BusinessSoftware and Outsourcing Guideline for Executives
Matt Sadowski
CEO @ Custom Software Development Expert
Marcin Sadowski
CTO @ JS and Web3 Expert
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Introduction to software development outsourcing
It doesn’t matter if you are the CTO, IT Director at an enterprise-type company, IT executive in a small, medium-sized company, or a SaaS start-up owner with a team of a few people onboard. Doubts about hiring or involving internal staff vs. outsourcing the entire development team are common for companies at all levels.
Software and outsourcing essentially means involving a third-party company such as a mobile application development outsourcing company, web app development company, or, in general, an external IT services provider to do the particular software development project instead of engaging a significant part of your internal IT app development department or team to the particular IT initiative requested by yourself, by you business department, board members or other sponsors of the project. In the beginning, it can be said that this approach saves money and time and gives access to skilled and experienced developers. This is a common tactic for companies, whether big or small, to develop new software and apps or enhance their current digital products, such as mobile apps, web apps, legacy systems, etc., to stay ahead of the competition within their respective markets.
The global outsourcing market was valued at $92.5 billion in 2019, with an expected compound annual growth rate (CAGR) of 8.5% from 2020 to 2027. Outsourcing the development of specific functions like IT allows companies to focus on core business goals. The IT services and business process outsourcing market is even more prominent at $466 billion as of 2021 and is projected to reach $655 billion by 2028.
The outsourcing industry has seen sizable growth in recent years. Overall spending reached over $700 billion in 2022 as businesses increasingly leveraged external partners. Similarly, business process outsourcing was forecasted to reach $212 billion in 2023 (we are waiting for statistics updates from 2023), accelerating significantly from 2019 with a projected 19% cumulative gain. Companies expand their use of technology, and they use third-party services to help them benefit from specialized skills and app development to reduce costs. Companies are increasing the use of web or mobile app development outsourcing to improve productivity in various areas. Indeed, outsourcing app development is becoming a trend among companies these days as the primary motive, according to Deloitte research, is claimed cost savings.
Here are some reasons why outsourcing development is essential now:
In our guide to outsourcing, we would like to present you the pros and cons of this approach, show you the different aspects, better and worst sides of this topic to give you full knowledge before making a strategic decision about outsourcing a particular IT project to IT software vendor and service provider.
Benefits of Software Outsourcing
There are several key advantages to companies choosing to outsource app development or web app development. Let's evaluate them point by point.
1. Specialized skills, as well as technology access
Outsourcing app development presents a unique advantage in terms of specialized skills and access to cutting-edge technology. In web and mobile app development, companies often specialize in specific technologies, tailoring their expertise to excel in particular domains. At Mobile Reality, we take pride in our specialization as a blockchain consulting and full-stack JavaScript company, leveraging the dynamic and versatile capabilities of JavaScript frameworks: ReactJS or VueJS for frontend development, NodeJS for backend development, and React Native for cross platform mobile app development. This approach is mirrored in the industry, with other firms showcasing prowess in areas such as C#/.NET or languages tailored for embedded software development.
Furthermore, outsourcing companies are specialists in their chosen fields and remain abreast with the latest technological advancements and trends in both tech and design. This ensures that the outsourced development team possesses up-to-date skills and knowledge crucial for delivering contemporary and competitive applications in today's fast-evolving digital landscape. By partnering with outsourcing companies, businesses gain access to a reservoir of expertise and technological resources that might otherwise be inaccessible, significantly enhancing the quality and relevance of their app development projects and keeping the technology gap of their software products at a minimum.
2. Reduce software development cost
When companies outsource mobile application development or web development projects, CFOs and board members can expect substantial cost savings compared to hiring developers locally in high-wage markets like the United States and Western Europe. According to recent industry surveys, the average hourly rate for a mobile app developer in the US ranges from $100 to $200 per hour, with senior developers commanding over $175 per hour. In Western Europe, average rates are marginally lower - typically between $90 and $ 150 per hour. These cost ranges depend on the sources, but you can take it as an average number to have some awareness about the web or mobile application development pricing.
