What Is Outsourcing Software Development? Valuable guide in 2020

Outsourcing software development is the best choice to keep up with digitalization.

To stay competitive in this new economic environment after Covid-19, every business must require a new adaptation of digital technologies. For this reason, outsourcing software development is the best choice to keep up with digitalization.

The pandemic has pushed companies over the technology tipping point. Similarly, the solution to all these problems is to use innovative technologies. So how do you get started when you don’t have much experience? The answer is outsourcing software development

1. What is outsourcing software development? 

Outsourcing software is an arrangement in which a company hires an IT partner. By all means, they will professionally conduct all the tasks of your application software.

Additionally, the system software is now seamlessly done with the help of blazing-fast internet. And the advanced communications tools as well, making it a must-have strategy for every enterprise.

In light of the global trends in Tech, outsourcing software is now standing at the top of the list. In fact, the concept of an IT partner is becoming more popular since 2020. Many companies tend to choose this way because it is cost-effective, has the ability to meet customers’ needs, and has advantages for the business.

According to Fortunly, the size of the global outsourcing market reached 92.5 billion dollars last year. Surprisingly, the global IT outsourcing market is expected to grow by $98 by 2024. This is a huge number, as cloud technology has become mainstream for every business.

2. Outsourcing software – A must for staying competitive

First, a software company has in-depth knowledge with experienced expertise. As a professional organization, they always stay up to date with the latest technology. Which can provide effective applications and functions for businesses.

Second, some small and mid-size enterprises (SMEs) cannot find suitable people for their projects. In addition, they do not have time to build an in-house development team. Therefore, cooperating with outsourcing companies will help you to get more benefits. Indeed, they understand what works best for you, and all you need to do is focus on core business.

Third, outsourcing software not only reduces costs but also saves time and resources, which is crucial to the competitiveness of businesses.

Not to mention, additional software development capacity will be needed by companies during busy periods of time. Outsourcing companies also provide them the extra flexibility to fill supplementary orders. 

3. The current state of software development

In fact, there are different types of software outsourcing services and engagement models that are available to serve customer needs. 

3.1. Types of software outsourcing services

There are much different software outsourcing models in 2020, which are: high-tech and innovative technologies of artificial intelligence, robotic process automation, and cloud computing. Moreover, they are expected to have a significant effect in the future. 

Additionally, many software outsourcing agencies provide a full portfolio of services that customize to customers’ demands. Also, it is useful to meet numerous ranges of their specific business requirements at any stage of the project. During the whole development cycle – from planning to defining, designing, developing, testing, deployment, etc.

Software development agencies can offer essential resources and expertise to make sure the entire project’s success.

By using software outsourcing, businesses can get services delivered under remote operation models. Particularly, this allows them to work with top, talented IT professionals who are a perfect fit for their projects. 

3.2. What Are The Engagement Models For Software Outsourcing?

There are 3 ways for customers to outsource their projects. They are onshore software outsourcing, offshore software outsourcing, and near-shore outsourcing. 

Onshore software outsourcing (OSO)

OSO means customer companies working with development teams from the same country. 


  • There are no language barriers between both sides.
  • Leading to a more effective outsourcing result. 
  • An onshore development team is potentially accessible


  • The development costs usually are higher than those of other foreign outsourcing agencies. 
  • They probably have the same tech-skill gap that your company experiencing.

Nearshore Software Outsourcing (NSO)

NSO means customer companies working with software development outsourcing agencies located in the neighboring nations.


  • They share a work ethic and the values caused by their culture are very similar to your firm.
  • They are geographically closer to your office, enabling easy site visits when it is necessary.
  • Furthermore, they have the same time zone as you. Which means they are able to get things done quickly.


  • The most common one is related to the easy availability of resources and the cost. These are certain factors to take into account. 

Offshore software outsourcing

Offshore software development refers to the act of customer companies working with development teams that are located in other countries. 


  • It is the most cost-efficient option as it helps to save labor costs.
  • Online communications channels (VoIP phone, skype, emails, etc.) make it possible to manage the projects remotely.
  • Easily scale up and down.
  • Access skills you struggle to find in your region


  • Running an offshore team might be laborious
  • Difference timezone

4. How To Outsource Software Development Effectively?

Significantly, there is a wide range of factors that influence the success of the project. Here below are 5 aspects that customer companies to keep in mind:

  • Define the reasons and objectives for outsourcing.
  • Have realistic expectations.
  • Be flexible and have an exit plan.
  • Set milestones and frequently track progress to provide feedback.
  • Then guide the extended team.

As shown above, there is no way to make sure that an outsourcing project will be successful at 100%. However, many certain things to help your companies increase the chance of success thanks to IT partners.


In the final analysis, we recommend that you should find the right outsourcing agencies that apply Agile methodology. They will have the responsibility to manage your software projects for better quality. Correspondingly, using advanced tools to manage and help gain visibility into project progress.

At Manifera, it is our mission to guide you on scaling your software development team successfully and which fits your current business needs perfectly.

If you need help choosing the right option for your online store, drop us a line — We’d be happy to hear about your business and suggest a good fit.




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