How to Choose the Right Outsourcing Partner for Your Custom Software Project

When it comes to developing new projects exclusively for some business applications, one of the critical questions that arises is whether the project should be completed in-house or contracted out to an outside team. Outsourcing helps one to have access to skills that may not be available within one’s firm; cheaper and efficient methods of working. However, it is very essential to find the right outsourcing partner for your project for its success. 

Benefits of Outsourcing Custom Software Development

According to the Statista Global Survey conducted in 2020, 74% of firms worldwide work with a third party when it comes to IT services.  There are several reasons why outsourcing custom software development can be a beneficial strategy for businesses:

Access to a wider talent pool: Outsourcing is just a way to find yourself in the comfortable position of seeking developers everywhere which gives you the possibility to get the most suitable team in the marketplace.  In the year 2023, the U. S.  Bureau of Labor Statistics carried out research that depicted the fact that there are 0.37 million computer and information technology employment opportunities every year and these are only within the U.S.  Outsourcing also adds to the likelihood of excluding geographic factors involved and is capable of searching for the required characteristics in a developer.

Cost savings:  It is also possible to find that development costs are lower in some outsourcing destinations. A 2022 Study showed that developers in the United States averagely charge as low as $70-130 per hour while in Eastern Europe as low as $25 per hour.

Software developer hourly rates in different countries.

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Increased efficiency:  Outsourcing is a strategic approach to creating organizational efficiency since it relieves the organization of duties that can be handled by other capable organizations while the organization concentrates on its strengths.

Scalability: Your outsourcing partners can assist you in increasing or decreasing the size of your development team.

Innovation: Outsourcing helps in exposing a wider range of development methodologies and technologies.

8 Simple Steps to Choosing the Right Outsourcing Partner

Our 8-step structured approach will guide you in selecting the appropriate outsourcing partner for your custom software development project. Here are some key steps to consider:

1. Define your project requirements.

You should always have a clear vision of what is expected of you in the project, and what you expect to achieve out of it. This will assist you in filtering the outsourcing partner’s skills and experience that is relevant to your business.

2. Identify potential partners.

Identify outsourcing firms and get a list of potential candidates that meet the requirements. Seek vendors that have worked in your line of business and with similar specifications in projects as yours.

3. Evaluate potential partners.

Carefully evaluate each potential partner on a number of factors, including:

  • Expertise- Is the partner competent enough to deliver your project in the best way possible?
  • Communication: Do you have the ability to interface with the partner’s staff?
  • Infrastructure: Does the partner have adequate structures to execute your project?
  • Project management: Is the partner organization using the best methods in the management of projects?
  • Scalability: Can the partner increase or decrease its team size in proportion to the need?
  • Pricing: Is the pricing model that is used by the partner reasonable?
  • Security: Is the partner sufficiently secure?

4. Consider Geographic Location

Geography can also be a factor in outsourcing as it is often easier to cooperate with a company located in a nearby area, to communicate with a partner and, possibly save money.

5. Conduct interviews.

Scheduling a meeting with the shortlisted partners to comprehend their work experience, competence, and working style of project management.

6. Request references.

Request the shortlisted partners to provide you with contacts of previous clients.

7. Negotiate the contract.

Be very careful when drawing up the contract with your selected partner. It is recommended that all essential aspects such as work and deliverables, timeframes, prices, and terms of payment should be noted on the contract.

8. Build a strong relationship.

When you have selected your partner, the next key area is to establish effective working relations with the partner’s staff. This will help in enhancing the flow of communication during the project lifecycle.

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Additional Steps for Successful Outsourcing

  • Set clear expectations. Be very specific about your expectations to your outsourcing partner to avoid misunderstandings in the future.
  • Establish a communication plan. Create a communication schedule as to how you will be communicating on a daily, weekly or monthly basis.
  • Use project management tools. Make sure you implement project management tools to monitor the progress, the tasks to be accomplished, and the communication with your counterpart.
  • Conduct regular reviews. It is advisable to carry out progress checkups to determine the status of your project and whether or not there is any problem.
By following these steps you will be on the right track to selecting the right outsourcing partner for your custom software development project.

Challenges of Outsourcing Custom Software Development

Despite the benefits, there are also some challenges associated with outsourcing custom software development:

  • Communication challenges: In this case, communication can be a barrier due to the differences in time zones and language differences.
  • Loss of control: One of the main disadvantages that you want to face when outsourcing is reduced control over the process of development.
  • Intellectual property (IP) concerns: There are measures that one has to take so as to protect their IP when outsourcing.
  • Quality concerns: Before outsourcing, one needs to be very selective so as to choose the right partner who will produce good work


Outsourcing is a very effective model of custom software development in any type of business. However, more attention should be paid to the choice of the partner which is crucial for the successful implementation of the project. Our 8-structured steps & additional steps will assist you if you are looking for a partner who will enable you to achieve your set goals in software development.

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