Y ou’ve probably heard of software development outsourcing as members of this technologically developed society. According to grandviewresearch.com, the global IT services outsourcing market size was valued at USD 520.74 billion in 2019 and is expected to grow at a compound annual growth rate of 7.7% from 2020 to 2027. And yes, there are disagreements on how and when to outsource software development and whether the effort is worthwhile.

We, UNIBENCH, are a Melbourne-based nearshore software outsourcing company, providing world-class dedicated tech talent and development expertise to companies listed in the Australian Share Market to innovative startups who are shaping the future.

So, here’s everything you need to know about Software Development Outsourcing!

1. So, what exactly is Software Development Outsourcing?

Outsourcing is the practice of delegating certain tasks to an external vendor rather than using in-house resources. It is now commonplace in almost every industry. According to Statista, the most outsourced IT function in the tech industry is Software Application Development.

This is how the outsourced or off-shored IT functions were worldwide, as of 2017, according to Statista.



2. Why should you outsource Software Development to your startup?
• Faster
• Less Expensive
• Eliminates the need for renting office space
• No need to establish an entire development infrastructure
• Access to extensive knowledge and expertise
• Worldwide access to superior technical talent
• Optimal skill and rate balance
• Ability to find the best professional team for the project
• No need for micromanagement
• Effective communication within the team
• Use of the Agile Methodology
• Simple scalability

Now let’s get into details.

2.1 Access to Extensive Knowledge and Expertise

Software Engineering Outsourcing is a great way to compensate for a lack of internal resources. It allows you to focus on your core tasks. You need to come up with a product idea, and with outsourcing, you will have instant access to a comprehensive package of consulting including analytical, marketing, design, and development services.
You can proceed to development or create a Minimum Viable Product (MVP) to validate your idea and make initial changes as needed. That depends on your product type, project specifics, and budget. The outsourcing company’s marketing and design
experts will assist you in creating the best MVP along with interpreting the analytical data it generates.
Whether it be project planning, cost estimation, wireframing, software development, or UI/UX design, outsourcing companies can do it all! So, fear not! They can create the best project plan for any project.

2.2 Worldwide Access to Superior Technical Talent

Simply, you are not restricted by geography. You can select any company from anywhere in the world, paying attention to the team’s skills and professionalism, not their proximity to your worksite.


• Go through the company’s portfolio.
• Look up customer feedback.
• Read the reviews.
• Try the products that the company has delivered.

That will help you to find the team that is ideal for your project’s requirements. They will uplift the creation of your product regardless of where they are located, whether they work together or remotely.
Plus, pay attention to the cultural differences since the company you chose might be at the other end of the world, and sometimes, depending on the product type, of course, you will have to take measures to minimize the company’s influence on the project development process.

2.3 Optimal Skill and Rate Balance

Outsourcing allows you to strike the ideal balance between the team’s development skills and its rates. Your geographical outsourcing options are diverse.
At UNIBENCH, we outsource developers from the Philippines and Sri Lanka which are quickly rising in the outsourcing rankings. These countries’ software development firms have proven to provide high-quality services with an optimal balance of expertise and creativity. Outsourcing to us will provide you with a high-quality product, professionally delivered at a significantly lower cost.

2.4 Ability to Find the Best Professional Team for the Project

You will most likely be significantly behind schedule if you have started your project by assembling your startup development team. A successful product launch requires more than just developers writing codes and DevOps deploying the product. Business analysts, UI/UX designers, QA engineers, and copywriters are also required to ensure a smooth product release.
Furthermore, your project may necessitate highly specialized skills, such as virtual reality or artificial intelligence. Finding such a diverse group of experts may require some time that could be spent on actual project work.

Typically, software development outsourcing firms already have a full team on board, or they can quickly hire known and trusted freelancers to fill positions if additional expertise is needed. The project manager can propose a team capable of delivering your project and estimate the time required from each team member during the early stages of project planning.

2.5 No Need for Micromanagement

When you outsource your project, it is coordinated by a project manager, who manages outsourced software development. The project manager oversees all aspects of your product development and launch and serves as your primary point of contact for any issues that may arise.
It’s better to be aware of the project manager’s duties, so you will know the responsibilities you are handing over to the company you choose, and you can be confident that the necessary actions will be taken.

