What You Need to Know About Outsourcing Software Development For Startups

December 10, 2021

What You Need to Know About Outsourcing Software Development For Startups

It can be tricky to create software for your business, especially if you’re starting out. Lack of resources, team skills, and time are the problems you have to face. But learning about outsourcing software development for startups could be the only solution you’ll ever need.

Although software outsourcing is not a new strategy, every startup founder knows that there are risks in taking this step. With businesses failing at an alarming rate, 21% of chance during the first year, you want to ensure you’re doing everything possible to succeed.

That’s why it pays to understand the ins and outs of relying on these third-party services. You’ll have us to help you navigate the software outsourcing industry.

Let’s start!

What is Usually Included in Outsourcing Software Development?

in-house developers

Software development outsourcing is a high-risk endeavor if you don’t know what to look for. So, it would help if you first understood what tasks are included in software outsourcing.

Generally, there are core components that you should look for when you outsource a software development package, specifically:

Project management

The provider should have a project manager assigned to ensure that the project goes smoothly.

Software development

This includes developing the application, whether for web development, mobile app development, SaaS application development, enterprise digital solutions, or custom software, depending on the project.

UI/UX Design

The right software company should be able to design the look and feel of your product, as well as ensure it is easy to use. UI/UX design has a fundamental role during the execution of your custom web application.


Your chosen provider should be able to test the software before it is released thoroughly. This can include beta testing, user acceptance testing, and more.

Maintenance and support

The provider should be able to maintain the application and make sure that any problems are fixed promptly.

These are the basic components that most software development companies offer. To ensure success, you should look for providers with extensive experience in providing these services.

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4 Software Development Outsourcing Models to Choose from

After you understand the software development services you need, the next thing you should think about is deciding which outsourcing model is right for you.

Not to worry. We’re here to help! Below, we’ve outlined 4 popular outsourcing models and provided guidance on how to select the one that’s best for your software project.

1. Fixed-Price Model

With this model, you and the outsourced company agree on a set price for the entire project upfront. This option is best suited for projects with well-defined scopes and requirements.

However, if your project scope creeps into an issue, it can be addressed by adding a clause to the contract that outlines how any additional work will be priced.

If you’re starting with a new software development vendor and are looking to keep costs down, this fixed-price model is your best bet.

2. Time & Material (T&M) Model

From the name itself, this model allows you to pay for the software development services hourly. Basically, you are paying based on the number of hours worked by your provider and the materials used.

This software outsourcing model is best suited when the project requirements are not fully known at the start or if they are likely to change throughout the course of development. 

With no limitations on modifications, this model is ideal for small projects. Also, it’s perfect when you’re trying out a new software development outsourcing agency.

3. Dedicated Team Model

Essentially, a dedicated team model is like having a software development company all to yourself. Through this model, you’ll have access to a team of developers who will work exclusively on your project.

Both parties will agree on the working hours, rate, and other terms. Usually, many startups agree on 40 hours per week to maintain a cost-effective budget.

Best suited for long-term projects with complex scopes or projects that require ongoing maintenance and support, this model gives you the freedom to scale up or down your team size as needed.

scope of project quote

4. Staff Augmentation Model

If you already have an in-house development team and need to fill a skill gap or need more resources, then staff augmentation is the right outsourcing model for you.

With this model, you can hire experienced software developers on a part-time or full-time basis for your organization’s existing processes and tools. Plus, you have the flexibility to choose the team members and select their level of expertise.

What’s great with this option is you’ll be billed hourly. So, it’s best suited for organizations with an in-house team but needs additional resources to meet spikes in demand or deadlines. 

No matter which model you choose, it’s important to clearly define the scope of the project and set roles and responsibilities. Outsourcing companies will know which model is suited for your project. So, be sure to discuss with them so you can avoid costly mistakes in the process.

Who Do You Need in Your Software Development Team?

Having the right people on your software development team is key to successful project delivery.

Every project is different, so the team composition depends on your requirements. Generally, an ideal team should consist of the following:

Project manager

A project manager takes care of the activities such as planning, monitoring, and reporting. They are also responsible for ensuring that all team members are working together effectively and meeting project milestones.

UI/UX designers

These professionals are responsible for creating the user interface and experience of your software. They work closely with developers to make sure that all features are implemented correctly.

software dev professional team

Software developers

Software developers are responsible for the code and development of your software product. They work together with designers in developing and maintaining the software.

Quality assurance engineers

Quality assurance (QA) teams are responsible for making sure that the software product meets all requirements and specifications. This ensures that the product is of high quality as well as bug-free.

Business analysts

Business analysts are responsible for understanding and interpreting business requirements and translating them into software design documents. They are also responsible for creating the project’s timeline and budget.

Maintenance and support staff

These people are responsible for taking care of the product once it’s released. They are essential in ensuring that the software remains up-to-date and running smoothly.

