Software outsourcing has become a massive trend, and for good reason. Even the biggest companies are jumping on board. You have probably heard whispers about outsourcing as well, but what exactly is it?
This article will answer all your questions. We will explain different software outsourcing types and models and give you the 10 best companies for the job. We will also look at strategies for implementing it into your workflow.
Software Outsourcing Explained in Simple Terms
Software outsourcing is hiring an external team or company for some or all of your software development work. This saves you time and money and lets you focus on other parts of your business.
The process starts with identifying your software needs. Then, you select an outsourcing partner and discuss the project requirements. After agreeing on the terms, the outsourcing team develops the software while keeping you updated on progress. Finally, they deliver the completed product for your review and deployment.
To better understand software outsourcing, here are 2 tables that explain it best.
Types of Software Outsourcing
Let’s see which outsourcing method works best for your company’s needs.
| Outsourcing Type | What It Is | Perfect For |
| Onshore | Hiring within your own country. | Those who want easy talks and meetings, value local expertise and might face strict legal rules. |
| Nearshore | Teaming up with neighbors or nearby countries. | Businesses looking for cost savings and easy communication. Familiar culture and quick visits are also some of the other benefits. |
| Offshore | Going far abroad for talent, often across oceans. | Firms open for time zone differences and remote collaboration. Savings are big and you access a wider talent pool. |
Software Outsourcing Models
Unsure which approach to take? This table breaks down different outsourcing models and who they benefit most.
| Outsourcing Model | What It Is | Perfect For |
| Project-Based | You give the whole project to an outside team. | Those with a clear end goal but need the right people to make it happen, especially for one-offs. |
| Staff Augmentation | You add experts from outside to your current team. | Businesses needing extra hands or brains to fill in the gaps, without a long-term commitment. |
| Dedicated Team | An outside team works just for you, like your own crew. | Companies wanting long-term help without the hassle of hiring more employees. |
Examples of Industry-Specific Outsourced Software Projects
Wondering how software outsourcing can help your business? Here are outsourcing examples from different industries to show you how.
| Industry | Types of Software Projects | Purpose |
| eCommerce | Website & mobile app development | To facilitate online sales & manage inventory |
| Customer relationship management (CRM) systems | To manage customer data & improve customer service | |
| Payment processing & security solutions | To securely process transactions & protect customer data | |
| Finance | Financial management software | For managing accounts, transactions, & reporting |
| Blockchain & cryptocurrency applications | To enable secure & innovative financial services | |
| Compliance & risk management systems | To ensure regulatory compliance & manage financial risks | |
| Healthcare | Electronic health records (EHR) systems | To digitize patient records & improve accessibility |
| Telemedicine platforms | To provide remote medical consultations | |
| Patient management & scheduling software | To manage patient appointments & hospital workflow | |
| Technology | Cloud computing solutions | To offer scalable & flexible computing resources |
| Artificial intelligence & machine learning algorithms | To automate processes & extract insights from data | |
| Internet of Things (IoT) applications | To connect & manage devices & data for smart applications | |
| Education | Learning management systems (LMS) | To support online learning & course management |
| Student information systems | To manage student data, grades, & administrative tasks | |
| E-learning content & platforms | To provide educational content & interactive learning experiences |
Top 5 Software Outsourcing Locations
Here are 5 countries where you can find the best talent at affordable rates.
1. Philippines
Known for its strong English proficiency and a growing tech talent pool, the Philippines has become a hub for innovative software development outsourcing.
Expertise: Customer support software, web development, and mobile app development.
Pros:
- High English language proficiency.
- Strong cultural alignment with Western countries.
Cons:
- Time zone differences can affect real-time communication.
- Occasional internet connectivity issues.
2. India
India is a giant in the outsourcing industry. It has a large pool of skilled programmers available at competitive prices.
Expertise: IT support, software development, and back-end systems.
Pros:
- Large, highly skilled workforce.
- Cost-effective services.
Cons:
- Cultural and communication barriers.
- Quality consistency can vary.
