Software Development Outsourcing: How To Opt Right Vendor For Your Business Ideas

End-to-end software development outsourcing supports businesses to focus more on the business ideas. So how to choose the right IT vendor for you? 

In today’s fast-paced business changes, enterprises are advancing in the breakneck space. To gain a strong competitive advantage over other competitors, companies need to implement digital solutions into their business operations. 

Business owners can use IT solutions to automate daily tasks, virtual assistants, and lucrative software solutions to enhance the business growth. However, it is an expensive and time-consuming process, thus companies need to consider factors before using those services. What is it: definition, models & trends? And How to choose the right software development outsourcing companies for your business ideas. 

Software development outsourcing: the market overview 

As people can see, the software development outsourcing market is a growing industry and continues growing in the future. Read out impressive software development outsourcing statistics and figures. 

Software development outsourcing statistics & figures 

North America regions: up-to-date statistics 

Software development outsourcing is a rise-up trend in the world, especially in North America. Eastern Europe, India, and China have dominated the global software development outsourcing market. Currently, the outsourcing software landscape in North America is getting momentum. 

According to Statista, software development outsourcing revenue in North America will reach $170 billion (2023). By 2027, the market is expected to increase to $227.4 billion, with a CAGR of 7.54% (2023 – 2027). The United States will generate an estimated $156.2 billion (2023). Besides, choosing the software development outsourcing services will be a viable cost resilience method for most enterprises. 

Europe regions: with IT outsourcing statistics 

In the last decade, Europe has witnessed significant growth. According to Statista, the software development outsourcing market will rise up to $138.2 billion (2023). In 2027, the market for software development outsourcing will reach $186.4 billion, with a CAGR of 7.77%. Among those, the United Kingdom and Germany contribute the highest revenue in the European market. 

Asia-Pacific regions: up-to-date figures 

The Asia-Pacific area has been an attractive hug for the software development outsourcing market. Vietnam has recently been an appealing IT destination for their productivity and cost-efficiency, behind India. The revenue will reach $95.85 billion (2023). In 2027, the market will be hit to $136.1 billion, with a CAGR of 9.16%. Japan and China will be the highest contributors. 

Software development outsourcing market size 

According to Statista, the global IT outsourcing market is valued at $92.5 billion. The IT outsourcing service makes the largest contribution to the global market, with $ 66.5 billion. Additionally, software outsourcing companies contributed over 50% of the global outsourcing market. 

IT outsourcing market accounted for 22% share in the global market (2020). The figure is going to reach 25% by 2025 (Krusche Company). Therefore, the IT outsourcing industry will rise in 2023, which gets market revenue and profitability. 

Among others, the app development sector increases since about 34% of enterprises are modifying the business strategies to avail software development outsourcing services. Only 9% use in-house development teams over outsourcing development teams. 

The software development outsourcing statistics prove that the market will grow to 70% (2023). Besides, the software development outsourcing market size also contributes to the global market, over 50%. 

How to choose the right software development outsourcing company for your business expansion? 

There is no best software development outsourcing company that fits you and your requirements the most. Nevertheless, here are some steps for you to choose the right software development outsourcing vendor: 

#1: Identify software development needs 

Before choosing any software development outsourcing company, you should specify your business needs and requirements. Which kind of software applications do you want to develop? Which online platforms do you want to be on? Which tech stacks do you use?  Moreover, you should work with development teams to create a clear software development plan. 

#2: Do research for potential vendors 

With various needs and requirements, you can find out potential software development outsourcing companies and research on them. Enterprises do research through various channels such as websites, blog posts, social media channels, clients reviews, portfolio, etc. 

#3: Contact and make the first call with IT vendors 

After researching potential software development outsourcing services, you reach out to them to discuss rates, qualifications, and others. The first call will clarify which software development outsourcing companies fit your requirements. 

#4: Check the previous clients 

There is another way to test those IT outsourcing companies. In addition to, you can contact the former clients for the testimonials and references. 

#5: Send out project requirements 

Lastly, you select the right software development outsourcing company for your business. You can discuss project details and requirements: which software development methodology that fits your needs? Moreover, you also ask for the estimated time and cost. 

#6: Test software development outsourcing services 

Conducting a real test for development teams is another way to test your software development outsourcing services. After carrying out the test, you surely choose the right software development outsourcing company that fits all your criteria. 

