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Software Development
When to Choose a Software Development Company for Outsourcing Software Development 4

When to Choose a Software Development Company for Outsourcing? 

software development company

As technology continues to play a major role in our lives, traditional businesses are faced with ever-increasing demands for the use of newer technologies from many stakeholders. If you are an owner of said businesses, one thing is certain: the need for digital transformation is inevitable, so it is best to be proactive rather than reactive. Maybe you are considering working with a software development company right now, but are still unsure. Fret not, while the beginning stages can take some getting used to, the end result is more than worth the trouble. That is, if you’ve done your homework when it comes to finding the best partner who can take your business to the next level.

Why is Outsourcing Software Development So Popular?

Cost constraints:

Arguably the most popular reason why anyone would consider outsourcing software development. Businesses live and die by the bottom line, and any cost that can be avoided is more money to be made. Unfortunately, software development is often expensive, especially when custom-made, and most of that cost comes from labor (paying developers, designers, project managers, etc.). 

This is where certain businesses have an advantage when it comes to cost because of their location and access to cheaper labor, especially those that are based overseas. In special cases that require a domestic technology partner to satisfy regulations, a software development company can still offer a better price by being based in smaller and less expensive cities and locations.

Lack of in-house expertise:

As we’ve established, it’s hard to do digital transformation when there are no technical people in your company to begin with! Even the thought of hiring someone to take care of such an undertaking is difficult for all parties involved, both the employer and the employee. 

While the cost of hiring is no doubt higher than outsourcing, it is also a long process that takes trial and error. A non-tech employer would have to brush up on some knowledge about the field in order to effectively communicate and work with an employee who is technical. And from the employee’s point of view, they might feel pressured if it is a big project, and they are the only person working on the project or even when they are in a small team.

It is very easy for communication to break down between the two parties. The employer might fail to convey their expectations and what they want, while the developers could not properly explain the technical feasibility and potential challenges that might come from the project’s requirements and the employer’s ideas. At any point in the process, miscommunication can occur and cause frustration for everyone. It takes the proven expertise of a software development company and real-world experience to combat these potential challenges.

Tight deadlines:

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Safe to say nobody likes a tight deadline

The time you take to find and hire the right people for your software development team is time that could be spent on your main business, your bread and butter. This is especially true if there’s a business goal that you need to achieve in a short period of time, from a couple of months to a year. Maybe market forces have forced you to adapt and impose a deadline that would not be feasible without external help.

Hindsight is indeed 20/20. But instead of looking back at the past and laying blame, it is much more productive to view this as an opportunity to improve your current processes and a chance to stay on top of the competition. This is especially true if they are also in the same boat as you.   

Need for scalability:

The famous tech investor Marc Andreessen once said that “software is eating the world.” It has been 12 years since this bold claim and time and time again, he has been proven correct. Software has allowed some of the biggest and most influential companies in the world to scale and dominate their competition. “Big Tech” owes much of its success to the “near infinite” scalability of software. Even long-established businesses like the airline industry are now faced with difficulties as their existing legacy system could not keep up with the massive increase in travel demands.

The need for scalability is not unique to just big businesses and market leaders, it permeates throughout the market and often shows itself in the most unexpected times and places. The demands of the market change with technological advancements, and what works today might not work tomorrow. Nobody is perhaps more familiar with this looming challenge than those who are on the ground and engaging with customers and clients on a day-to-day basis. 

Focus on core business activities:

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The need to focus on activities that generate value and profit  

Another point that we have yet to touch on is that when your attention is divided between digital transformation and core business activities, your business as a whole suffers. Even if your attempt to build internal tech expertise proves to be successful, the time it takes for such a risky bet to pay off is an opportunity for your competitors to come in and steal away your business.

Much of this is dependent on the capability of your business and industry. For some, they might find the potential long-term benefits to be worth the initial investment but for others, it would be too much for their business. Ultimately, the choice is up to you as a business owner. 

When to Outsource Software Development?

When you have a good understand of your project requirements

Having a good understanding of your project is critical for its success. Software projects can fail before the first line of code is even written due to poor planning and misguided requirements. Before approaching a software development company with your project idea, here are a couple of things for you to consider:

  • Type:

What kind of software do you need? Is it a web app, a mobile app, a desktop app, or something else? What are the main features and functions of your software? What are the technical requirements and specifications of your software?

  • Time:

How soon do you need your software to be delivered? What are the milestones and deadlines of your project? How flexible are you with the timeline of your project?

  • Team:

How big do you want your team to be? Do you need a dedicated team? How do you plan to communicate and collaborate with your team? Do they need to be located near you?

  • Scope:

What is the size and complexity of your project? How many users or customers will your software serve? How much, and how often will they use the software? How many modules, components, or pages does your software have? How will your software integrate with other systems or platforms, if applicable? Are there similar softwares that you want to imitate and improve upon for your project? 

  • Budget:

How much money do you have to spend on your project? How do you plan to allocate your budget among different aspects of your project, such as development, testing, deployment, maintenance, etc.?

  • Cost:

How much will it cost you to outsource your software development project? How do you compare the cost of outsourcing with the cost of developing software in-house or using off-the-shelf software? Do the benefits gain from custom software justify the higher cost for your business?