3. Ukraine
Ukraine’s education system has a strong focus on engineering and sciences. As a result, it produces highly skilled developers known for their expertise in complex projects.
Expertise: Blockchain technology, AI development, and cybersecurity.
Pros:
- High level of technical education.
- Strong expertise in emerging technologies.
Cons:
- Political and economic instability.
- Smaller talent pool compared to larger countries.
4. Poland
Poland is known for its exceptional educational system in IT and a strong command of English. This makes it a leading destination for outsourcing in Europe.
Expertise: Enterprise software solutions, game development, and eCommerce platforms.
Pros:
- High-quality standards and innovative approaches.
- Good time zones overlap with Western Europe and the US East Coast.
Cons:
- Higher costs compared to Asian markets.
- Limited scalability because of a smaller population.
5. Vietnam
Vietnam is emerging as a cost-effective outsourcing destination. It has a young, dynamic workforce and a growing emphasis on IT education.
Expertise: Mobile applications, software testing, and digital transformation.
Pros:
- Very cost-effective solutions.
- Young, fast-learning talent pool.
Cons:
- Emerging, less proven market.
- Language and cultural differences may pose challenges.
10 Best Software Outsourcing Companies
If you are set on outsourcing your software needs, here are top picks for the 10 best software development companies to help you choose the right one.
1. Genius – Top Pick
At Genius, we connect businesses with the top 1% of Filipino developers. We hand-pick these talented professionals after a rigorous vetting process. This ensures you get the best technical expertise and innovative problem-solving skills for your project. Our risk-free hiring comes with a 6-month talent guarantee.
- Expertise: Blockchain development, machine learning, & cloud computing solutions.
- Services Offered: Customized web development, mobile app development, agile software development & more.
- Pricing: One-time 25% fee.
2. SumatoSoft
SumatoSoft specializes in creating tailored IT solutions to help companies improve their operations and reach their goals. They have experience working with all sorts of businesses, from big companies like Toyota to startups.
- Expertise: Artificial Intelligence, IoT, & software development
- Services Offered: UI/UX design, frontend/backend development, code reviews, QA testing.
- Pricing: Based on developer location and expertise.
3. Arcanys
Arcanys is a Swiss company specializing in finding talented software developers from the Philippines. They can either build a whole software program for you from scratch or add extra developers to your existing team to help them out.
- Expertise: Cloud-based solutions, DevOps, AI/ML, & Blockchain.
- Services Offered: Mobile app development, QA testing, & IT consulting.
- Pricing: Custom pricing starting from $20/hour.
4. Aloa
Aloa connects you with vetted development teams with a free replacement guarantee. They offer a purpose-built platform to track progress and manage tasks. Their project managers provide ongoing support to ensure your software development project runs smoothly. Every 2 weeks, they provide data-backed insights into project progress.
- Expertise: Emerging tech development & enterprise software development.
- Services Offered: Full-stack, front-end, back-end development, & UI/UX design.
- Pricing: Custom project-based pricing.
5. Innowise
Innowise has been around since 2007. It has a big team of developers who can develop anything from mobile apps to complex web systems. They also offer design and quality assurance to ensure your software is polished and works perfectly.
- Expertise: Machine language, IoT, and Blockchain.
- Services Offered: Front-end & back-end development, UI/UX designs, & custom software development.
- Pricing: $50/hr-$99/hr.
6. ScienceSoft
ScienceSoft has been in the business for over 3 decades. With a team of 750+ developers, they have helped businesses across 30+ industries to improve operational efficiency and achieve digital transformation. You can hire professionals for data analytics, cybersecurity, and CRM solutions.
- Expertise: Enterprise app development, cloud solutions, IoT, cybersecurity & data analytics.
- Services Offered: IT management infrastructure, UI/UX design/development, testing services & more.
- Pricing: Starts at $150,000.
7. BairesDev
Founded in 2009, BairesDev connects businesses with top talent from Latin America. They have completed over 1,000 projects which shows their expertise in the field. They are known for their expertise in using cutting-edge technologies to deliver innovative solutions. They have a 91% client satisfaction rate which shows they consistently deliver quality solutions.
