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Software Development Outsourcing #3: Planning & Strategy

April 10th, 2024
Software Development Outsourcing - Planning & Strategy.


In the previous part of the series, we’ve learned what are the different types of software development outsourcing, which outsourcing model suits your business needs & what factors you should analyze before outsourcing software development services.

In this part of the series, we’ll dive deeper & learn the process of software development outsourcing. Are you ready to dive deep into the sea of Software development outsourcing services & learn the detailed process?

Then, let’s go!!!

Before jumping into the details, let’s first understand what a software development outsourcing strategy is.

What is a Software Development Outsourcing strategy?

What is a Software Development Outsourcing strategy?.

An outsourcing software development strategy is an outline that intends you to know how to manage an outsourced development project. It includes the following four points:

  1. Plan to hire a remote developer: This point highlights the planning about where you’ll find a suitable developer, what languages should they be aware of & are there any other requirements that must be met to work on a software development project.

  2. Project Management Plan: A project management plan outlines how you'll talk to your developers, what tools and guides you'll give them, and any other directions they need to finish the work.

  3. A Quality Assurance plan: This describes how you will check and make sure the work done by your outsourced team meets quality standards.

  4. Financial Plan: This covers how much you expect the project to cost, the way you plan to pay your developers and any other money-related details.

After outlining an outsourcing strategy, it is vital to follow the process effectively to achieve successful project management.

Now, let’s understand the detailed process of planning & strategy involved in software development outsourcing.

Planning & Strategy: An 8-step Process of Software Development Outsourcing

8 step Process of Software Development Outsourcing.

After understanding the outsourcing strategy, let’s understand how to plan the strategy for meeting your software development needs. There are several things to consider while setting up an outsourcing development plan. Let’s understand all of them in detail.

#1 Defining the goals

Before beginning the software development process it is necessary to understand the end goal of your development project. What are your hopes for the outsourced development project? Will it help you save money, increase your project efficiency, reach new markets, or something different altogether

Moreover, are you also going to use the same team in the future or are you just hiring them to perform a specific task? Finding out what success looks like before working with an outsourced team would be very helpful. Once you know what are you looking to accomplish, planning the process to achieve it becomes quite easy.

#2 Research your outsourcing partner

The next thing to do is to look for a reliable company to outsource to. You can search on the Internet or ask other businesses for suggestions. Choose a company that knows a lot about your business field and the kind of work you need help with.

Remember to ask them how they ensure good quality work, how they will talk with you, and about anything else that matters to you.

#3 Choose an outsourcing model

The next step in the planning process is to choose the best project outsourcing model that fits the best with your requirements. Let’s understand the various types of outsourcing models you can choose from:

Offshore Development

In this model, you will look to hire a foreign country that will work for your software development project. Choosing this option would be a feasible idea if you are looking to lower the costs, but you need to be aware of all the cultural & language differences that might occur. However, if the agency is set up in the right way, outsourcing offshore is a win idea.

Nearshore Development

This type of outsourcing model is quite similar to a “Nearshore Development” model, the only difference is in this model the developers will be located in a nearby country. Using this model will eliminate the communication & cultural barriers, but is relatively more expensive than the first option.

Onshore Development

In this outsourcing model, you would look forward to hiring remote developers who are located in your country only. Of all the three hiring models, this is one of the most expensive models. However, companies that want to build in-person communication or those that want to avoid any potential cultural barriers would opt for this model.

#4 Preparing all the necessary documents

After choosing an outsourcing model that fits your business requirements effectively, it’s time to start the process of preparing the necessary documents so that the developers are ready to work. This step includes preparing contracts, work instructions, payment details, NDAs, etc.

Moreover, it is necessary to be as specific as possible in providing instructions so there remains no room for confusion about what should be done. Moreover, it is necessary to get a signed contract with an outsourced partner to avoid all the upcoming legal issues in the future. Also, make sure all the terms of the agreement are stated clearly & check for their references before signing the deal.

#5 Finalize the budget

It is important to have a precise & crystal-like clear understanding of how much money you should spend while hiring an outsourced software development team. Doing this will help you identify what type of developers should you hire, the locations you should target & also understand the features that would be possible in a specific budget.