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Wireframing is a popular technique to help identify the project requirements

While not a definitive list, these questions should start you on the right path. A good outsource software development company will spend a decent amount of time early on to help you identify the business goals of the project, and how the software goals can help you achieve them. They will walk you through many of the more technical questions such as scope and choosing technical implementation that can feasibly deliver on the software goals and in turn, business goals.

>>> Read more: The ultimate guide to hiring company doing app development in Singapore 2023

When you have a good grasp of the outsourcing partner

Once you have identified a real need and capacity for the software project, it is time to do your research and create a rough list of outsourcing partners. There are many avenues to conduct your search, most obviously on search engines. But you can also be more creative and look at review sites, tech forums, social media groups, referrals etc. After this first step, you should have a selection of software development companies to choose from, let’s say 10 for a nice round number. It’s time to refine further. 

Besides looking at their portfolio and certifications, which any company worth their salt will proudly display, you can also ask for references of current and past clients to contact them for a more unfiltered and “real” look at the outsourcing partner’s quality of service and performance as a whole. And if the potential outsource partner declines to give out this information for whatever reason then maybe that’s a good sign to stay clear and not use their services. 

Beyond the awards and accolades, transparency and communication should be the number one priority you should look and test for in an outsourcing partner.   

Things to consider

  • Their location:

When choosing an outsourcing partner for software development, it’s important to consider their location. Time zone differences can impact the ability to communicate and collaborate in real time. Language barriers and cultural differences can also affect communication and understanding. It may be helpful to choose a partner located in a region with a similar time zone and culture to minimize these challenges.

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Vietnam is a popular choice for software outsourcing

For example, suppose you run a finance company in Asia. Naturally, you would want your company to be based out of places like Hong Kong or Singapore, the finance hubs of the region. Let’s say it’s Singapore. Then your first inclination would be to go on Google and type into the search bar “software development company in Singapore” to start your search. Seems reasonable enough, but may we suggest a savvier option? If you look further out into the APAC region, countries like Vietnam and India are well-known for offering the best bang for your buck while having the convenience of sharing a similar timezone and culture as your company location, which is definitely worth the consideration.

  • Their niche/specialization:

This might sound like a no-brainer, but the software development company you work with should have experience in the specific technologies and industry relevant to your project. This will ensure that they have the necessary skills and domain knowledge to deliver high-quality work. Look for a partner with a proven track record of success in similar projects.

Beyond the technical aspects, a company with relevant domain knowledge will have a better understanding of the industry and its specific requirements. This can help them to quickly identify and address potential challenges ahead of time, resulting in less time and effort wasted and faster project completion. With enough domain knowledge, they can understand the lingo of your field and better communicate with you as they work on the project, minimizing misunderstandings and improving overall collaboration throughout the process.

  • Their work culture:

The work culture of an outsource software development company can affect your project in many ways. For example, a work culture that values clear, timely, and respectful communication will better convey expectations, goals, and feedback, and avoid misunderstandings, conflicts, and delays.

Having a standard of excellence, innovation, and customer satisfaction can motivate them to deliver high-quality products or services that meet or exceed your standards and requirements. You want a work culture that promotes trust and fosters mutual respect and honesty. Transparency is critical in building a strong working relationship, especially one that is remote and not bound by physical location. 

  • Their terms and conditions:
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Always help to examine closely when it comes to T&C

Arguably the most important point to consider once you’ve found a potentially suitable outsource partner for your project. When examining the terms and conditions of an outsource software development partner, you should look out for some key points that can affect the success of your project, such as:

Services to be provided: The contract should describe the development services that you expect your partner to provide, such as the project’s scope, specifications, deliverables, timeline, and quality standards, as previously mentioned. 

You want to be as thorough and detailed as possible. In the case of errors or defects, how should they be handled? What is the procedure for reporting and resolving issues, the expected amount of time for testing, and quality and performance guarantees?

Payment terms: Payment method, schedule, and the amount that you agree to pay your partner, as well as any penalties or incentives for late or early delivery, or exceeding or falling short of the quality standards; they should all be specified. 

Intellectual property rights: A sticking point for many companies. The contract should clearly define who owns the intellectual property rights of the software and its components, such as the source code, documentation, and design, and how they can be used, modified, or transferred by either party. Typically you, the client, would wholly own the rights to the software but other arrangements can be made to fit the needs of all parties involved. 

Confidentiality and security: It should be clearly stated how the outsource software development company will protect your confidential and sensitive information, such as your business data, trade secrets, and customer details, and what measures they will take to prevent unauthorized access, use, or disclosure of such information. This is especially important for software in healthcare, finance, consulting, and other businesses that typically handle such sensitive information.

Dispute resolution: Even in the best of times, conflicts and disputes can arise so you need to take that into account. The contract should cover how you and the outsource tech partner will handle any disputes or conflicts that may arise during or after the project, such as the applicable law, jurisdiction, arbitration, or mediation process, and the remedies or liabilities for each party.

To Outsource Or Not To Outsource?

For any traditional non-tech business, all this talk about digital transformation may seem intimidating but it does not have to be that way. By choosing the right tech partner, small and medium-sized enterprises such as yourself can leverage the advantages of technology without having to overinvest in hiring, training, and managing an in-house team. Outsourcing can help save you time, money, and resources while giving you access to a global pool of talent and expertise. 

To find out more about how you can supercharge your business with software outsourcing and stay ahead of the competition in the digital age, please reach out via our contact page to receive further consultation. 

Thanh Tram

Thanh Tram

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