- Expertise: eCommerce, UI/UX design, mobile app development, & custom frameworks.
- Services Offered: Agile development methodologies, custom software solutions, full-stack development, & enterprise-level software solutions.
- Pricing: Starts at $55/ hr and can go up to $99
8. Andersen Inc.
Andersen Inc. is a renowned name in the industry, specializing in React Native development for the FinTech sector. With a team of over 190 dedicated professionals, they have delivered 1,000+ successful projects.
- Expertise: FinTech, HealthTech, real estate software, oil & gas IT solutions, & energy software.
- Services Offered: Mobile & web development, custom software development, support, maintenance & management.
- Pricing: $50/hr-$99/hr.
9. The Software House
The Software House is based in Poland and specializes in custom software development, DevOps, and cloud computing. They have expertise in different technologies like Node.js, Laravel, and Java development. The company has delivered over 140 projects.
- Expertise: Fintech, healthcare, & real estate.
- Services Offered: Web development, cloud & DevOps, app modernization, AWS consultancy.
- Pricing: Start at $15/hr.
10. Aalpha
Aalpha is an ISO-certified company with 10 years of experience in custom software outsourcing services. They have served over 900 customers and are known for their customer-centric approach and commitment to quality.
- Expertise: eCommerce, cloud solutions, IoT, & Blockchain.
- Services Offered: IT consultancy, custom software development, and business process automation
- Pricing: Starts at $15/hr.
10 Step Easy-To-Follow Software Outsourcing Guide
Here’s how you can make outsourcing strategy work for you.
Step 1: Define Your Project Scope
Outline your project needs, including goals, features, and deadlines. Use Trello or Asana to keep track of requirements and timelines.
Step 2: Assess Your Team’s Capabilities
Evaluate your in-house team’s strengths and identify skill gaps to determine what outsourcing can complement. Use skills assessment platforms like LinkedIn Skill Assessments or Codility to analyze your team’s expertise and identify gaps.
Step 3: Research Outsourcing Destinations
Look into regions known for outsourcing to find where your project fits best. Consider factors like:
Cost-Effectiveness: Consider outsourcing destinations offering competitive rates without compromising quality. For example, Southeast Asia offers rates ranging from $15 to $30/hour. This offers major savings compared to North American and European rates.
Talent Pool Quality: Look for regions with a strong emphasis on STEM education and a growing tech industry. The Philippines is notable for producing skilled IT professionals. Other regions like Eastern Europe also have robust talent pools.
Language and Communication: Effective communication is key to outsourcing success. Destinations with high English proficiency levels like the Philippines, can ensure smoother project management and collaboration.
Cultural Compatibility: Cultural alignment can influence the success of your outsourcing partnership. Regions that have experience working with Western companies, like the Philippines and Latin America, understand their business practices better.
Political and Economic Stability: Stability matters for long-term outsourcing relationships. Always check that the political and economic conditions in potential outsourcing destinations are stable and reliable.
Legal and Intellectual Property Protection: When outsourcing software development, it is important to protect property rights and data security. Consider countries with strong legal frameworks that protect these aspects.
Time Zone Compatibility: If you need to work together in real-time, choose a location with similar working hours. Nearshore outsourcing has more overlapping hours, while offshore places like the Philippines can provide round-the-clock services.
Tech Infrastructure: Reliable internet and technological infrastructure are essential for hassle-free outsourcing. Research the technological capabilities of each destination to ensure they meet your project’s needs.
Previous Success Stories: Check the outsourcing track record of each destination. For example, Asia takes the lead because of its cost-effective labor. But keep a check on potential cultural hitches. Look for stories in industries or projects similar to yours to see how well they can handle yours.