However, regions like Eastern Europe and Asia offer highly skilled development talent at significantly discounted hourly rates. On average, the cost of hourly rates in Eastern Europe is between $40 to $90, whereas in India, the average rates vary from $15 to $75. Well, other Asian countries like Vietnam also have discounts on hourly rates, which range from $20 to $50. When extended to a complete app development project with numerous developers, the cost contrast can inspire significant savings of 50-80 percent in certain circumstances. If you would like to know more about pros and cons of offshore software development don't hesitate to check our article on this matter, available under this title: Onshore vs Offshore vs Nearshore Software Development Outsourcing.
3. Project kick-off
There are several reasons why internal development may have extended timeframes. However, creating a group from the start requires a considerable amount of time. Advertising and filling up job vacancies can take a lot of time, and it may take months before a new employee can start working. Also, within the company, teams are often faced with disagreements, internal issues, etc., while vendors such as mobile application development outsourcing companies or web app development agency who get hired from outside the organization have no stake in it and only follow the task they’ve been given. By collaborating with experts outside of the company, businesses can launch their new products faster and begin seeing profits more quickly.
App development outsourcing company is usually prepared to take on new projects in a relatively short time since it gets the request from the Client. Being prepared for the new project is part of their business. As Mobiel Reality, we are usually able to start a new project in 2 weeks' time.
4. Scalability
As a Mobile Reality and one of the application development outsourcing providers, we are also aware that the requirements of a project can change over time and in result we offer various resourcing models to meet clients 'needs. We keep a talent pool that helps us steadily adjust developer capacity, either up or down, frequently on a weekly basis driven by sprint demand. Thus, for instance, if a client is preparing for a significant release and needs extra QA resources, we can provide dedicated testers during the period needed. On the other hand, sometimes there isn't a need for so much workforce after a launch, so the size of the team can be decreased. For most initiatives, we can find qualified developers within two weeks.
This flexibility is required to be closer to customers and understand their existing needs. Team size varies depending on the progress of our product roadmap. Working as a part of a team helps students distribute tasks more effectively, which allows them to be more productive in their work. We assist our customers in getting information from specialists on a regular basis through our consultants. By being flexible, it's easier for us to adjust to changes in demand quickly. Through the establishment of specialized teams, we aid our clients in accomplishing more within the given timeframe.
5. Focus on core competencies
One of the most significant advantages of outsourcing app development is the ability it grants clients to concentrate on their core competencies. When companies choose to outsource, they entrust the technical complexities and nuances of app development to specialized firms like Mobile Reality. This delegation allows the client company to redirect its focus and resources towards areas where it excels, be it innovation in its products or services, market expansion, or enhancement of customer relations.
At Mobile Reality, our expertise in app development ensures that our clients receive top-tier, specialized application development outsource services. This specialization translates to high-quality app development and frees up valuable time and resources for our clients. They are no longer burdened with the intricacies of managing a complex development project, navigating the ever-evolving landscape of technology, or investing in specialized, often costly, technical skills. Instead, they can harness their efforts and resources to develop their primary business areas further, secure in the knowledge that their app development is in expert hands.
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How to Choose the Right Software Outsourcing Company?
Selecting the right software development services to deliver desired mobile, web, or cloud applications requires rigorous evaluation within the software outsourcing process, covering several considerations, from technical competencies to data protections and pricing models.
Technical Expertise and Experience
Assessing an app development agency's technical expertise and experience is pivotal in choosing the right partner for your tech innovation. At Mobile Reality, we pride ourselves on our fintech and proptech expertise, our advanced skills in blockchain technology, and our comprehensive proficiency in full-stack JavaScript development. However, verifying these claims is a crucial step for clients. We recommend looking at the web or mobile app outsourcing company's portfolio of completed projects, client testimonials, and case studies. These can provide tangible proof of their capabilities and the breadth of their experience.