• The Project Manager is most likely already familiar with tried-and-true methods for managing both remote and in-house teams.
• Meeting you at the start of your project’s development.
• Working with the team to develop a plan.
• Following through on the agreed-upon schedule and budget once the project plan and estimate have been approved.
• In charge of sprint planning
• Setting deadlines
• Controlling delivery
• Scheduling
• Preparing feature demos
• Dealing with changes, suggestions, comments, and complaints

2.6 Effective Communication within the Team

Effective communication is critical. An outsourcing firm already has the tools and platforms in place for effective communication and collaboration. Preparing a collaboration environment for your project will take very little time and effort,
maybe a workspace in Slack, a project on GitHub, or a board in Jira or Trello, and you’re pretty much done.
Since the primary and secondary skills of the team members are well known, when a team is accustomed to working together, all issues, big or small, are resolved most shortly and effectively.

2.7 Use of Agile Methodology

Adhering to the principle of lean development is frequently critical for a startup. This allows for the delivery of a product with minimal unnecessary expenses or tasks because of poor management, poor communication, excessive complexity, or other project coordination issues.

The Agile methodology encourages a lean approach. The product creation process is typically divided into two-week sprints in the most common model. Each sprint has a specific goal which is usually a feature or functional component. After developing the product increment, it is tested and demonstrated at the end of the sprint. Agile allows for on-the-fly revision and adaptation of the development process to changing requirements. This reduces redoing finished components to a bare minimum.

2.8 Simple Scalability

The scope of the project may expand or contract during the period of project development. That requires some changes to be done. When this happens, what should be done is the initial team to be scaled up or down. That is difficult to achieve

with in-house development. It is difficult to find another team member with the necessary skills, especially for a single project. If you need to reduce the team size, you will have to either dismiss people and risk not being able to replace their skill set in the future, or you will have to continue to pay their salaries to keep them on board for future projects.

The solution to these issues is to outsource software development. The agency usually has enough staff to cover the project’s needs. When specialized skills are required, they can hire a trusted freelancer or part-time team member. Similarly, an outsourcing agency can manage the team size well because they may be working on multiple projects at the same time.
Startup outsourcing has been practiced for quite some time, with successfully outsourced projects, and a geographic scope encompassing the entire globe. Successful outsourcing examples include Opera, Slack, and MySQL.



3. Disadvantages of Outsourcing Software Development

Outsourcing is not a cure-all. When you assign a project to a new team, you take a risk. Even with positive first contacts and positive reviews, there is still the possibility of miscommunications, delays, features developed differently than expected, and other challenges as well.

Outsourcing critics point to a lack of transparency. When it comes to outsourcing or offshoring, information about quality control and labor conditions is frequently left out of your efforts to gain insights into the company’s processes and activities.

4. How to Outsource Software Development while reducing the Risk

Here’s how you do it!

• Hire a small agency to complete a simple task.
• Make a detailed agreement that specifies the quality, deadlines, rates, and acceptance criteria.
• If you are satisfied with their work, sign a contract for a larger portion of the functionality, or if you are confident about the entire project.
• You can cancel the agreement at any time if you discover that the company is not up to the task.
• In some contracts, the contract allows you to cancel the agreement while keeping the project components that have been developed. You can start looking for a new company to pick up where the last one left off.
5. Software Development Outsourcing Models

The process of outsourcing software development entails more than just paying a third-party company. Indeed, the development process begins with the selection of an outsourcing model.

We’ll go over three major options here.

• Time And Material
• Fixed Price
• Dedicated Group of Professionals

Let’s take a closer look at each one.

5.1 Time And Material
The client only pays for the time spent on development. This model is the best fit for small or medium-sized projects with no set requirements and projects with limited resources.


Pros	Cons
Flexibility – Because the initial specifications are still being worked out, the client can change the work plan if necessary. As a result, this works well with a variety of agile methodologies.	Budget – Since the requirements are undefined and not finalized, making the budget estimation might be difficult.
Client Participation – Because of the use of agile methodologies, the client can see all stages of development. This increases the likelihood that the result will meet the client’s expectations.	Prolonged time-to-market – This requires a lot of communication throughout the project. That might slow the project down.

5.2 Fixed Price

This is named after the assumption that both parties agree in advance on the specifications, project scope, and price. As changes are not permitted, this model is best suited for small projects. When you are testing a new software development vendor, this is an ideal solution.

Pros	Cons
Specifications – You can get what you need while staying within your budget.	Risks – Because this model does not allow for any changes, risk management is extremely difficult.
Time-to-market – The project is more likely to be completed on time because the time frames are agreed upon in advance.

