There’s no doubt that outsourcing software development has made digital acceleration accessible to all. With the advent of new technologies facilitating remote work, it’s the first time in IT projects outsourcing history that any company worldwide can promptly access top-notch developers in the market

The rise of technology adoption has sparked widespread interest in digital differentiation. Essentially, gaining an advantage over competitors now hinges on possessing the top technology and IT talent. This is evident by the fact that the most successful companies in every field are those that excel in utilizing superior software solutions

However, you likely have a good understanding of this topic, which is why you have found your way to the Best Guide for IT Projects Outsourcing in 2023. Let’s delve deeper into the specifics of outsourcing your IT projects, including which aspects you can outsource, reasons for and against doing so, and much more. So, let’s take a closer look together.

What is Software Development Outsourcing?

it projects outsourcing

Software development outsourcing is a process whereby an organization hires a third party to create custom software solutions. This often involves IT projects outsourcing the development to an external company, sometimes located offshore. Outsourcing can bring several advantages, such as reduced costs, improved efficiency, risk mitigation, and increased security.

Despite these benefits, some business leaders remain skeptical about the effectiveness of outsourcing due to the various pros and cons of outsourced software engineering. Nevertheless, outsourcing can help bridge talent gaps for many companies and provide numerous other benefits.

Why do companies outsource IT projects’ software development?

Why do companies outsource software development? There are several reasons why companies choose to outsource their software development. Here are some of the key benefits:

Cost reduction: Outsourcing software development can often be more cost-effective than hiring an in-house team. This is because outsourcing companies are typically located in countries with lower labor costs, which can result in significant cost savings.

Access to specialized skills: Outsourcing allows companies to access a wider range of specialized skills and expertise that may not be available in-house. This can help to fill any talent gaps and ensure that the project is completed to a high standard.

Scalability: Outsourcing allows companies to scale their development resources up or down as required, making it a more flexible option than hiring an in-house team.

Faster time to market: Outsourcing can help to accelerate the development process and get products to market more quickly, which can be a significant advantage in fast-paced industries.

Reduced risk: Outsourcing companies often have established processes and procedures in place to ensure that projects are completed on time and to a high standard, reducing the risk of project failure.

Overall, outsourcing software development can provide a range of benefits to companies, making it an attractive option for businesses of all sizes.

When Should I Outsource IT Projects?

it projects outsourcing

Entrusting an entire IT project to an external service provider can be a challenging choice to make. Therefore, prior to delving into a more comprehensive set of guidelines, it’s important to determine whether outsourcing an IT project is appropriate for your business at this time. There are several unmistakable indications to look out for:

  • Shortage of in-house IT talents: If your company is facing a shortage of in-house IT talent, it can lead to decreased work efficiency and longer product life cycles due to a heavy workload with limited human resources. To avoid potential business pitfalls and overcome this challenge, outsourcing should be considered a viable option as soon as possible.
  • Technology lapse and skills gaps: In a constantly evolving tech world, if your systems and staff can’t keep up with the changes, your business may experience a technology lapse and skills gaps. If this occurs, it may be necessary to seek professional help from other IT project outsourcing companies to keep your business growing
  • Tight project timeline: Meeting project deadlines with quality results is crucial to the success of any project. For example, if your internal team is having difficulty keeping up with the roadmap for your ERP project, delegating a function or portion of the project to a separate team of developers/testers may be the solution you need to meet the tight project timeline.
  • Need to optimize cost: If you need to optimize costs, outsourcing your projects to an experienced cross-border team can help improve overall velocity and achieve your business goals in a cost-efficient way. Shifting to a more affordable global region such as Vietnam can help eliminate recruitment, training, facilities, and administration costs, making it a viable option to consider.

How Do You Outsource IT Projects?

Step 1. Define your Development Goals

To ensure that your company’s business and specific project goals align with an outsourced software development company’s culture and work ethic, it is recommended to work with a company that adheres to the SMART acronym. SMART stands for Specific, Measurable, Achievable, Realistic, and Time-bound, and is a reliable way to determine and define your goals.

In addition to aligning goals and culture, it is important to make clear plans for:

  • addressing contingencies
  • identifying and correcting flaws
  • budgeting for the project
  • testing the software in multiple environments.

These are the basic steps that you should take before outsourcing software development. It is a common mistake for companies to wait until after hiring a team before setting goals, which can lead to a lack of direction. To avoid this, it is recommended to establish goals beforehand and then communicate them clearly to the professionals who will be hired.

While the input from the professionals you hire may help refine and clarify the goals, it is important that you set the direction for the project, not the hired professionals.

Step 2: Understand the different service models in IT projects outsourcing

To fully customize your IT projects outsourcing service, it is important to understand the different service models available. While you can always get the best deal on what you need, it is recommended to learn about the three main outsourcing models: Dedicated Teams, Staff Augmentation, and Project-Based Outsourcing. This will help you stay ahead in the outsourcing process.