It’s also beneficial to consider agencies with different specializations. For instance, some companies might excel in developing AI-driven applications, while others could have a strong background in android app development outsourcing services, healthcare platform apps, or e-commerce app development. This diversity in the market ensures that you can find an outsourcing application development company whose expertise aligns perfectly with the specific needs and goals of your project.
In addition to our expertise in Mobile Reality, the app development landscape is rich with specialized firms. Some may boast exceptional skills in native app development for specific platforms like iOS or Android, while others might be renowned for their cross-platform development capabilities using frameworks like React Native or Flutter. The key is to identify an agency whose strengths align with your project’s specific requirements and whose portfolio and client feedback corroborate their claimed expertise.
Design and Development Quality
Choosing the right app development agency necessitates a thorough evaluation of design and development quality. This aspect goes beyond mere aesthetics; it encompasses user experience, functionality, and the overall robustness of the application. At Mobile Reality, we understand the criticality of these elements in the success of an app.
The initial phase of product development, often conducted through workshops, is an excellent opportunity for clients to validate a vendor's design skills and development quality. These workshops provide a collaborative environment where ideas are conceptualized and strategies are formed, offering a window into the agency’s approach to design and problem-solving. At Mobile Reality, we utilize this phase to demonstrate our commitment to quality and our ability to translate client visions into tangible, high-quality products.
Equally important is the Quality Assurance (QA) process. A dedicated QA team, well-versed in testing both mobile and web applications and digital platforms, is essential. At Mobile Reality, our QA team is integral to our development process, ensuring that every product not only meets but exceeds both industry standards and client expectations. This team employs a comprehensive testing strategy that covers everything from basic functionality to complex user scenarios, ensuring that the final product is not only bug-free but also delivers a seamless and engaging user experience.
Communication and Accountability
Companies must select the right outsourcing partners for software engineering. This decision affects the entire business, and it should be made carefully. The long-term value of the partnership depends on factors like transparency, collaboration skills, and accountability. Therefore, companies must exercise their critical thinking skills while considering their outsourcing options. Evaluate the level of communication skills during the initial conversations. Individuals from distinct cultures must understand each other to communicate without friction.
The reviews that the client has left previously can give an insight into the reliability, but the rating given by them was compiled So that individuals can better understand the differences between the types of governments and can make informed decisions. Collaboration can be more productive when more people get involved.
Data Security Measures
When selecting the right agency to outsource application development, whether it is a mobile development company, web development company, or embedded software development agency, understanding their data security measures is crucial. While having ISO certifications can be a significant indicator of a mobile app development company's commitment to data security, it's important to note that these certifications, though highly beneficial, are not the only benchmark of a secure and reliable data management system.
A comprehensive approach to data security should include advanced storage protections, robust encryption mechanisms, and secure data transmission protocols. Access restrictions and user permission systems are essential to ensure that sensitive data is accessible only to authorized personnel of software, web, or mobile app development team, reducing the risk of breaches. Additionally, a well-structured backup system is vital for efficient data recovery.
Agencies should also demonstrate their knowledge of relevant data protection laws and regulations. Familiarity with international standards like GDPR and sector-specific regulations such as HIPAA in healthcare is "good looking" and nice-to-have element in the proposal.
As a Mobile Reality company, we have assisted our clients multiple times in ensuring compliance with GDPR, HIPAA, and SOC2 regulations and procedures.
Pricing Models and Rates
The higher costs of in-house app development compared to savings generated by outsourcing development represent significant drivers for various software dev shops like web and mobile app development companies. There are several pricing models offered by external software companies and actions that the particular company can take in order to engage external vendors, such as:
hire a dedicated development team to undertake app development projects based on project time and materials (T&M) basis,
outsource app developers and extend the internal, in-house software development team with them (team augmentation),
outsource the entire project, where the result is a ready-to-use digital platform for the external software development company on a fixed-price basis.
