ways you might not have considered. This infusion of new ideas and approaches can lead to more creative, effective, and beautifully executed software solutions.

How to Choose the Best Outsourcing Software Development Companies?

Finding the right software development outsourcing partner is a complex challenge. When choosing outsourcing software development companies, there are things that you need to take into consideration.

Identify Your Requirements

When selecting the best outsourcing software development company, the initial step is to clearly identify your organization’s specific needs. The absence of well-defined goals is a primary reason for the failure of software development projects. To mitigate this risk, it’s crucial to have a thorough understanding of your project requirements.

How to Choose the Best Outsourcing Software Development Companies: Identify Your Requirements

Clearly outlining your project goals, objectives, and expected outcomes will not only help you understand what you’re looking for but also enable the potential outsourcing company to grasp your needs accurately and propose the most suitable solutions. This clarity in requirements sets a solid foundation for a successful partnership and project.

Provider Experience

When choosing the best outsourcing software development company, assessing the provider’s experience is crucial. The market has numerous companies, each with different levels of expertise and specialization. To ensure a successful outcome, seek out firms that have a proven track record with projects similar to yours. This relevance in experience ensures they understand the nuances and challenges of your particular domain.

Provider Experience

Platforms like Clutch, Glassdoor, and Upwork, as well as professional networks like LinkedIn, can be invaluable for discovering and evaluating companies’ past projects and client feedback. These platforms often provide insights into a company’s technical proficiency, problem-solving capabilities, and reliability. Opting for a company with a solid history of delivering quality work in your specific area of need is essential, as experienced providers are more likely to manage your project with the expertise and efficiency it requires.

Technological Expertise

Those businesses that look for a certain skill set outside their countries should aim at the IT companies that have the necessary expertise. Business owners should examine their proficiency in working with your technology stack, architecture, and infrastructure.  For this, they need to:

  • Create a shortlist of the vendors specialized in the areas of their interest;
  • Prepare a set of questions for the specialists and hold face-to-face interviews with them.


Never compromise on security, especially when dealing with sensitive data such as credit cards or personal information. A trustworthy IT vendor can set an official security policy to monitor all the operations. So in case you’re choosing a software development company and making a bet on security, consider only those IT companies that are compliant with ISO standards.

Portfolio and References

Shortlists help businesses to narrow down the number of software outsourcing companies.  In order to research possible prospects, company managers can go to social networking sites and specialist websites such as Clutch to find out what other people are saying about the companies 


Usually, you might need to look for companies with the lowest costs in order to save more. However, those companies need to come from highly developed IT markets or have high-quality educational infrastructures. Also, they have to be able to communicate in their preferred languages. 

Location and Culture

It doesn’t stop there; when applying global IT outsourcing software development across borders, the culture or time zone is also a thing that you need to consider. To ensure the delivery time, it’s great to have your partners work when you work and rest when you rest. Additionally, they have the same culture as you do to understand what you need deeply. 

Location and Culture

In more detail, here are some best countries for outsourcing software development that you should note down right away. Vietnam is one of the countries that have high-quality software engineering workforces. Every year, a significant number of students graduate from universities specializing in IT and software development. Also, Vietnam has a tradition of being hard-working and kind. Therefore, along with the cheaper cost of software engineers than India and China, it’s very strategic to outsource software development to Vietnam. The average cost per hour for software developers in Vietnam ranges from $25 to $35.

Tips to Have the Best Strategy for Software Development Outsourcing Projects

Although software development outsourcing can help businesses save time and money, it can come with many unpredictable risks. You can only prevent or solve the problems with IT outsourcing by becoming aware in advance. There are six common risks contained in any software development outsourcing project


A software development outsourcing project usually consists of many stages. To get things done well and successfully, communication between all parties is the critical element. The cooperation between companies and outsourcing firms, especially in different time zones, can cause many difficulties. Some of them are cultural differences, language barriers, or working styles. Therefore, there can be significant gaps in communications. 

Reality vs Expectations

Choosing the right outsourcing software development partner is rough. Sometimes, the portfolio posted on websites doesn’t fit reality. The differences can be various from different aspects. The most significant one could be the over-advertising service. In that case, you can waste your time and money. Also, with qualified outsourcing firms, late delivery can happen very often. The reason is that they have many clients to handle. Generally speaking, there are many significant gaps between reality and expectations, so don’t forget to be careful when signing outsourcing contracts. 

The Cheapest May Not Be the Best

If the price is your most concerning thing, then you might need to change your mindset. There are many hidden reasons for the low price. Sometimes, the contracts’ costs might not be the ones you have to pay in total. Therefore, take time to read all the terms and conditions in the contracts as well as discuss with the accounting partners when you’re confused about something. The outsourcing firms also offer you the lowest price as they’re new to the market or not confident about their services. In short, try not to take the price seriously.


Entrusting your business parts to outsourcing organizations is a big step that can affect your people, processes, and systems. A rushed transition can lead to many regrettable mistakes, such as leaking intellectual property or secret methods. So carefully set up the plan to process everything. 

Avoid loss of Business’s Core Value

When applying software development outsourcing, it’s essential to keep your business’s core value or culture. Outsourcing partners can convince or lead you in some ways that are convenient for them. As a result, you can lose your actual core values and culture. Tell them what you want for your business right at the beginning, and try to keep everything in your way. Send people or take time to supervise the outsourcing process to interrupt whenever needed.

Magenest’s Outsourcing Software Development Service – When Everything Gets Easier Than Ever

Magenest is one of the most amazing outsourcing software development partners that you have ever had. With more than 8 years of experience in the field, we’re confident that we can provide you with a world-class service that can meet your expectations. 

Magenest’s Outsourcing Software Development Service - When Everything Gets Easier Than Ever

To build the trust of customers as well as get rid of the hidden cost of outsourcing, we give clients all access to project management through a platform supported by English-proficient AM. Magenest always respects and catches up with clients’ requirements to adjust things as well as eliminate as much as possible the waste of time and money. We have been using Magento Open Source (CE) and Magento Commerce (EE) to successfully handle many projects with big clients such as Heineken and E3D Online.

In conclusion

Finding the right strategy for your software development outsourcing projects can help businesses effectively minimize their expenses and avoid any hidden mistakes in project management.

If you are new to business or just at the beginning step of outsourcing planning. Contact Magenest TODAY to get your outsourcing software development done fast and effectively! Don’t hesitate because there is always a free consultation.

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