Step 3: Define Budget and Time Expectations

Creating an approximate plan for your project can greatly improve its efficiency during implementation. This includes setting deadlines, milestones, and Key Performance Indicators (KPIs), which will assist developers in organizing sprints and adhering to them, allowing you to determine the exact deployment date.

At this stage, defining the budget is essential, as it will determine the outsourcing model you choose (offshoring for a smaller budget, onshoring for a larger budget, or a hybrid approach) and the number of developers you can add to your team.

Step 4: Choose your partner wisely that Match Your Needs and Goals for IT projects outsourcing

Select your outsourcing partner carefully as not all software outsourcing companies are equal. It is advisable to choose an experienced partner with a proven track record in developing software similar to what you are trying to achieve. Additionally, it is always recommended to check references before making a final decision.

Step 5: Make a Choice and Start the Cooperation

After completing the previous steps, the final step is to select the technology vendor with the best offers and concentrate on the legal and privacy issues for future collaboration. During the pilot phase of an outsourcing project, there are several factors you need to consider:

  • A well-prepared legal document, including a Non-Disclosure Agreement (NDA), an employment agreement, or a Memorandum of Understanding (MOU), is essential for successful and valuable IT project outsourcing.
  • Using precise and consistent communication methods can help eliminate any potential misunderstandings between the outsourced team and the in-house team. Additionally, it reduces the risk of the vendor straying from the project’s goals and priorities.
  • Having clear methods for measuring the project’s effectiveness enables you to keep everything on the right track and provide timely feedback throughout the process. It is important to stay informed about new status updates, significant milestones, or any concerns about the project to prevent costly fixes later on.

After all the preparations have been made, the outsourcing process can commence. In particular, when teaming up with ONEXT DIGITAL, we provide you with a complimentary 2-week pilot period to ensure your satisfaction with both the quality of the work and the operational procedures.

How to Choose an Outsourcing Software Development Vendor to Outsource IT Projects?

it projects outsourcing

Tips for Verifying a Software Outsourcing Company

Choosing a vendor must be approached with caution, especially since sensitive information such as intellectual property is shared with the chosen team. This raises the question of how to verify the quality of the vendor.

Conducting thorough research on a potential partner is crucial before meeting with them. It’s the simplest yet most important step to take. Start by looking at their portfolio and see if they have experience in assignments and projects similar to yours. If they do, they are likely to know the ins and outs, as well as potential pitfalls, and be better equipped to handle them.

Evaluate their website carefully by examining the design, functionality, and user experience. Also, check if they have a blog section and how frequently they publish content. Look for customer reviews or case studies that describe their approach and the outcomes of their work.

If you have prior experience with outsourcing, you can use the aforementioned criteria to make your own informed decision. Alternatively, if you have a technical advisor, such as an in-house employee or a third-party consultant, you can seek their consultation and assessment before proceeding with the interview process. This can provide valuable insights and help ensure that you choose a vendor that aligns with your project goals and requirements.

Technology Vendor Selection Criteria

One effective way to determine if the outsourcing company meets your technological requirements is to assign them a test task that includes some of the elements in your project. Additionally, you can request to see their demo presentations or sample codes to further evaluate their capabilities.

In some instances, Sample codes and demo presentations can provide a better perspective in certain situations as they enable you to see the bigger picture, such as how developers approach architecture and how different parts of the code work together.

Checklist to Choose a Software Development Company

Choosing a software development outsourcing company involves considering multiple factors. We have compiled a list of the main points of interest to help you identify the perfect vendor: 

  •   A good software development outsourcing company should have a well-designed website that includes customer reviews, case studies, and a regularly updated blog.
  • Has a strong portfolio showcasing their experience in projects similar to yours, demonstrating their expertise and ability to deliver quality work.
  • Demonstrates relevant experience by having worked on similar projects.
  • Provides a pricing model that fits your budget without compromising the quality of work.
  • Ensures proper security measures and has a solid Non-Disclosure Agreement (NDA) in place to protect your intellectual property and sensitive information.
  • Uses an Agile methodology in project management and software development, providing a clear and flexible product roadmap.
  • Provides various communication channels to ensure smooth collaboration and prompt issue resolution.
  • Offering good customer support

Conclusion

Although there are numerous factors to take into account before outsourcing IT projects, the advantages that it provides are well worth the initial investment. By outsourcing product development, you can save time and resources, allowing your team to focus on core activities.

ONEXT DIGITAL, an IT outsourcing Viet Nam- based company, has been providing high-quality and helping our clients achieve successful business goals.  If you want to gain similar results as our successful clients, don’t hesitate to contact us.  Our team of experts will always be available to assist in accelerating the growth of your business.