What is outsource software development and how to use it properly

Digitalization era spreads rapidly, so more and more companies cannot avoid software development for their business. Classic in-house software development approaches become more outdated as a new, more profitable, and practical approach emerges and we call it outsourcing software product development. According to Statista, Revenue in the Application Outsourcing segment is projected to reach US $116.40bn in 2022, and it is estimated trends will not stop, so by the year 2027 with a 4.47% yearly growth rate, it will result in a marketing volume of approximately 145 billion dollars. Impressive statistics that only prove outsourcing software development popularity. 

What is Outsourcing

All genius is simple and the same with outsourcing software product development. The main concept of outsourcing is to delegate the tasks you need to solve to the third-party developers. 

Companies use such an approach because of many reasons, but the most common are:

• Additional hands. 

When you need extra hands to do some tasks, it is the best decision to choose to outsource. Let the outsourcing team take the software development and marketing, sales and finance teams can be in-house.

• Lower costs.

Thanks to wage differences, modern companies can get a decent specialist from another country, but it will cost much lower than hiring an in-house specialist. 

• More talents with necessary skills.

It’s never easy to find a proper specialist with all the skills you need, and what if you need to find a specialist with a narrower skill to achieve the result you want? It is the moment where you need to outsource as it opens the door to a source of worldwide specialists with any skills you need.

Why choose an end-to-end development approach?

When outsourcing software product development, there is an option to hire just a few developers to add them to the in-house team working on the project. But on the other hand, this will cause some issues to the development process like desynchronization in the working process, communication problems, and different visions of the project.    

To achieve the best result, you have to put the whole team on a single project. Here is why we need End-to-end development. End-to-End development is an approach to software development when the unified team consists of all the necessary specialists to cover the project’s needs in developing it from the beginning till the deployment and further support. 

The main benefits of the end-to-end development approach are:

• Complex team is working on your product.

It is more valuable than it may seem because working with different developers on the project, especially when outsourcing software product development, takes more time to organize the work. 

Working with a single team means the development process goes faster, and the team that works together for a long time has all the processes flow aligned. It means they know how to divide the tasks and what type of work fits the best for specific team members. All that allows us to create an unstoppable workflow to get the best results in a short time.

• Opportunity to save the budget. 

To hire the whole team further will cost you less than hiring each developer and other team members separately.

• Less communication, but more effective. 

Working with the whole team that provides outsourcing product development services, in contrast to freelancers, you don’t need to explain tasks multiple times to each developer separately. But with a unified team, you need to communicate with the team lead, and he will do the rest by himself!

Price models

While outsourcing product development services, you can work with several price models: 

• Fixed Price

This model suggests defining the scope of work and approving a fixed price for the completed project. This model has pros and cons, where the main pros are predictable and stable budget spending on the project, but on the other hand, cons like lack of flexibility and it is hard to implement some changes. 

• Hourly rate

It is a great option for a pricing model when you don’t have strict deadlines and requirements from the very beginning of development. In this case, the hourly rate pricing model allows you to implement changes during development according to the needs of the product. 

Of course, along with these pros, some cons show the unknown final price of the development, so the price can be much higher than was expected. One more disadvantage is the lack of a deadline, which leads to uncertainty in planning further steps in development. 

• Shared risk reward

If you can’t choose between two previous models, choose a shared risk-reward. The main advantage is you can mix fixed price and hourly rate models. In this model, the main idea is to share both risk and reward with the client. You estimate the project cost, and if the resulting cost is lower than expected, you share the reward with the client. The same situation, when the cost is higher than the earlier calculated price, the client will share a part of paying an extra cost. The main advantage is sharing the risk with the client, but simultaneously the disadvantage is that you have to share the reward too.

• Incentive based 

A simple model with an extra reward if all the deadlines were met or exceeded. A great stimulus to work according to the requirement based in the beginning.

ASD expertise

Advanced Software Development is an outsourcing company that provides clients with a single team of specialists that works as a united mechanism to cover all the product development needs from the very beginning to the deployment and support. We have 15 years of experience providing outsourced software development services in Hospitality, Tourism, and related markets.

Conclusion

In summary, we can observe the main benefits of outsourcing software product development that make it one of the best ways for companies to develop their product. Outsourcing product development services are cheaper, practical, and high-quality due to numerous high-skilled professionals. 

Reference:

Statista.com