12 Nov Software Development Outsourcing Guide
Offshore Developers for Hire
In IT since 1989, HLT Global helps businesses with fast, quality and hassle-free software development.
Software Development Outsourcing: The Essence
Outsourcing is one of the reliable ways for a businesses to develop software at a lower cost and effort. Software outsourcing entails the following benefits and risks:
Software development outsourcing advantages
- Reduced hiring efforts and costs.
- Quick project start.
- On-demand access to required resources.
- Optimized managerial efforts.
- Easy team scaling up and down.
Software development outsourcing disadvantages
- Less control over the project.
- The risk of communication gaps.
- The risk of security breaches.
How to Set Up Software Development Outsourcing
The outsourcing process setup will take from several days to several months. It will depend on the chosen outsourcing model, the maturity of the vendor’s processes, your readiness for such kind of initiatives, and more.
Step 1. Decide whether to outsource
A software development outsourcing initiative should start with a feasibility analysis. It can include the following steps:
- Determining the stumbling blocks in your existing software development process.
- Deciding on a part(s) of your software development project to outsource.
HLT Global recommends
- Software maintenance and testing are usually the easiest project parts to outsource, while software requirements gathering and design are the most difficult to outsource.
- When outsourcing software coding, make sure software can be safely divided into independent modules.
- Comparing Total Cost of Ownership (TCO) of in-house vs. outsourced software development.
- Selecting the fitting model of software outsourcing services:
Team augmentation
A vendor provides you with remote professionals for you to manage directly. You can get an exact number of experts you need, from 0.5 FTE to 100+ FTE.
Dedicated team
A vendor offers a dedicated team to work on an outsourced project or a part of the project, sharing risks and responsibility for the quality with you and/or your other vendors. Team management mostly stays on the vendor’s side: their Team Lead/PM reports regularly to your PM on the work progress.
Full process outsourcing
A vendor takes over the whole development process, with full responsibility for team organization and management, quality of the development results and accompanying risks.
Step 2. Select the software outsourcing company
When shortlisting potential vendors, consider the following factors:
- Experience in outsourcing software development services shared by a vendor on their website, in case studies, etc.
- Vendor collaboration experience shared by third parties in testimonials, reviews from independent research agencies, etc.
- Location (onshore, nearshore, offshore), time zone differences.
- Language and cultural proximity.
- A vendor’s development infrastructure (hardware, network, bandwidth, etc.).
- The maturity of project management, quality management, and security management processes (e.g., proved by ISO 9001 and ISO 27001 certificates).
- Compliance with industry standards and regulations you need to follow (HIPAA, FDA, PCI DSS, etc.).
- Pricing options offered (fixed price, T&M).
- Software maintenance and support options available.
Note
Vendors offer a variety of support models, for example, free/paid post-implementation software maintenance for a certain period, free/paid post-implementation software maintenance and free/paid post-implementation support (L1, L2, L3, L4 support in different combinations) for a certain period, free post-implementation software maintenance and support and paid software support and evolution for the required period, etc.
Step 3. Set up the outsourcing process
Team augmentation
- Send a request to the pre-selected vendor with the detailed skill set and FTE required.
- Get CVs and rates of available staff.
- Schedule interviews with potential hires.
- (optionally) Arrange a test task for the potential outsourced experts.
- Negotiate SLA, including penalties for security breaches.
- Sign the contract.
- Organize the knowledge transfer to outsourced resources.
- Provide remote resources with access to the project infrastructure.
- Negotiate communication channels between the outsourced staff and the rest of the project team.
- Schedule to get weekly and/or monthly performance evaluation reports.
Dedicated team
- Send a request to the pre-selected vendor and get the proposal with service options, development approaches, etc.
- Receive the vendor’s estimation of the project scope and exact efforts to implement it.
- Together with the vendor decide on KPIs to track the performance of the outsourced team.
- Negotiate SLA, including penalties for security breaches.
- Sign the contract.
- Organize the knowledge transfer to the outsourced team.
- Provide access to the project infrastructure to the remote team.
- Decide on the convenient communication channels with the outsourced team.
- Schedule to get weekly and/or monthly performance evaluation reports.
Full process outsourcing
- Send a request to the pre-selected vendor.
- Receive the proposal with basic estimates for a technical solution the vendor suggests (optionally), service options, development approaches, etc.
- Get from the vendor:
- Analysis of all software development and support needs (based on application backlogs, business plans, input from IT departments and business departments), evaluation of the project scope.
- Analysis of your current development and testing processes (if any).
- A service delivery plan.
- Negotiate SLA (it can include such KPIs as budget planned vs. budget spent, user satisfaction metrics, backlog waiting time expired, application reliability and security metrics).
- Sign the contract.
- Organize knowledge transfer to the vendor.
- Check your vendor to set up the development process, implement CI/CD (if needed), integrate with development and deployment processes of other vendors (if needed).
Specifics of Software Development Outsourcing Models
Staff augmentation
Pros:
- Easy resource scaling up and down to adapt to changing project needs.
