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How to outsource Software Team effectively

Published : Aug 04, 2022 Updated : Jan 27, 2024

How to pick up right software vendor while outsourcing? How to save costs on development? The best solution - is to outsource! Get answers in this article

Every time you call a plumber to fix a sink or ask baker to bake a birthday cake, you’re outsourcing. Outsourcing software development is almost the same. Although there is more responsibility, but the risks higher and the process is more complicated

According to ReporterLinker, the global IT outsourcing market expected to grow by $98 billion from 2020 to 2024.This means that software outsourcing has become the norm among both established companies and startups. This has happened for several reasons. Here I will talk about it, what software outsourcing is and how to outsource software development correctly.

Let’s get started!

Software Outsourcing: Types & Models

Outsourcing software development is a lot like home improvement. Instead of doing everything yourself - you turn to outside repair services for help. The end goal is the same - to make your home more comfortable and enjoyable to live in. There are different ways to achieve the goal.

Software Outsourcing Types

Three main types of outsourcing considered, depending on where the work done:

  • Onshore

This is a very close collaboration geographically, so you and your outsourcing partner are in the same time zone. Onshoring is good because your affiliate software team can have an office near you, so you can easily meet up at even your favorite coffee shop. This is a good option for people who have some space in their budget and want to get team near them

  • Nearshore

With this type, software development takes it’s place in a country with a similar time zone or with minimal differences. This is also called neighboring. This type of outsourcing benefits from proximity and offers a pool of IT professionals at a lower cost compare to onshore, but there are cultural and language issues might take a place

  • Offshoring

For this type, the easies would be to explain in examples. If your in-house team based in the United States, and you decide to work with trusted software vendor like CloudFlex that is located in Ukraine, it would be offshoring. Simply put, an offshore team means a team located in another country which is pretty distanced from you

Offshore software development considered to be the most cost-effective method and offers you a pool of IT specialists for a pretty cheap rate. On the other hand, there is a risk, you will be dealing with time zone differences. Since offshore team mostly outsourced by other countries, they know language pretty well and there is no communication barrier most of the time

Software Outsourcing Models

The software outsourcing business model selects the way you collaborate with a vendor

Here are the most common software outsourcing models:

  • Project-based model

As simple as just hiring a custom software development company to design and develop website, mobile application, backend or data science project that is already envisioned and defined in the plans

  • Dedicated team model

To determine the scope of the project you hire a dedicated team and work together. Unlike the project-based model, a dedicated team is more focused on your project. That’s what the “dedicated” part means - engineers are full-time available and not getting distracted

For example if there is no scope to work during project-based post-production support period, development company will reassign a team to other projects. So, always consider dedicated team to get full attention

  • Outstaff model

Sometimes it just required a few extra people, and you can hire professional engineers or freelancers to do that amount of work. Outstaffing allows you to hire exact team members and integrate them within your team. This way you are not overpaying and can combine C-level part of the team in-house and get a good price reduction on the engineers who will make the rest

  • Time & Material for any phase of project

The team works to satisfy your requests on-demand. If there is a scope for example for web, mobile or backend development in Python or NodeJs you will pay for time spent. That works best for the support phase, so that you are not overpaying for the developers and generating the most value out of time spent

Why to Outsource Software Development?

Understanding the benefits of outsourcing software development, such as lower costs and increased productivity, is fairly easy.

Per open data available, United States companies fulfill their about 1 million of open IT position elsewhere

5 reasons to outsource software development services

  • Develop Faster

Outsourcing software development greatly speeds up the entire product development process. You don’t waste time hiring every engineer, designer, or product manager. You simply hire an entire team of professionals to handle your project. That way, you hire once and get right down to the project.

  • Reduce Costs

A Deloitte study found that 70% of respondents cited cost savings as the most important factor in their decision to outsource software.

You could say that this advantage lies on the surface. But it’s not just about outsourcing developers at a fraction of the price, it’s also about outsourcing software projects, which saves on hiring, benefits, vacation, technical equipment, and makes room for other activities. You can focus on your core business functions, start another project, or spend time and resources fixing bandwidth problems. This is a good way to improve cost efficiency.

  • Reduce Risks

The software outsourcing company is your partner, and you can trust it completely. Let me give you some context here. Before you start your partnership, choose the outsourced development model I mentioned earlier. Each model has its own rules and conventions, and you can choose the one that suits your project. What is crucial here? By signing an agreement on a specific collaboration model, you reduce the risks in the development of your project. As your partner, we work hard to meet all the requirements.

So you’re safe.

  • Fill The In-House Gaps

Outsourced software development is a tool for developing skills. For example, in an outstaff model, you can outsource to an individual specialist. For example, if you have a marketing team, you are looking for experienced developers and designers, a dedicated team model would work for you.

With software development outsourcing, you only pay for the expertise you need. It’s a great way to assemble a full team of professionals or in-house employees who will make an idea come to life

  • Access To Talents Worldwide

The main reason for outsourcing software is that it opens all doors and location does not limit you. In today’s world, that’s an advantage over the competition.

Outsourcing programming services and make software development cheaper is a huge topic nowadays and as I mentioned earlier, there is a lot of jobs in the US in the IT industry. The shortage of IT developers is forcing Western employers to look in different places

It’s worth mentioning, that there is more than 1 million IT professionals in Eastern Europe including Ukraine. This gives Eastern European countries more opportunities to fill the gaps in these IT departments, since hiring a developer or dedicated developer is cheap, though, the standards remaining high. This way founder can save significant budgets but still get the quality

The conclusion is obvious. Outsourcing for development companies is not just a benefit - it is a way to create a successful business

How To Find A Software Outsourcing Company?