Step 4: Choose the Right Outsourcing Model
Analyze your project scope and needs and decide whether you need a project-based, dedicated team, or staff augmentation model. Outline your project needs and consult with experts on platforms like Genius. This can help you pick the best model for your project.
| Comparison Factor | Project-Based | Staff Augmentation | Dedicated Team |
| Fixed Scope & Budget | ✓ | ||
| Flexibility in Scaling | ✓ | ✓ | |
| Control Over Team Selection | ✓ | ✓ | |
| Deep Integration with In-House Team | ✓ | ✓ | |
| High Project Management Involvement | ✓ | ||
| Cost Predictability | ✓ | ||
| Short-Term Commitment | ✓ | ✓ | |
| Long-Term Partnership Potential | ✓ | ||
| Specific Skill or Expertise Access | ✓ | ✓ | |
| Full Project Outsourcing | ✓ |
Step 5: Partner with Genius for Top Talent
Genius connects you with the top 1% of Filipino talent, ensuring quality and cost-effectiveness. To start with Genius, sign up on our website. Browse profiles of skilled professionals and chat with them directly on the site to find the right person for your project.
Here are some simple questions you can use to assess the candidates.
- Can you discuss a challenging project you worked on and how you overcame obstacles?
- How do you ensure code quality and maintainability in your software development projects?
- What is your team’s approach to user experience design and usability?
- How do you handle communication breakdowns or conflicts within the team?
- How do you stay updated with emerging technologies and industry best practices?
- Can you share examples of successful collaboration with remote clients or teams?
- How do you prioritize features and functionalities for timely delivery?
- What is your approach to data protection and encryption?
- How do you handle feedback and incorporate client input throughout development?
- Can you provide client references who had similar projects?
Step 6: Sign a Detailed Contract
Sign a detailed contract to secure your project and interests. It should outline the project’s scope, including all tasks and responsibilities. Make sure to clearly define timelines for each deliverable. You can find more details on how to write a software development contract on Genius website or you can directly download the template.
Step 7: Set Clear Communication Channels
Ensure smooth collaboration by establishing effective communication channels. You can use Slack for daily communication and Zoom for meetings.
Step 8: Manage the Project Actively
Monitor progress, address issues promptly, and adjust to stay on course. Project management software like Jira or Monday.com can be very useful.
Step 9: Conduct Regular Reviews
Schedule check-ins to review progress. Provide feedback in every review and adjust plans. Calendar apps for scheduling and Google Docs or Miro for collaborative feedback work well.
Step 10: Plan for Post-Deployment
After the project launch, you have to regularly maintain and update it to keep it trouble-free. Talk to your outsourcing partner about ongoing support. Use Zendesk for customer support.
Step 11: Evaluate and Reflect
Compare project outcomes to your initial goals and see what you can improve next time. Retrospective tools like Retrium can help you with a post-project review.
3 Examples of Successful Software Outsourcing
Here are 3 real-world examples of companies that turned to software outsourcing to achieve the ultimate development goals. Read and get inspired
1. GitHub
GitHub is a developer heaven that is used worldwide for collaborative coding projects and code management. This platform helps in code sharing, version control, and project management.
- Why they outsourced: As a startup with limited funds, GitHub looked for specialized backend expertise that was not available locally.
- What they outsourced: GitHub outsourced the optimization and scaling of its backend infrastructure to specialized teams.
- Results: Through strategic outsourcing, GitHub launched the projects faster. They also gained expertise that helped the company to grow into the world’s largest code repository.
2. Slack
Slack is a cloud-based communication platform that has 42.7 million daily users. It is used by teams of all sizes, including some of the world’s largest companies like IBM and NASA.
- Why they outsourced: Conserve funds and access design expertise (as a startup).
- What they outsourced: Design and app development (including logo, website, and mobile app) from the beta stage onwards.
- Results: Launched quickly with a polished user experience (UX). They attracted 15,000 users within 2 weeks. This early success helped them secure unicorn status by 2014.
3. Google
Google is known for its innovative products and services. It dominates online searches and has shaped the internet experience for users worldwide.
- Why they outsourced: Manage massive workload and benefit from a wider pool of global talent beyond their internal staff.
- What they outsourced: Development, IT infrastructure management, and customer support.
- Results: Outsourcing helped them speed up the software development process for specific projects. It freed up internal teams to focus on new products and improved ROIs.
How to Overcome 6 Common Outsourcing Challenges
Despite everything, outsourcing isn’t always easy. Let’s look at common obstacles you can face when outsourcing and how you can overcome them.