5.3 Dedicated Group of Professionals

Using this model, a fixed monthly salary will be paid to the hired specialists in addition to administrative costs throughout the project. This type of collaboration is ideal for long-term projects with ambiguous requirements, as well as large in-house projects where the client’s staff lacks specific expertise.

Pros	Cons
Control – The client has complete authority over the dedicated team and workload.	Uncertain requirements – The absence of well-formed specifications allows a remote team to be creative, which can lead to discrepancies between the client’s expectations and the result. You can put those experiments to use with a reputable software development company.
No hurried onboarding – Because the vendor handles all hiring and administrative tasks, you can concentrate entirely on the business aspects of a project.

5.4 Summary of the Software Development Outsourcing Models


There are no correct or incorrect models. Your decision will be influenced by the nature of your business and the requirements of your project.

6. How to Plan Your Outsourcing Strategy
• Increasing Productivity
• Improving Product Quality
• Lowering Costs

are just a few of the advantages of outsourcing software development. You won’t be able to successfully outsource IT development unless you plan ahead of time. So having a solid outsourcing strategy must be the first step in the process of hiring a company to meet your needs.
Here’s how you do it!

6.1 Establish Your Objectives

Cost reduction is a common reason for outsourcing, but it is not the only reason. It’s better if you don’t limit your search to vendors based solely on price. Outsourcing allows you to capitalize on advanced technologies, streamline processes, and reduce the risk of business expansion. Your goals should be realistic and balanced, and attainable at the same time.

6.2 Define Delegation Tasks

There can be companies that well are known for their coding prowess, while others are well-known for their consulting services. You must first define which tasks you want to outsource so you can find the best match.

6.3 Establish Your Technological Profile

As software development outsourcing is typically done remotely, your vendor must have a technological profile that matches your requirements. We recommend making a list of the resources needed for your project. Also, don’t overlook security and data protection features, as data leakage is common.

6.4 Create A Favorable Work Environment

Maintain positive relationships with your outsourced employees by informing them of the outsourcing goals. Avoiding rumors and closing any cultural gaps between your team and their team should be done very carefully. It would be better to check if your company is truly prepared for change.



7. How is software development typically carried out?

Whatever the complexity of a software product, it must be flexible, easy to maintain, and upgradeable. This can be accomplished by pre-planning each step, from brainstorming to maintenance. The phases of the software development life cycle vary by vendor.


7.1 Ideation

Each project begins with an idea. Ideas, on the other hand, do not appear out of somewhere. You must first identify a business need and then consider how to meet it. In most cases, the project initiation phase consists of,
• Conducting a feasibility study to assess the likelihood of project completion and to mitigate potential risks
• Establishing the project’s scope
• Identifying the project’s expected results
• Identifying stakeholders
• Creating a business case that justifies the project’s existence
• Creating a statement of work that specifies the project’s objectives, scope, and deliverables.

7.2 Planning

• Developing a project plan
• Assembling your team
• Defining each team member’s role
• Estimating the budget
• Ensuring everyone has the necessary resources
• Anticipating risks
are the main phases of planning.
Making sure that the necessary development tools, platforms, and communication channels are all available and accessible is critical. It is essential to ensure flawless

daily processing while not depleting resources or interfering with ongoing development.
Another pillar of your success will be well-organized documentation. Documentation consistency at all stages is critical for maintaining proper communication, work processes, reporting, and facilitating interaction among team members. It is highly advised that you use a Software Requirements Specification (SRS) which is a document that specifies what a product should do and how it should be developed and summarize everything done during the planning stage.

7.3 Design

Since this is an important part of the lifecycle of a software project, it should include the following items. A prototype, which is a visual representation of how the project will look and function, may also be created during the design phase.



7.4 Coding

This stage is all about ‘translating’ the product’s design into actual software. The goal of this phase is to create a working product as well as a source code document. While a single developer can complete a small project, for larger projects all tasks are divided among team members based on their areas of expertise. A front-end developer creates the product’s user interface and its communication with the server, while database administrators enter all necessary data into the database.

It is critical to ensure that the code meets the project’s requirements and meets stakeholders’ expectations. It’s no surprise that this stage is the longest. However, if the ideation and planning are done correctly, it is also the simplest.

7.5 Testing

When the development phase is finished, it is time for experts to review it to ensure that it meets all the requirements. Several types of testing are performed on the software for this purpose.
➢ Functional Testing – Ensures that the software performs its stated functions in the manner that users expect.
➢ Performance Testing – To determine how the software performs under high load.
➢ Unit Testing – To ensure that each module functions as expected.
➢ Security Testing – To ensure that the software is free of vulnerabilities and threats that could lead to data leakage.
➢ Usability Testing– To determine whether the software is intuitive and responsive.