Once you’ve decided to outsource your custom software development, it’s time to look for a good partner. In CloudFlex we are focused on building relationships with the customer and always searching for a way to share our improvement ideas

Here are the major things that might assist you along the way of finding a good partner:

  • Outline Your Needs

It works best when you know what you are trying to achieve. This way, product matches the reality at the end

Is it just designing of website or do you need a strong engineering team to design, document, develop and release a mobile app from scratch? Do you need it on iOS or Android, or both? Maybe there is an AI piece integrated with your backend? Don’t hesitate to talk to your engineers to hear what they would say and keep in mind that product requirements really needed to be detailed and that’s your job

The first and most important thing is to clarify your goals. Here are 3 questions you can ask yourself at this point:

  • What exactly do I expect from the outsourcing company?

  • How do I want to cooperate?

  • What do I want to get in the end?

These are all valuable questions to you personally, since this is a good way to save valuable resources and to increase chances for the success

  • Check Company Profile

Look at who’s in the software outsourcing market. There are good company representations for example at Clutch and Upwork, except of their own website

  • Check Previous customers

To validate the experience and knowledge of the team, research is important. The right industry plays an important role, as working with an experienced software outsourcing team that has experience building real estate startups if you are focused in this area. It is an investment in your success. The best way to evaluate a potential software outsourcing company is to hear what people say about it. Take your time and check feedback from previous clients. Good place for that might be Clutch or Goodfirms

  • Book An Introduction Call

After a while, you decide what you want, checked recruiting platforms, and studied company profiles. Now - you are selecting a specific candidate. Limit your results by 5 companies and schedule an introductory call. You can do this by sending an email to the company with a brief description of who you are, what your idea is

  • Prepare The Questions You Want To Ask

The call has the following two purposes:

  • Allow the outsourcing company to learn more about you
  • You can get to know the outsourcing company better

If everything is more or less clear with how to present an overview of your business idea, then when it comes to getting to know a potential partner, things become much more complicated

What questions should you ask him or her? Should you check their experience first or look at the communication?

My answer is - both. Prepare ahead of time and create a list of questions. Here are some questions that might be on your list:

  • Could you briefly describe the process a company goes through when they decide to work with you?
  • What does a typical process for taking on a new project look like?
  • When will you be ready to start work? How will there be communication between the teams?
  • What information from us will be helpful in preparing a proposal?
  • What do you expect from us in the process?
  • The legal part (legal entity, payment method, payment terms, etc.)

What are the next steps? It is in your best interest to ask as much as possible in the beginning. The more accurate the answers you get, the easier the decision will be

  • Make Sure The Company Shares Your Values

Software outsourcing deals are like building a bridge. It always happens on both sides. When we bid on software development projects that we really like, we are willing to exceed expectations. In addition, we are happy to spend more time and present clients with a proposal that will simplify their decision. In turn, you make your decision based on what you value most. Usually it’s not just the nuts and bolts of getting the job done. It’s about convergence of communications, values, quality of end software and attitudes

A team that has exceeded your desires is a better partner than a team with an enticing check

  • Meet The Team

To get an idea on types of persons you will be working with. Just schedule a video call to have a brief discussion. You’ll find out if you can communicate effectively, if you can connect with the team and learn how they work. At the end, we are all people and jokes along with informal conversations matters

How Much Does It Cost To Outsource Software Development?

In our experience, the approximate range of software development costs is between $50,000 and $250,000. MVP can be developed for a 30k$ You will most likely need a six-figure price tag, if you are building a multi-platform application with a strong backend part, financial transactions and active interaction with external systems. Of course the lower cost corresponds to a simple software product, website or a mobile app, that requires minimal user intervention and data processing on the server side. You can save budget by outsourcing developers offshore, see the table below attached to compare rates of software engineers in different parts of the world

Region Average hourly rates range
North America $40 - $270
South America $20 - $70
Western Europe $30 - $120
Eastern Europe $25-$85
Southeast Asia $15 - $50


For a more complete picture, read our article about how to decrease software development costs

Top World parts For Outsourcing Software Development

Based on our rich experience, Eastern Europe is the most interesting place for software outsourcing. Ukraine, Poland, and Czech Republic have been among the fastest growing destinations for offshore IT solutions in recent years. In addition to advanced technology, reliable infrastructure and affordable prices, communicating with third-party software companies in these countries is not difficult as they know language as well as timezone overlap is good with any part of the world. In this case, it is likely to meet the unique needs of your business and the specific needs of your project

Why CloudFlex Is Your Best Software Outsourcing Partner?

Every time at the presale meeting with a client, I present next information:

  • We are experts in area of Web, Mobile, Backend and Data Science/AI
  • Portfolio filled with bold study cases
  • Customers from 5 countries
  • Only Senior+ level engineers in a team

I would like to point out that we don’t just want to work with good people, we strive to become a reliable outsourcing software development company for our clients. Relationships and quality - values we provide to our clients. It’s about partnership and fun, not just getting work done.

For us, good software development outsourcing promotes more collaboration, ingenuity, and space for us to work effectively


Outsourcing software development is a common practice among established companies as well as among startups, which contributes to business development.

Software outsourcing can help you speed up product development, testing, and launch. By being prepared, you reduce risk and ensure that your expectations met.

If you think software outsourcing is what you need, or if you have questions, email us. We’d be happy to help you!

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