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November 24, 2014

The Top 5 Strategies for Outsourcing Software Development [Video]

The_Top_5_Strategies_for_Outsourcing_Software_DevelopmentRegardless of whether you’re just beginning a tech startup project or you’re an established software development company, there are a number of strategies you can implement to determine whether outsourcing is right for you.

The fact is that when choosing to outsource software development, you need to consider the unique dynamics of your company, the challenges of hiring domestic programmers, and what angle you’re coming from in terms of software development.

Here are the top 5 strategies you can employ to meet your development needs.

Internal Team

For this strategy, you’ve decided you want to hire only internal developers for you team. However, it’s worth reviewing this process to understand exactly what it means for you.

Here are some main points:

  • For one, it’s difficult to find reliable software engineers
  • If that wasn’t hard enough, retention is a serious problem for software companies
  • It’s simply expensive to hire programmers for an internal team
  • Engineers can be difficult to control, with many owners describing the process like “herding cats”
  • Finally, it’s difficult to build the right kind of company culture that can effectively development software applications

Internal & Outsourced Team

The second strategy involves outsourcing, but assumes there are some internal members on your team. In this situation, you need to expand by going offshore or nearshore, and some of the reasons might be that you can't hire enough programmers locally, you want to gain some additional expertise, or add some capabilities likes QA or user interface design.

Now that we’re talking about outsourcing, it’s important to define it. A lot of American companies tried what they thought was outsourcing and what they were really doing was partaking in long distance recruiting. This simply means that they hired “cheap” programmers who were not qualified to do the work and were hard to manage at a distance. That doesn’t work very well!

If you check Wikipedia or other standard sources, you get a commonplace definition that indicates outsourcing as the process of hiring another company to handle a business task or to provide a capability that you can't do or simply don’t want to do with internal employees.

Accelerance has a different definition of software development outsourcing that we use in our interactions with our customers and outsourcing providers. Accelerance defines software outsourcing as hiring a company that is an expert in software development best practices and one that ensures outsourced developers can better create applications than internal hires.

Dedicated Outsourced Team

This is one of the most straightforward and simplified methods of outsourcing software development. This process means complete outsourcing of your application development, and not having any internal software developers at all. Several Accelerance certified partners focus on this type of service and excel at building apps from start to finish based on your initial specifications and product development needs.

This model really relies on the nearshore or offshore company to manage a team and produce a software product for you. You will still interact with them and help them determine what to do, but you won’t have any internal software developers in your company. That saves you money and time.


For this process, you’ll have a complete specification of what the software will do and based on that, service providers provide bids in terms of how much it costs and how much time it takes to complete the software.

Usually, it doesn’t make sense to do this in many situations. Often you won’t know what the software will do at the very beginning and a time & cost estimate is therefore not going to be accurate.  However, in some situations it does make sense. If you have an existing application that you need to upgrade or move over to a new platform or technology, at that point it’s pretty well defined in terms of its functionality.

You can also create an initial product on a fixed priced basis, even using agile development techniques. You won’t be completely clear at the beginning exactly what the software will do, but if you have a good enough vision of what the software process, then a reputable software development company can give you at least a rough estimate how much it will cost to deliver that functionality in a given period of time.

BOT / Subsidiary

This solution embraces the idea of going offshore to form a software development subsidiary or operation in that country. It’s referred to as the BOT model, which means Build, Operate and Transfer.

It is similar to hiring a dedicated outsourced team. However, with the “T” you have an option to transfer the company into your own subsidiarity. It’s rare that companies do this, because there’s not a lot to be saved through this process, but for companies that are very large and are comfortable with the country in question, it sometimes makes sense. However, due to the upfront costs and difficulties of this process, it’s not recommended unless you’re going to have 50 or more software employees.

Ultimately, building software is about finding a process that works for your company and makes your company money. As you can see, outsourcing is often a solution to many company’s issues in terms of finding the right talent and building software quickly. Thankfully, Accelerance has the experience and resources to help you attain your outsourcing needs.


Andy Hilliard

As CEO, Andy leads and advocates for the globalization and collaboration of great software teams with companies in search of talent, innovation and a globally-distributed extension of their engineering function and culture. Andy founded the ground-breaking nearshore software development services company, Isthmus Costa...

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