Moreover, the capability of mix-model cooperation can be in favor of the particular software house, which is not very common for these types of companies in the market.
Additionally, checking rate cards for various software development roles like mobile app developers, frontend developers, backend developers, DevOps engineers, UX/UI designers, Project Managers or QA specialists (manual testers or testers specialized in automated testing), security experts, and support staff is obligatory point in vendor assessment. Initial rate card verification allows us to verify if the particular outsourcing mobile application development company is at a cost level that we can afford, even if quality and the whole client-centric approach of their offer will be on the top-notch level.
In conclusion, it has to be mentioned that partnering with outsourcing companies is more than selecting the best technology or trying to reduce cost fo development by outsourcing to countries with low labor costs. It is better to take a more careful and thoughtful approach to avoid pitfalls from partnerships and projects, such as hybrid app modernization initiatives, or more advanced stuff, such as bringing legacy software systems back to life. This can be done by considering specialized skills, quality, communication synergies, execution quality, and security-first approaches.
Software outsourcing models
There are various engagement models that IT executives can consider when deciding whether to opt for mobile application or web application development outsourcing. Each option has its advantages and disadvantages, which should be carefully evaluated to determine right outsourcing model to the project needs, budget, timeline, and business goals.
1. Project-based or fixed-price model
This project-based mode of working means that we get a business entity that acts as a third-party provider and deals with deliverables as per our project scope given to them while staying in line with specifications. What are terms typically included? This method helps us understand clearly what results we are looking for before we start working on it. Through crafting a clear plan, outsourcing shops can give clients a clearer picture of the cost, reducing the chance of surprise fees. The level of difficulty of a project directly affects the total amount of work done as well as the expenses incurred. The company offers payment only for the work that has been agreed upon as part of the project, which is released in small segments over time. This is based on the scope and complexity of the project.
The Project Model encourages the hiring of external talent to enhance performance, overcome obstacles, and remain within time and cost restrictions. This model is most suitable for applications that follow well-defined guidelines with clear instructions on what the application must do. On the other hand, fixed-scope projects can limit creativity, and there is little room for adjusting priorities throughout the development process. Changing something means that more money must be spent later, which cancels out the amount saved earlier.
2. Dedicated developer teams or team augmentation model
Instead of relying on temporary contract app developers for specific projects, organizations should choose to hire specialists for long-term roles who can integrate with the company's technological development teams. Staffing comprises individuals who are experts in specific areas, such as mobile developers, frontend developers, backend developers, quality assurance testers, DevOps engineers, product managers, and UX/UI designers.
The staff provider is in charge of taking care of all the HR needs, recruiting talented people, managing the resources and equipment, and supporting the app developers. The main advantage of the team augmentation model is access to technologically skilled workers on a temporary basis, ensuring consistent results at reasonable prices, much like having our in-house employees.
This model is beneficial when you need to respond quickly to changing priorities. It's perfect for applications that are important for your business, like digital products. However, having a dedicated development team requires a considerable investment, which may be difficult for smaller companies. However, for businesses that focus on products, outsourcing skilled workers who are familiar with the company's culture and user base can lead to highly successful applications. It is observed that even with fluctuating activities, the costs associated with the development team do not change much.
3. Time and material model
Time and material (T&M) contracts can be flexible solutions that allow companies to pay for only what they need on a monthly basis. Mobile app development agencies, mobile app development services, and app development outsourcing companies have rates that apply. These rates are for the services that are required by businesses and which can be engaged through outsourcing. The rate can be for their services related to HR, admin, development, design, or testing.
The pricing model follows simplified monthly timesheets recording workdays logged, enabling variable costs based on needs. Businesses only fund actual services leveraged, although forecasts should align budgets to utilization trends. While the open model accommodates changes, a lack of delivery commitments means projects could inflate beyond expectations without proper governance.