#6 Creating a project plan & a timeline

The next step is to build a project plan that includes a list of specific tasks, milestones & deadlines for each phase in the development. It is quite important if you are trying to perform more than one task with an outsourced software development team because it would be difficult to keep track of multiple projects at one go if there is a lack of planning. 

A good project plan has all the ingredients of specific instructions for an outsourced developer. It should also have details about communication plans so everyone is on the same page. Doing this will help keep everyone on the same page.

#7 Building a stronger communication plan

This is one of the most important aspects of any successful outsourcing project. While working with an outsourcing software development company ensure you are building strong communication flows from the place, i.e. with developers as well as other team members.

Using various communication channels like video conferencing, chat software & file-sharing can make communication easier, but what’s more important is the ensure everyone is on the same page.

#8 Quality assurance

While working on a software development project it is quite important to have a quality assurance plan in place. This can either be a checklist, or a Do’s & Don’ts list. Moreover, the organization should also create lists of items that need to be checked while measuring the quality of the project.

So, we believe this 8-step process was easy to understand & would be easy to implement while managing any outsourced software development project.

Now, let’s understand how the plan for Budgeting works in a Software development outsourcing project

What are the Effective Budgeting Strategies for Outsourced Projects

Effective Budgeting Strategies for Outsourced Projects.

Budgeting for outsourced software development projects requires thorough planning to estimate the cost realistically. We’ve mentioned everything you need to learn about Budgeting for an outsourced software development project in the below section. Let’s begin:

Understanding the Scope & requirement

Defining the Project Scope

In this step, you need to clearly state the project scope, i.e. include all the deliverables & timelines of the project. The more detailed the scope is, the more accurate the cost estimation will be.

Identifying the Specific Needs

Define what skills & technologies are required for the project. Doing, this will help your organization find the right outsourcing partner & estimate the costs accurately.

Selecting the right vendor

Researching & shortlisting the vendors

Search for vendors that possess a proven track record in a similar project. Evaluate their portfolio, review their client testimonials, etc. to identify their caliber for the project.

Client Testimonials

Request for Quotation

Encourage outsourced software development vendors to send their quotations & then compare the costs of all. Remember you ensure that these quotations are broken down and include information about all the expenses as well as any potential additional charges in the plan.

Evaluate the expertise & the cost

The next step in the process is to choose a vendor that offers the best value - this doesn’t mean it should be the cheapest option. Moreover, consider their expertise, reputation & the quality of work they provide.

Now, let’s understand the next pointer in the Budgeting creation strategy which is known as “Cost estimation”

Cost estimation

Understand the pricing model

It is important to get familiar with the common pricing models such as a fixed price model, time & materials, or retainer agreements. Make sure you choose the pricing model that aligns with your project needs & the budget constraints.

Include all the Costing factors

Apart from the direct costs mentioned by the vendor, consider all the indirect costs like communication overheads, project management costs & any other potential revisions or unexpected work.

A contingency budget

Never forget to have a buffer budget of at least 10-20% to meet any unforeseen expenses that occur in the future.

Now, let’s understand the last pointer which is “how you can manage the finances”

Managing finance

Setting Milestones for payment

Instead of paying a larger sum of money at one go, the range for a milestone-based payment. Doing this will ensure that the payments are tied to specific deliverables or project phases.

Reviewing the budget regularly

It is important to review your budget & expenses consistently. Doing this will help you identify any loopholes and uncertainties early on & make the necessary adjustments.

Have an open communication with your vendor

It becomes very important to have transparent communication with your vendor about the budget. If there are any changes in the scope of the project it is important to discuss ll the necessary financial implications beforehand.

Documenting everything

It is quite necessary to keep a detailed record of each financial transaction, agreement & communication with the outsourcing vendor. Doing this will help you manage current & future projects effectively.

Wrapping Up!

In this article, we learned what is Software Development outsourcing strategy & an 8-step process to manage software development outsourcing projects. We also learned about various budgeting strategies to plan the best budget for our software outsourced project. 

We have a lot more to share with you that is circling software development outsourcing. Keep reading this space for more exciting information on outsourcing software development


Mukesh Ram

Founder and CEO, Acquaint Softtech

I love to make a difference. Thus, I started Acquaint Softtech with the vision of making developers easily accessible and affordable to all. Me and my beloved team have been fulfilling this vision for over 15 years now and will continue to get even bigger and better.

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