What Is Software Outsourcing

Software Outsourcing is the practice of selecting a third party service provider of software development services. It is capable of managing all the tasks involved in a software development project.

In essence, outsourcing is a company’s practice of delegating control of a specific business area or project to a qualified, external enterprise that has the resources, talent, capabilities, and time to handle the required business needs.


Software Outsourcing Models

Onshore Software Outsourcing 

Onshore companies work with teams that reside in the same home country as the client partner. While there is typically little to no language barrier with the external team, onshore software development companies are also the priciest of the three options.

Offshore Software Outsourcing

Offshore companies work with teams in other countries. This is the most affordable option because offshore software development companies operate virtually and remotely. 

Nearshore Software Outsourcing

Nearshore firms work with teams in similar time zones. These companies sit in the middle between the onshore and offshore options. They are cost-effective since they delegate operations to teams abroad.

Advantages of Software Outsourcing

Reduce Software Development Costs and Operating Expenses

Minimizing expenses goes hand in hand with nurturing business growth, which is why it is important to consider all the alternatives available to reduce costs, which is where software outsourcing comes in. It helps reduce costs by making it affordable to hire top-notch, qualified personnel who do not require the hiring company to cover the full spectrum of employee benefits such as taxes, training, trips, healthcare, insurance, and more.


Clients can hire software outsourcing companies only when needed. There is no real pressure to sustain a long-lasting business relationship of employment. This flexibility also adds to the cost reduction advantage. As it is cheaper than hiring an in-house team full of resources all year around. However, in reality, there may be slow seasons where they are not particularly needed.

Increase Skills and Scale a Development Team

External software professionals open up the door to new talents on a global scale. With access to skilled software developers across the globe, clients feel confident streamlining entire software processes. And also the implementing new projects. By hiring a team of external software professionals, companies are exposed to new and more comprehensive skills. This enables them to scale significantly and nearly effortlessly.

More Time Available to Focus on Core Business Needs

Focusing on core business needs is fundamental to designing strategies for growth. With software development outsourcing, companies find themselves with more time available to spend on core business needs. Hence, to foster growth and continuous improvement. By outsourcing significant chunks or the entire software development process, companies can solely focus on what is most important. Especially if IT is not the company’s line of business.

Quick Software Development

In big companies, it is relatively hard to get things done quickly as there are a lot of layers to get through before reaching the desired outcome. With software outsourcing, there is a lean startup process implemented that kick-starts software development into high gear. And also decreases the software delivery time notably.

Disadvantages of Software Outsourcing

Risk of Low-Quality Software

There is an inherent risk with hiring an outside party to deliver high-quality services for a fraction of the cost of existing market prices. Nowadays, it is relatively common to hire software outsourcing resources from developing countries where the cost of labor is remarkably cheap. Which increases the chance of experiencing low performance or low quality of service.

Language and Cultural Barriers

When contracting with a software outsourcing company from an entirely different location than the client’s own, it can be very challenging to manage and adapt to the language and cultural barriers. Additionally, clients must also deal with time zone differences that hinder the direct interaction with external teams.

Security Risks

It is challenging to open up the pathway to sensitive, private, and sometimes highly-confidential information to third parties. There are always risks involved when exposing data, especially confidential and proprietary information, and entrusting it for lawful and appropriate usage.

What Is Software Outsourcing


To Wrap Up

Software outsourcing is basically an arrangement made by a business to hire a third party software contractor to do the software related work that could have been done in-house. But, developing a complete software application in-house demands both money as well as time. And honestly, not everyone has an extended IT team. In such situations, businesses turn to Software outsourcing companies.

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