Evaluating the differences and use cases across outsourcing agencies, dedicated teams, fixed price, and time and material models allows companies to select the methodology and partner relationship that optimizes app development success based on where they are in the product maturity cycle. Prioritizing flexibility, risk mitigation, and realizing ROI from app investment and application development outsourcing guide strategy.
Key Aspects of Application Development Outsourcing
Product design collaboration
Early product design collaboration is instrumental for translating strategic vision accurately into intuitive, user-centric application experiences – particularly with outsourced delivery. Investing upfront in research around target users, workflows and workshops, behaviors, needs, and pain points guides effective planning.
The outsource app development team must partner on conceptualizing key features aligned to primary use cases, mapping out detailed information architecture and interaction models for clean UI/UX design. With design direction sealed, outsourcing talent can commence translating concepts into high-fidelity prototypes leveraging modern frameworks attuned to platform guidelines. Still, most specification details get lost in handovers without methodical requirements documentation. Maintaining ongoing involvement through app development sprints via early prototype access, providing feedback, and reviewing iterated app versions is crucial for desired outcomes.
Project scoping and planning
Effective scoping and planning are vital in custom app development projects, especially when outsourcing at scale. This meticulous process minimizes risks associated with quality, timelines, and budget. At the outset, it’s crucial to break down the project requirements into detailed feature sets and user stories. These should clearly outline each feature's priority, specifications, mockups, necessary data, and integration requirements.
For each functional module, we conduct precise sizing estimates. This includes accounting for the needs of design, development, and testing/QA, with an added buffer to accommodate unforeseen complexities. A critical step is aligning on the most suitable technology stack, weighing the pros and cons of each option based on the specific use case. This helps prevent the need for reworking later in the project.
Our team structure is finalized early in the process, alongside the app development cost, pricing models, and project management workflows. This upfront clarity ensures a smooth development journey.
Ongoing communication/updates
Maintaining consistent and effective communication is pivotal in outsourced app development, as it prevents misunderstandings and aligns goals. To facilitate this, Mobile Reality advocates for daily 15-minute standup meetings. These brief sessions provide status updates across teams, fostering a culture of openness and prompt issue resolution.
Biweekly project and portfolio reviews are another cornerstone of our communication strategy. In these meetings, we discuss key milestones achieved, potential shifts in priorities, new risks identified, pending action items, and the overall health of our working relationship. This regular appraisal ensures that all stakeholders are on the same page and any concerns are addressed proactively.
We also implement strategic tollgates in our development process. These checkpoints are opportunities for demoing software functionality, allowing us to gather early feedback and make necessary adjustments. Peer code reviews are scheduled regularly to uphold quality best practices and to foster a collaborative environment focused on continuous improvement.
Quality assurance testing
Quality assurance testing, conducted by seasoned professionals, is a cornerstone of delivering outstanding end-user experiences. This critical phase should never be undervalued, even in offshore partnerships. At Mobile Reality, we emphasize that functional testing is essential to ensure that the software's behavior aligns precisely with the specified requirements. This includes conducting comprehensive tests that cover typical scenarios, boundary conditions, and negative test cases.
Furthermore, test automation suites significantly influence our quality assurance process. These suites are crucial for efficiently performing responsiveness, compliance, and regression testing, especially at scale. They enable us to maintain high-quality standards consistently across all development stages.
An essential practice in our approach is setting frequent checkpoints for our outsourced teams. This allows for continuously identifying and rectifying defects throughout the app development cycle rather than deferring this crucial task to the User Acceptance Testing (UAT) phase. Such a proactive approach to defect management significantly enhances the overall quality and stability of the final product.
In summary, our approach to quality assurance testing is comprehensive and integrated into every stage of the development process, ensuring that the final product meets and exceeds client expectations and end-user needs.
