Why Software Project Outsourcing?

When a business thinks of how to accelerate their time to market or move beyond what their internal resources can do, they often reach out to software project outsourcing companies to help. (5 Ways To Shorten Your Time To Market)

Project outsourcing companies come in many shapes and sizes. In this article, we explain some of the reasons why you might consider project outsourcing along with key points to keep in mind as you look to engage with an outside party.

It’s worth noting that we’ll be specifically focused on Project Outsourcing, which is typically a different engagement model than Staff Augmentation. If you are curious, however, we have written an article on Why Staff Augmentation is valuable as well as its differences


How Does Project Outsourcing Work?

In a project outsourcing model, you are working collaboratively with a vendor to complete the project and giving up direct control over certain aspects of the business operations. For example, the vendor will bring in their proven process and shift the talent needed on the project as they see fit. The vendor is trusted to make the important decisions to ensure the product’s success without your direct oversight and instead, you are trusting them to ensure a specific outcome. I like to compare it to having a general contractor who might work if you were to build a house. In a Staff Augmentation scenario, you would find the architect, electrician, plumber, etc., and oversee their work and the timelines to ensure the house is built properly. In Project Outsourcing, you hand those tasks off to a general contractor who ensures the house is built properly by bringing their own team of specialists. It is up to the vendor to recruit, manage and train the team of skilled professionals to ensure success. The engagement turns from one of tracking individual tasks and engineers to a results-centric model.

According to a recent survey by Computer Economics, companies are dedicating more of their budgets each year to outsourcing. With the upper Midwest in general, and particularly Minnesota containing top tier universities, a central time zone, and lower costs of living, project outsourcing firms in these locations are a viable option to select when it comes to filling internal skills gaps, finding skilled expertise, or saving costs by offloading less critical business operations to an outside vendor.


Why Might You Outsource?

Some of the benefits of project outsourcing overlap with staff augmentation in the general sense, however, there are some specific ways in which outsourcing can vary. Here is a list of them:

  • Reduced Expenses – Both in management overhead and training. Project Outsourcing allows access to an entire range of talent. Product managers, UI/UX, Mobile application development, Cloud, Machine Learning, etc. Just like when working with a general contractor, for a set price, you have access to an entire pool of product and software engineers that will ensure your success.
  • Time Saved – Since the project is being managed by an outside party with set deliverables, this frees you (the customer) up to do what you do best, in running your business. You don’t need to hire project managers yourself.
  • Software Development Process – Leveraging the outside party’s process results in avoiding many of the mistakes that other companies run into when trying to build software themselves.


What Services Can Be Outsourced?

The short answer is just about anything! This is the reason behind the “gig economy” that we are living in these days. However, in order to be successful, you need to make sure you have not only a high level of trust in the firm you are using but a clear and consistent level of communication with expectations and processes.


What Key Metrics to Consider When Evaluating a Project Outsourcing Firm?

Now that we have covered the many benefits of Project Outsourcing and what services can be outsourced, let’s discuss a few things that you should make sure any firm you engage with has:

  • Process – First and foremost, make sure any company you engage with for outsourcing has a process. Ask them to share how their phases work, what is the cadence of their communication, and how they will get your project from start to completion. If they can’t provide a clear roadmap, this should be a red flag.
  • Team Roles and Accountability – In any good software engineering process, each team member has a clear set of not only skills but what they are accountable for. As part of their process, ensure that you understand what each role does and what value they bring to the project.
  • Skillsets – This might go without saying, but ask the firm about their team skillets. With the roles and accountability defined, work with them to understand what roles they might have a strong suit in and where you might have internal staff to augment them. Not every role needs to be outsourced, but in a good engagement model, it must be clear and understood which organization handles which pieces.
  • Quoting Process – If a firm gives you a quote for a project based on one meeting and a few bullet points you should be highly skeptical. If it’s standard maintenance it’s easier to quote, but any new software project being developed these days remains a highly complex set of tasks. It will require a good amount of upfront hours to go through discovery to really detail out the work that will be required.
  • Guarantee – Ask if the firm offers a guarantee on their work? Some outsourcing firms are open to giving you a set amount of time to support your after project completion or a discount to startups or project building software for socially responsible clients.
  • Acceptance Tests – As part of the outsourcing process and the need for ensuring that it’s a results-centric engagement, acceptance tests have been defined to all parties know when the project has been completed.



We hope that is article has helped define Project Outsourcing, some reasons why you might consider it within your organization, and some key differentiators that you should be looking for when interviewing a firm to provide outsourcing services. Finally, note that Project Outsourcing is results-centric. The quality of the solution is the vendor’s responsibility as they control the process, staffing, timelines, and cost of the project from beginning to end. For some companies evaluating how to build their software product quickly, this is exactly the correct solution for them.


Have more questions? The Differences Between Software Staff Augmentation and Software Project Outsourcing