With the right mix of skills and experience, an effective software development outsourcing team can meet your project’s needs and deliver great results. So make sure to choose the right people for your team!

How Do You Make Your Outsourcing Plan?

Preparedness is key for a successful startup outsource software development strategy. Having a clear plan will help minimize risks and ensure that your project is delivered on time.

having clear objectives quote

Here are some tips to consider when making your outsourcing software development process a success:

1. Identify your goals

Before you begin, it’s important to know why you’re outsourcing software development and what needs to be accomplished. Identify the goals point by point and carefully describe your expectations of the final product.

Having clear objectives will help your offshore development team understand what needs to be done and deliver a successful outcome.

2. Define your budget

Setting a budget is crucial in project planning. This will help you determine the scope of the project and decide whether or not outsourcing is a viable option.

The goal of outsourcing is to cut costs and save in-house resources, so make sure everything is accounted for, such as labor, materials, and overhead, in your budget. This will ensure that you stay within your allotted budget.

3. Determine your required technological profile

One thing to never forget when you outsource software development is the technical expertise of your remote team. Make sure that they have the right skills and experience to handle the tasks assigned to them.

With that said, be sure to ask for detailed resumes or portfolios and conduct interviews to ensure that you get the right people on board.

4. Delegate tasks

What activities of software development do you wish to outsource? Do you want to outsource the entire development process or just certain tasks?

Determining which roles and tasks to delegate is important when setting up your outsourcing plan. This will help you keep track of the progress and ensure that the team delivers a successful outcome.

5. Create a great work environment

Having a greater relationship with your outsourced developers doesn’t just benefit the project but also your company’s reputation.

A peaceful work environment is essential in motivating, avoiding rumors, and closing any cultural gap that may exist between your team and the offshore developers!

These are just some effective ways to get started with setting up your outsourcing software development plan. With the right preparation and dedication, you can make your project a success.

woman doing recruitment process

6 Considerations Before Hiring Software Development Companies

Now that we’ve covered the basics of outsourcing software development, it’s time to choose your partner.

Before you hire a software development company, here are some important considerations to make:

1. Effective communication

One of the top challenges when you outsource software development, is communication, especially if you hire an offshore team. If you want your project to be successful, then being able to communicate effectively is a necessity. After all, how can you explain what you need if you don’t understand each other?

Timezone differences and language barriers are just two of the common hurdles that you may encounter, so make sure to find a team who can speak your language or English and can keep up with your schedule.

2. The cost

Short-term versus long-term operational costs are two of the most important aspects to consider when it comes to getting software development services.

The main purpose for outsourcing is always to cut down on expenses, and in order to do so, you’ll want an outsourcing partner that can offer better rates over time. Be cautious of any hidden costs that may pop up along the way.

3. Intellectual Property contracts

Agreements and contracts should be your priority before you hire a third-party company. One of the most important is intellectual property rights and if you don’t have one in place, then be sure to make one soon after.

Non-disclosure agreements can also help protect you from any intentional or unintentional wrongdoing, so be sure to take the time to discuss these with your chosen offshore company.

man signing contracts

4. Tech competency

Never trust a company that says they can do all stacks and technologies without doing a thorough check. It’s important to determine if the company has the specific tech stack you’re looking for and can provide innovative solutions when needed.

If you want to find out the core competency of a team, the best thing to do is look for proof in their portfolio or past projects. Asking them directly could also help you get a better understanding of their level of competency.

5. Ask for their software development process

A trusted outsourcing software development agency will have an entire development infrastructure process in place for every project they take on. Ask your chosen partner to explain their process and find out how they handle different scenarios like bugs, challenges, or any other unforeseen circumstances.

This will help you gain a better understanding of the company and how it can help you with your software development needs.

6. Scalability & flexibility

Managing a team can be burdensome, but you can outsource software development teams to an agency that will tailor its staff and time according to your needs.

Do your best to avoid becoming a victim of an unfair, one-sided contract. A project-based working relationship is best because it gives your company the freedom to hire only when necessary. This makes things more flexible while still cutting costs.

Remember that one outsourced software development partner can make a significant difference in the success of your project.

Let’s Develop Your Custom Software Project!

As a company that has been in the industry for years, we know how important it is to have the right software development partner. Having a team of experienced coders and project managers that you trust can make all the difference in the success of your project.

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Here at StarTechUP, we have specialists in various technologies and stacks to tailor the perfect solution for your minimum viable product, web application, or mobile app!

Our experienced software developers can help you develop the perfect custom software for your project. Get in touch with us, and let’s create something amazing!

About the author: Andrea Jacinto - Content Writer

A content writer with a strong SEO background, Andrea has been working with digital marketers from different fields to create optimized articles which are informative, digestible, and fun to read. Now, she's writing for StarTechUP to deliver the latest developments in tech to readers around the world. View on Linkedin