1. Cultural Alignment
- Challenge: Different work cultures and communication styles can affect collaboration and productivity.
- Solution: Build a strong relationship with your outsourcing partner. Prioritize regular video calls and open dialogue to keep things running smoothly. Team-building activities also help bridge cultural gaps.
2. Vendor Reliability
- Challenge: Trusting an outsourcing vendor’s reputation without thorough vetting can cause delays and quality issues.
- Solution: Conduct detailed background checks and review client testimonials. Look for referrals from trusted sources to ensure the vendor’s reliability.
3. Scope Management
- Challenge: Unclear project scope or changing requirements can result in scope creep. This can negatively impact timelines and budgets.
- Solution: Implement a change management process with regular requirement reviews and stakeholder consultations. Use formal approval procedures to keep the project on track and prevent budget overruns.
4. Data Security
- Challenge: Sharing sensitive data with an outsourcing partner can cause breaches and confidentiality issues.
- Solution: Establish strict data protection protocols, including encryption, access controls, and NDAs. Regularly monitor compliance with regulations like GDPR or HIPAA.
5. Contractual Ambiguity
- Challenge: Ambiguous contract terms and legal issues can cause disputes and hinder project progress.
- Solution: Work with legal experts to draft detailed contracts. Clearly outline project scope, deliverables, timelines, and payment terms. Also, add dispute resolution mechanisms to mitigate potential legal risks.
6. Dependency Risks
- Challenge: Relying on a single outsourcing partner can make you less flexible and more vulnerable.
- Solution: Diversify outsourcing partnerships. Work with different vendors to distribute risks and improve resilience.
Conclusion
There is no denying that software outsourcing can truly make a difference for you. But it is not some magic fix or just about saving costs. Outsourcing software development services is about finding the right partner who understands your vision and delivers high-quality work on time and within budget.
That is where Genius can help. We are a leading platform that connects businesses with top Filipino software development talent. Our pre-vetted network ensures you have access to highly skilled developers who can integrate into your existing team. Start hiring the perfect development team today.
FAQs
1. What are some red flags to watch out for when selecting a software outsourcing company?
First, look at their communication skills. If they respond slowly or unclear, this can cause problems later. Also, check their portfolio. If they don’t have relevant experience or their past projects look subpar, that is a bad sign.
Another red flag is a lack of transparency. A reliable software development company should provide clear information about its processes, pricing, and timelines. Plus, beware of companies that offer very low prices. You often get what you pay for, and it can be poor-quality work.
Finally, read reviews and ask for references. If they have negative feedback or can’t provide references, think twice before hiring them.
2. How do I ensure that my outsourced software project stays on schedule and within budget?
- Before you outsource software development start with a detailed plan. Outline the project scope, deliverables, and deadlines. Share this plan with the outsourcing team and make sure they understand it.
- Schedule frequent meetings to discuss progress and address any issues early.
- Set clear milestones and review them regularly. If something goes off track, you can correct it before it becomes a bigger problem.
- Define the budget clearly from the start and keep a close eye on expenses. Address any discrepancies as soon as they arise.
3. How do I handle time zone differences when working with an offshore software development team?
- Identify a window where both your team and the outsourced team can collaborate in real-time. Schedule regular meetings during these overlapping hours to discuss updates and issues.
- Maintain clear and up-to-date documentation for the project.
- Consider flexible work schedules for your in-house development team for better communication with the offshore team.
- Make sure to set clear expectations for response times. This helps manage any delays because of time differences.
4. What are the typical costs associated with software outsourcing?
The most direct cost is the rate you pay the development team. Rates vary depending on the region, expertise, and project complexity. Hourly rates can range from $20-$50 for developers in regions like Eastern Europe or Asia. It can be $100-$150+ in North America or Western Europe.
Many outsourcing companies include project management services. These fees are often included in the overall rate but can sometimes be additional. Other additional costs can include:
- Initial setup fees
- Infrastructure and tools
- Training and knowledge transfer
- Quality assurance and testing
- Rework and modifications
