10 Best Practices for Outsourcing Software Development

Author: Tomasz Bąk
8 min read
10 Best Practices for Outsourcing Software Development

Regardless of the scale or focus of your company, there might come a time when IT outsourcing is required. This can happen for a number of reasons, ranging from requiring specialized software, creating a digital product or just to tackle a given problem. The first thing to come to mind is why not create the solution in-house. You get better control over the development and higher security of your companies information

But this isn't always an option for companies that either:

  • They are not scaled large enough to warrant creating a special software development division.
  • Require a one-time or infrequent solution to be developed.
  • The existing team don't have the technical capabilities for such
  • Or there is a time constraint that dissuades the creation of such a team.

Regardless of the reason, engaging an IT development service team can be a positive decision that both speeds up and accomplishes a software development need. But there are some caveats to this. Not just any software development service you find on the internet is going to be a perfect match for you or your project. In fact, one can say that finding the right software development service team is a project in itself.

So to make this task as simple as possible, we have compiled 10 best practices you should adhere to when outsourcing your software development projects.

Tip 1: Do a background check

The very first thing you would need to do when picking out your software development service provider is to have a shortlist of possible candidates. This helps in a few days, one of which is to establish a baseline of what the market cost is for such services. Once you know this you can move on to picking a list of those you feel would be a good fit for your project.

But this is only half the battle. The next part involves doing extensive research into the companies you have shortlisted. You need to know their strengths, average turnaround time and what previous clients had to say about them.

Do not forget you are entering into a relationship with a third-party, so its best to know if there are any skeletons in the closest to be wary of. It's easy to start a relationship but hard to extract yourself when things start going south.

Tip 2: Get the financials in order

Here we are talking about your budget. Even if there is a fixed budget for your project. It does not mean it is wise to go for the cheapest outsourcing company available. There has to be a balance between what you expect and what you are willing to pay for it. Once this is established the next step is to figure out what will be paid out and when. If there are events that trigger payment, it should be clearly stated beforehand. It should be noted at this point that there is a very high possibility of going over the stipulated budget when outsourcing a project. Either due to unforeseen requirements or additions, or issues that crop up unexpectedly. Hence it's best to leave a little wiggle room in your budget for such occurrences. After all, its better safe than sorry.

Tip 3: Pay attention to security on both ends

This part can not be overstated. When dealing with third-party providers, not only should you establish a secure means of transferring information on the project but a level of access control over the more sensitive data should be implemented on both sides.

It would be best to know what security measures and protocols the outsourcing firm has in place already and how they plan to handle your data. But security is a two-way stream, hence its also a good idea to establish secure means on how data is handled and transferred to the development team.

It should also be clearly stated in advance what can and can not be done with the information once it arrives in the possession of the outsourcing team. Usually, a good NDA(None Disclosure Agreement) should help with this.

Tip 4: Create Milestones and mini-goals

One grave error companies fall victim to is thinking the job is as good as done when they hand over all the requirements to the development team. There are so many ways this can lead to catastrophic results.

Instead, certain milestones and mini-goals should be established for the total lifecycle of the project. This helps with keeping proper track of what has been achieved and what is still pending. Also, the various milestones let you see the various functional parts of your application. This is important because an actual functional section might identify issues, possibilities and overall flow of the software development process. This also brings modularity to the project.

Tip 5: Use a pricing model that fits your needs

When we refer to models in this context we are talking about the payment structure established with the outsourcing team. These can take any of the following flavors:

  • Hourly rates: Here the outsourcing team is paid a fixed rate every hour. For smaller software development projects this might be an idea since the lifecycle might be rather short if makes sense to pay for just the time spent on it. This also works when you have projects that require only slight modifications.
  • Fixed rates: A fixed budget is arranged at the start of the product with clearly defined goals, scope, and durations.
  • Dedicated: Usually used by large projects or companies that require the full attention of a dedicated team to work with. Such teams usually work on site.

Once you know the best model that fits your project scope, it's best to get the fine details worked out with the outsourcing team.

Tip 6: Be hands-on

When it comes to your project and it's software development, there is no such thing as too much information or allowing the outsourcing firm to have some space. Instead what should be happening is to have active participation in the development process. You should not only be conversant with the current progress but make sure the outsourcing team uses tools and methodologies that keep you in the loop. A detached and hands-off approach can easily lead to misunderstanding and communication gaps that prolong the project's final delivery.

Tip 7: Document everything

Not only does this make it easy to retrace steps in case an issue props up, but it allows you to have a total written record of all transactions between the outsourcing team and the company. This is also one of the ways to ensure there is no misunderstanding on requirements, scope, content, materials or responsibilities.

But the importance of proper documentation doesn't end there. If you have a different outsourcing team or create an in-house one, this documentation would be important in understanding what has been done and why. Making upgrading and modifications a less cumbersome process.

Tip 8: Establish communication channels and schedules

One of the greatest issues with using an outsourced team when developing custom applications is the lack of understanding between parties involved which in turn leads to delays and in some cases, unusable software. To forestall this, proper communication channels need to be created at the start of the project. The project score and deliverables should be clearly stated and explained. With both sides coming together and ensure that the full requirements and scope is understood by all.

Following this should be periodic scheduled updates on progress, issues, actionable and others. As long as there is a steady flow of information between both parties, it becomes easier to track where the project is at any point in time.

Tip 9: Be realistic

Remember that you are dealing with humans, so a bit of flexibility is required. Hence realistic goals should be established. It is impractical to have a large software development project with multiple complex parts and give a short timeframe for completion. You end up with half baked or unusable software. Also, allocate time and resources for the unforeseen. It is better to have and not need than to need and be left wanting.

This does not mean you should be too lax with your goals and expectations. A bit of pressure goes a long way in attaining results. The trick is to know when and where to apply pressure to achieve the best results.

Tip 10: Function over Style

Regardless of how your application looks, if it does not function as intended then it is not worth the investment. It is important to note here that when engaging the services of an outsourced software development team, emphasis should be given to the functions, features, and ease of use over aesthetics. Once you have the team done with the main features then and only then can you move on to making it look pretty.

But take note, this does not discount the importance of a well-presented application. It adds to the user experience to have your applications looking attractive to use. However, priority should be given to function and features first.


Entering a partnership with a software development team isn't a simple task and should be considered an involved process. However, the above practical steps should go a long way towards seamless cooperation.