3 min read

Why do companies outsource software development

Let's review top 8 reasons why do companies outsource software development.
why outsource software development?
why outsource software development?
Table of contents:

Companies may choose to outsource software development for several reasons:

1. Cost Efficiency

Outsourcing software development can often be more cost-effective compared to hiring and maintaining an in-house development team. Companies can leverage the expertise and resources of external software development firms or freelancers, saving on recruitment, training, infrastructure, and operational costs.

2. Access to Expertise

Outsourcing allows companies to tap into a global talent pool and gain access to specialized skills and expertise that may not be available internally. By outsourcing, companies can work with professionals who possess in-depth knowledge and experience in specific technologies, programming languages, or domains.

3. Access to Advanced Technologies

Outsourcing can grant companies access to cutting-edge technologies and tools that may be expensive or challenging to acquire in-house. Outsourcing providers often invest in the latest software development tools and infrastructure, enabling companies to leverage state-of-the-art technologies without significant upfront investments.

4. Global Market Reach

Outsourcing software development to firms or professionals located in different regions can provide companies with a global perspective and market reach. It enables them to adapt their software solutions to diverse markets, cultures, and user requirements, enhancing competitiveness and expanding business opportunities.

5. Mitigating Risks

Outsourcing can help companies mitigate certain risks associated with software development. External vendors often have established quality assurance processes, compliance measures, and security protocols in place. They may also offer warranty or support services, reducing the risks of software bugs, maintenance, and technical issues.

6. Focus on Core Competencies

Outsourcing non-core activities like software development enables companies to focus on their core business functions. By entrusting software development to external experts, companies can concentrate their internal resources and efforts on strategic areas, such as product innovation, marketing, and customer engagement.

7. Faster Time to Market

By leveraging outsourcing, companies can expedite their development process and accelerate time to market. External software development teams are typically focused on project delivery and have streamlined processes in place, allowing for faster development cycles and reduced time-to-market for products or services.

8. Flexibility and Scalability

Outsourcing offers companies the flexibility to scale their software development capacity according to project requirements. They can easily ramp up or down resources based on workload fluctuations, ensuring efficient resource allocation and project management.

To Successfully Outsource Software Development:

  1. Define Your Goals: Before you begin, clearly identify what you aim to achieve with the software development project. This could be anything from solving a specific business problem to improving customer engagement.
  2. Prepare Scope of Work Documentation: A Scope of Work (SoW) document outlines the specific tasks, deliverables, and timeline for the project. It provides a clear roadmap for both your internal team and the outsourcing partner.
  3. Define Your Technology Stack: Identify the technologies, languages, and tools that will be used in the development process. Your choices could be influenced by factors such as project requirements, team expertise, and future scalability.
  4. Bring Experienced Engineering Leader: An experienced engineering leader can provide strategic direction, ensure the quality of the work, and manage the relationship with the outsourcing partner. This role is key to ensuring smooth execution of the project.
  5. Manage Project Scope, Budget, and Timeline in Each Iteration: Regularly review and adjust the project scope, budget, and timeline to ensure that the project is on track. Iterative planning and review sessions will help to prevent scope creep and keep costs under control.
  6. Choose the Right Outsourcing Partner: Look for a partner with a proven track record in your industry or with your chosen technology stack. The right partner will understand your business needs and be able to deliver high-quality work within your timeframe and budget.
  7. Establish Clear Communication Channels: Set up regular meetings and use collaboration tools to facilitate communication with the outsourcing team. Clear and frequent communication helps to resolve issues quickly and keeps everyone on the same page.
  8. Plan for Quality Assurance and Testing: Include plans for thorough testing and quality assurance in your project scope. This will ensure that the final product meets your quality standards and performs as expected.
  9. Plan for Post-Deployment Support: Ensure that the outsourcing partner can provide support after the product is deployed. This could include bug fixes, maintenance, and further development as required.


While outsourcing offers numerous advantages, there can also be challenges related to communication, coordination, cultural differences, and intellectual property protection. Companies must carefully evaluate potential outsourcing partners, establish clear communication channels, and define project expectations and deliverables to ensure successful collaboration.