Intellectual property rights
Defining software licensing, IP ownership, data rights, and confidentiality commitments at the onset of an outsourcing contract sets clear permissions governing asset usage across regions. Ensure scope covers custom code authorship, 3rd party integration rights, handling of sensitive data, privacy policy consents, and permitted usage scenarios.
Institute escrows allowing clients source code access rights if vendor relationships dissolve. Mandate proper code documentation for maintainability—trademark brand assets and patented IP to protect competitive advantage. Enforce info security controls and demand regular audits. Mitigate risks proactively for full control over application innovation intellectual property regardless of outsourcing.
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Managing Outsourced Development
Provide Detailed Specifications
Outsourced software application development projects should be aligned with accurate product specifications from the foundation to minimize miscommunications on expected functionality that derail timelines and inflate costs. Map precise user interaction flows through wireframes depicting each interface's inputs, actions, and visual layouts.
Capture small nuances, annotate critical details, and over-communicate business rules or data considerations easily lost in translations to an offshore partner. This is not the onset of an inmate with domain needs. Itemize every external system integration touchpoint detailing APIs required, data schema mapping, and authentication mechanisms to account for disproportionate efforts.
Set Realistic Timelines
Offshore outsourcing shops need to pay more attention to actual efforts on aggressive, wishful timelines. Enforce planning rigor through work breakdown structures analyzing each functional module, design-development needs down to testing, and infrastructure set-up with total critical path mapping.
Demand historical data benchmarking similar modules builds complexity rather than vague guesstimates. Factor at least 20% buffers, spread thoughtfully across execution stages as a contingency for unplanned issues, including accountability dips. Accommodate adequate time for not just coding but product owner reviews, user acceptance testing, and staging deployments.
Control Scope Creep
Any complex application specification transforms once the build commences, necessitating pragmatic change controls. Require proposed product enhancements or new feature requests to be funneled through a structured evaluation process post-scoping stage.
Demand teams furnish revised estimates detailing isolated and cascaded impacts on budgets and resource demands before approvals to manage additions judiciously. Limit approving any unplanned work items beyond the originally signed-off scope to just 20% of the total budget to force tradeoff decisions, balancing business priorities transparently.
Define Milestones and Approvals
Institute measurable progress milestones assessing software functionality developed matches specifications through rigorous reviews at each product component release stage rather than just UAT at the end. Build testing checkpoints, ensuring staging deployments meet stability, load thresholds, and compliance standards mandated by enterprise security teams or regulators before greenlighting production launches. Tie staging payments directly to the completion of test milestones and release candidate approvals required prior to going live.
Conclusion
In summary, outsourcing software development has its advantages and disadvantages, and these are the challenges that we have to deal with. However, if used effectively, it can positively impact the work. Having clear expectations and recognizing the challenges in a project can help the team work together effectively. It gets more convenient for all team members to monitor the advancement of a project when agile sprints are utilized. If we collaborate during development and create some criteria, then everyone will be responsible, which will encourage us to keep our jobs accountable. It is essential to take a break from a lot of work so that you can manage your finances more effectively. At first, it might seem challenging, but it will definitely be worth it in the end. To achieve higher profits, we need to follow this strategy and work with more efficiency. It's more than just focusing on one of these stages. The most successful app innovations come from a well-balanced approach to all three stages, fully committed to by the entire team.
Exploring the Business Facets of Software Development
The business strategy behind software development is as crucial as the technology itself. At Mobile Reality, we provide a deep dive into the various business models, methodologies, and strategies that drive profitable and efficient software creation. Our comprehensive articles are designed to guide you through the complexities of the custom software development business:
These resources are crafted for those looking to refine their approach to building and managing software projects. Whether you’re contemplating the most effective development methodology, weighing the pros and cons of outsourcing, or deciding on the right pricing model, our insights can lead to informed decisions. Contact our team for a personalized consultation on software development business strategies. We’re here to help you navigate the path to success in the digital product landscape.
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Matt Sadowski
CEO of Mobile Reality
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