- Quick access to specific skills.
- Direct supervision over the development process and team productivity.
- 1-2 weeks for onboarding (if the required resources are readily available in the vendor’s pool).
Cons:
- Full responsibility for project-related risks is on your side.
- Onboarding and managing efforts are on your side.
- High risk of communication gaps and collaboration difficulties.
Dedicated team
Pros:
- 1-2 days to start (if the team is pre-assembled by a vendor and the team structure just needs to be reasonably adjusted to your project needs).
- A vendor provides a Team Lead/PM to coordinate the work of the outsourced team so that they need little/no guidance from your side.
Cons:
- Risks related to vendor selection.
- Project team coordination and project risk management can be still partially on your side.
- In a newly gathered team, people may underperform during the first 2-4 weeks until the group turns into a real team.
Full process outsourcing
Pros:
- Minimum management efforts on your side.
- Guaranteed quality of project deliverables and timeline alignment (with penalties for breaching them).
- Access to a vendor’s established development processes.
- Tackling project-related risks is on a vendor’s side.
Cons:
- The longest setup (up to a month).
- The highest vendor risks.
Software Development Outsourcing: Roles on Your and Your Vendor’s Sides
Staff augmentation (usually software engineers)
On the vendor’s side
- One/several developers.
On your side
- Project manager.
- BA.
- UX designers.
- UI designers.
- Developers with a Team Lead.
- Testers.
- DevOps engineers.
- Support engineers.
Shared or on both sides
Dedicated team
On the vendor’s side
- Developers.
- DevOps engineers.
- Team Lead/Project manager.
On your side
- Project manager (for the vendor’s PM/Team Lead to report to).
- Developers (optional).
- DevOps engineers (optional).
- Support engineers.
Shared or on both sides
- BA.
- UX designers.
- UI designers.
- Testers.
Full process outsourcing
On the vendor’s side
- Project manager.
- BA.
- UX designers.
- UI designers.
- Developers with a Team Lead.
- Testers.
- DevOps engineers. S
- upport engineers.
On your side
- IT manager.
Shared or on both sides
| Staff augmentation (usually software engineers) | Dedicated team | Full process outsourcing | |
|---|---|---|---|
| On the vendor’s side |
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| On your side |
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| Shared or on both sides |
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Software Development Outsourcing Costs
The software development outsourcing cost is defined by the following factors:
The hourly rate for outsourced resources. The price varies greatly depending on the outsourcing region.
The performance of an outsourced team.
The transition to another outsourcing vendor (it is quite costly).
Specific cost factors for full process outsourcing:
- The maturity of the vendor’s outsourcing processes (mature project management and well-established development processes help avoid rework).
- The vendor’s QA process specifics (proactive testing lowers QA costs while fixing bugs in production makes QA more expensive).
HLT Global’s Software Development Outsourcing Offering
With 32-year background in IT and 700+ IT experts, HLT Global provides flexible software development outsourcing services for businesses to deliver software solutions cost-effectively and fast.
Staff augmentation
- Developers and architects well-versed in Java, .NET, Python, Go, PHP, and more (including legacy and retiring languages).
- Wide pool of roles for outsourcing: testers and test automation engineers, DevOps engineers, system and integration architects, data architects, data scientists, support engineers.
- Flexible cooperation terms: 1 month – 10 years.
- The exact number of qualified professionals you need (from 0.5 FTE to 150+ FTE).
- Capabilities in advanced technologies (AI, IoT, Big Data, VR, computer vision), modern architectures (cloud-native, serverless, microservices) and development approaches (CI/CD, test automation), and industry-specific knowledge.
Dedicated teams
- Fast ramp-up of the outsourced team (2 workdays – 2 weeks).
- Experienced PMs and Team Leads to manage distributed teams.
- Full assistance in establishing a collaboration environment and project progress control.
- Strict compliance with agreed quality KPIs.
- Easy team scale up or down.
- 1.5-2x faster development due to high proficiency and use of best coding and time management practices by our developers.
- 20-50% project cost reduction due to the agile approach, CI/CD, and reuse of readily available components.
Full process outsourcing
- Full-scale Project Management Office (PMO) to handle projects of any complexity.
- Industry-focused consultants (manufacturing, retail, healthcare, logistics, professional services, telecommunications, and 24 more) to help bridge business and technology.
- Defining the business and software development goals you want to achieve and taking the overall responsibility for the ‘how-to’ part of the development project.
- Tailored communication with each stakeholder.
- Continuous granular monitoring of project progress, regular reporting.
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About HLT Global
HLT Global is an IT consulting and software development company headquartered in McKinney, TX, with offices in the EU and the Gulf. Since 1989, HLT Global has been rendering end-to-end software development services for both non-IT and IT companies. We have 700+ IT experts on board, customers in > 40 countries and across > 30 industries. We set up smooth and efficient collaboration, offer ISO 9001 certified quality management, ISO 27001 certified information security management, and deliver software solutions compliant with HIPAA, GAMP, FDA, PCI DSS, SOC 3, GDPR, and more.
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