Don’t Start Outsourcing Custom Software Development Until You Read These Tips

Outsourcing software development isn’t always a great idea when you don’t have a professional team and you don’t know how to guide this process. If you have thought about hiring a remote team but have some doubts, answer these three simple questions:

  1. Do you know if your business is ready to outsource your software development?
  2. Do you want to hire an outsourcing vendor for the first time but are still hesitant about where to begin?
  3. Have you already used outsourcing services but had a bad experience and are confused about why the project didn’t go well?

In this article, you will find answers to these questions, learn about the potential risks that might derail your project, and how outsourcing some parts of your business can become a huge advantage.

In 2023, IT outsourcing is expected to generate revenue of $430.50 billion. With an annual growth rate of 8.07% from now until 2027, the market size will reach $587.30bn in U.S. dollars. This shows that businesses are actively using outsourcing services.

Why Can Outsourcing Your Software Development Fail?

Many factors contribute to failed outsourcing projects, but in most cases, poor vendor management, unexpected expenses, and lack of internal communication are to blame.

Clients often fail to specify the goal and desired outcomes of their projects, which has an impact on both their viewpoint and that of the outsourcing company. Without a clear understanding, customers typically modify their demands, which adds time and money to project estimates.

To avoid these situations, the Agiliway experts determined ten factors that are vital to address before outsourcing software development and which will help you win from adopting an outsourcing model into your business.

#1 Clearly Define Your Project Requirements

Before you consider outsourcing, it is necessary to broaden your understanding of the needs of your project. Define your software development project’s scope, objectives, and deliverables. It will be easier for you to effectively communicate your demands to prospective outsourcing partners if you first document the precise functionality, user experience expectations, and technical specifications that you need.

#2 Determine Your Budget

For effective software outsourcing, establishing a budget that is in line with reality is essential. Think about the expenditures that are related to the creation, the management of the project, the quality assurance, and the continuous maintenance. Consider the possibility of various situations and be ready to invest in a partnership that fits within the restrictions of your financial plan while yet guaranteeing high quality and good value.

#3 Assess Vendor Experience
Perform a careful analysis of the experience and capabilities of any providers of outsourcing services. Consider their track record, portfolio, and testimonials from their current or prior customers. Try to find vendors that have experience working on projects or within an industry that is comparable to yours. Their knowledge of applicable technologies and comprehension of the needs of your company will have a significant impact on the outcome of the project.
#4 Evaluate Communication and Collaboration Capabilities

Effective communication and teamwork are essential for a successful software development process. Analyze the vendor’s communication channels and project management tools, as well as their capacity to give timely updates and progress reports. Open and effective communication practices guarantee alignment, cut down on misunderstandings, and contribute to developing a fruitful working relationship.

#5 Examine Cultural Compatibility

The success of business relationships that include outsourcing is heavily dependent on the cultural compatibility of the parties involved. Conduct an analysis to see if the work culture, values, and communication styles of the vendor are compatible with those of your business. Throughout the whole software development lifecycle, having culturally constructive collaboration fosters improved understanding, more cooperation, and more effective problem-solving.

#6 Ensure Intellectual Property Protection

Protecting your intellectual property (IP) is critical when outsourcing software development. Give priority to suppliers that have implemented comprehensive security measures, such as confidentiality agreements and non-disclosure agreements (NDAs). Establish legal frameworks that protect your sensitive information, trade secrets, and ensure that intellectual property ownership is clearly defined.

#7 Review Vendor’s Quality Assurance Practices

Quality assurance (QA) is crucial to ensure that the software meets your quality standards and specifications. Evaluate the vendor’s QA processes, testing methodologies, and quality control practices. Assess their commitment to conducting comprehensive testing, identifying and resolving bugs, and delivering a reliable and secure software solution.

#8 Consider Scalability and Flexibility

Consider the scalability and flexibility offered by potential outsourcing partners. Determine whether they can accommodate changes in project scope, resource requirements, or future enhancements. An agile and adaptable outsourcing partner will provide the flexibility needed to align software development with evolving business needs.

#9 Assess Risk Management Strategies

Identify potential risks associated with software outsourcing and evaluate the vendor’s risk management strategies. Understand how they address potential project delays, cost overruns, and technical challenges. Assess their ability to proactively manage risks and provide mitigation plans to ensure project success.

#10 Arrange Site Visits and Face-to-Face Meetings

When it comes to prospective outsourcing providers, you should always try to meet with them in person and do site inspections whenever feasible. This gives you a chance to evaluate their infrastructure, get to know the members of the development team, and cultivate personal ties. Interactions that take place in person build trust, bolster existing connections, and provide a more in-depth grasp of the capabilities offered by the vendor.


Before embarking on software outsourcing, businesses must carefully consider various factors to ensure a successful partnership. By defining project requirements, evaluating vendor expertise, fostering effective communication, protecting intellectual property, and assessing risk management strategies, organizations can maximize the benefits of outsourcing and achieve their software development objectives. Taking the time to conduct thorough due diligence and make informed decisions will pave the way for a productive and mutually beneficial outsourcing engagement.

If you have some questions or need help, please feel free to contact Agiliway. With over 20 years of experience in the software outsourcing industry, we offer our partners flexible and high-quality custom solutions including business intelligence and big data analysis, web and mobile application development, quality assurance, and the management of remote teams.

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