Once an error has been identified and corrected, developers send the software back to the QA team for re-testing. This cycle is repeated until the entire is bug-free.

7.6 Deployment and Upkeep

When the testing phase is completed successfully and there are no discernible bugs or other flaws in the product, it is released to the market for beta testing. The support team collects user feedback during beta testing, and if any problems arise, the development team resolves them.

Once the product has been fine-tuned in response to real-world feedback, is it released to the public. It is to be regularly updated to improve performance and to meet the needs of the users.

8. How Do You Pick a Software Development Company?

Among 23 million developers worldwide, selecting the best software development outsourcing partner may appear impossible.
One of the primary reasons why people outsource is to save money. Taxes and the cost of office space differ from country to country. As a result, outsourcing software development to specific locations may cost you a fortune. For example, while the average software developer in the United States earns $77K per year, their Indian counterpart only learns 11 times less.
However, the vendors with the lowest service charges may not provide the best quality. Here are a few things to consider when you are choosing who to hire.
➢ Opportunities for Technical Education
➢ Positions in Global IT Destination Rankings
➢ The difference in Time Zones
➢ The Proficiency in English
➢ The Availability of Resources and The Diversity of Technical Competencies
➢ Cultural Background
Take the following steps to find your perfect fit.


9. Contract Details for Software Development Outsourcing

After you’ve found the ideal software development company, the next step is to sign the software development outsourcing contract. The contract formalizes your relationship with the software development vendor.
A software development contract, like any other service agreement, includes general terms, termination conditions, dispute resolution, and other essential parts.
However, there are some specific sections to include for IT outsourcing.
9.1 The Offerings
This section should include a detailed description of the services and project scope that you expect your outsourcing partner to provide, as well as the process for changing the scope.
9.2 Project Duration and Cost
Hourly rates, development phases, milestones, deadlines, responsibility for delays, payment schedules, and so on should all be specified here.
9.3 Acceptance Testing (AT)
It is a test that is used to determine whether contract requirements have been met. This section specifies who oversees the testing, how long it takes, and how the results are communicated.
9.4 Rights to Intellectual Property
The finished product is the customer’s property, not the developers’ property. Ensure that the contract expressly states this.

9.5 Confidentiality
This section specifies which information is considered confidential, who is responsible for its disclosure, and the consequences of doing so.

10. UNIBENCH as a Partner in Outsourcing

Finding a trustworthy outsourcing partner can be a difficult task. But if you’re reading this on the official website of UNIBENCH, you don’t have to go through all those circles, you’ve come to the right place.
UNIBENCH is an Australian technology company that provides exceptional talent as dedicated resources to software development teams shaping the future. We are a Melbourne-based company with a deep-rooted network in Colombo, allowing us to handpick premium software development talent and deliver results that exceed the global standard.

11. Returning to In-House Development

If you ever come to think about returning to in-house development, here are some tips to ensure a smooth project handover.
• Bringing together people who know is sometimes the best way to transfer knowledge. If in-person visits are not possible, remote sessions are the next best thing.
• Request that your outsourcing partner prepare project documentation. Reduce the size gradually.
• Using all the available options would be excessive. As a result, it’s best to stick to tips that are tailored to your specific needs.

12. Summary

Outsourcing is undoubtedly complicated. With the right service provider, you can achieve the best results within time and budget. You must think about careful contracting and clear communication of your business needs, then only you will receive in-depth knowledge and implement of capital-saving techniques. It would be a good decision if you decide to go for Outsourced Software Development because it is significantly less expensive and faster than in-house development. Plus, outsourcing is much more effective because you can gain access to extensive knowledge and experience, with top technology talent along with skill and rate balance. Outsourcing comes with the capability to assemble the most qualified professional team for the project, no need for micromanagement, effective team communication, use of the Agile methodology, and simple scalability.
Finding the best software development vendor is a multifaceted process. After determining your needs, you will have to spend some time searching for a candidate based on your requirements. Examining all available information about them will be required along with interviewing, discussing your project, and finally asking them to complete a test assignment.
When it comes to managing an outsourced team, you oversee coordinating all key processes and controlling the outcomes. Continuous communication can reduce misunderstandings between the parties. That helps you to adjust as needed.