Which are the suitable software development outsourcing models for you? 

Before choosing the suitable software development outsourcing company for your business, you might understand various software development outsourcing models. They are a dedicated development team, staff augmentation model, and project-based model. 

Dedicated development team 

The dedicated development team model allows clients to give software development outsourcing companies control over the project. Enterprises work with skilled and qualified development teams to manage the project from start to finish. Besides, dedicated development teams include software engineers, project managers, business analysts, etc. 

Using the dedicated development team model, clients are the owners of development teams. To ensure cost-efficiency, enterprises can use the dedicated development team model. If the development project is dynamic and complicated, the model is worth investing in. 

Staff augmentation model 

Instead of using a permanent developer, clients use temporary developers from the software development outsourcing company. This software development outsourcing model assists to fulfill talent gaps on the in-house team. Staff augmentation model offers clients developers who have specific skill sets that fit their requirements. 

Project-based outsourcing model or Outsourced development team model 

Enterprises contract with the software development outsourcing companies to give lucrative IT solutions. This software development outsourcing model adheres to the customer’s requirements and expectations. 

When choosing the software development outsourcing, the project-based model supports clients to take a backseat to the project. Besides, clients focus on their business operations and business strategies. The software development outsourcing model allows teams to have flexibility in the development process. 

Tips to avoid challenges of software development outsourcing services

Prefer productivity and value beyond cost-savings 

Cost-savings are one of the main reasons for enterprises to choose software development outsourcing services. However, business owners should not choose costs over the outsourcing service quality. For example, businesses choose the cheapest quotation from the software development outsourcing companies. However, it is a big challenge for them. Besides, it might harm the whole software development process. Since business owners are putting their business expansion at risk. 

To avoid challenges of choosing software development outsourcing, you should consider some factors. They can be experience and competencies of software engineers, company portfolios, technical skills, and ability to speak English. The factors will define the rate of software development outsourcing services. 

Try to avoid miscommunication 

Communication will play an important role in IT project success. If enterprises hire onshore outsourcing services, communication might not be a big problem. However, if companies outsource offshore or nearshore software development companies, communication is something to think of. It can be challenging for clients or their in-house development teams to ensure smooth processes. 

Therefore, you should check the English-speaking ability of the software development outsourcing companies before signing contracts. Moreover, you can conduct in-personal interviews or look at their CVs. 

Moreover, scheduling regular meetings with development teams is another way to keep your project on track. Additionally, online tools can support you to communicate with software development teams such as Skype, Zoom, Slack, Jira, etc. 

What is Next: software development outsourcing trends? 

Increasing demands for IT outsourcing services 

Enterprises want to expand their business operations by using software development outsourcing service4s. Also, the global software development outsourcing market size is expected to increase sharply. Therefore, the global market size will reach $1.06 trillion by 2030. 

The rise of cloud-based solutions 

Another software development outsourcing trend is the demand for cloud-based solutions. Additionally, the cloud-based market size in software development outsourcing will grow in the forecast period. 

Data management and cybersecurity are one of the main sectors of cloud-based solutions. The market value will rise up to $141.2 billion from $34.0 billion (2022 – 2027), with a CAGR of 32.9%. 

Focusing on automation 

According to Tempo, 46% of top software developers state that automation is a key to market growth. Furthermore, software development outsourcing can solve mundane tasks, low capacity, outdated processes, and lack of talent. 

Adoption of agile methodologies 

Enterprises use software development outsourcing services since they see its tremendous benefits. Besides, they also see the flexibility and productivity of the agile development framework. The process requires collaboration among team members, leading to efficiency. 

Quality assurance – specialized discipline for teams 

Currently, software development teams prefer quality assurance for its advantages. Therefore, many firms use outsourced quality assurance for their in-house teams. According to Technavio, a leading market search states that the global market for software testing and QA will increase at a CAGR of 10.8% before 2020. 

Wrapping Up 

Software development outsourcing is convenient for enterprises that do not have enough internal resources for their software development projects. As a leading software development outsourcing company in Vietnam, Adamo Software helps you turn brand-new business ideas into reality. The experienced developers support to build and develop high-quality and lucrative software solutions in various fields. If you want to build a custom app or website, contact us for software development services.