Software development management: its life cycle in outsourcing

Considering the current technological landscape, there is no doubt that every single application used, every website visited and even this article, are all the result of complex lines of code. However, undertaking the development of such software within a business structure often results in an onerous and laborious process.

This involves the need for specific skills, dedicated resources and effective management of software lifecycle phases. This is why more and more companies are opting for outsourcing software development services.

Outsourcing offers numerous advantages, including access to specialized expertise, reduced operating costs, and greater flexibility in adapting to changing market needs. In addition, it allows companies to focus on their core activities, while external suppliers handle development activities. This approach allows you to accelerate development time, improve software quality, and achieve results faster than in-house development.

What is outsourcing in software development

The outsourcing (or outsourcing) of custom software development is a strategic practice adopted by companies to delegate software development operations to third-party vendors, very often located in geographically remote regions. This approach exploits the globalization of the labor market, allowing organizations to access a variety of talent with specialized skills. In this way, both the cost of development and the time to market are optimized.

A tangible example of this trend is the extensive use of offshore development centers located in countries such as India and the Philippines, where labor costs are competitive and the availability of qualified professionals is high.

According to recent analysis by Statista, the IT outsourcing sector constitutes a significant component of the global IT services market. In 2021, this sector generated an estimated revenue of 361 billion dollars, with growth forecasts that indicate a further increase to 587.3 billion dollars by 2027.

Benefits of outsourced software development

Software development outsourcing allows companies to access a vast pool of experts from everywhere. These experts often have specialized skills in crucial areas such as the development of Shopify platforms, artificial intelligence or mobile app development, ensuring complete coverage for the needs of each project. Specifically, outsourcing for the development of computer applications can bring many benefits.

• Faster Time to Market: reaching the market faster is one of the advantages of outsourcing software development. With this approach, you no longer have to wait to assemble the right team. Instead, you have specialists available immediately, keeping the project going.
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• Focus on business: outsourcing simplifies the management of software development, leaving the company's internal team free to focus on the core business. Whether the company is in the e-commerce, healthcare or finance sectors, internal specialists can focus on their tasks while external software developers work on software development.
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• Greater flexibility: the outsourcing process translates into flexibility. If the company needs a small team for a short-term project, or, on the contrary, a long-term partner, outsourcing can cover these and other cases.
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• Reducing risks: navigating the software development lifecycle alone is complex. For example, they could hire the wrong internal experts, or face technical obstacles. However, outsourcing providers have well-established processes for managing various issues.

Considerations

In order to successfully select software development outsourcing, however, some fundamental considerations must be made. The outsourcing of software development represents an increasingly popular option for companies that want to optimize resources, access specialized skills and accelerate the implementation of projects.

However, to obtain the maximum benefits from this practice, it is essential to make a careful selection of the outsourcing partner and to define a solid collaboration strategy. Let's take a closer look at these considerations.

• Evaluation of the project's suitability: before opting for outsourcing, it is essential to conduct a careful evaluation to determine if the project is suitable for this mode of development. This involves a detailed analysis of the project requirements and the skills needed to ensure effective implementation.
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• Communication and collaboration management: clear communication and effective collaboration between the internal team and external suppliers are crucial for the success of the project. It is essential to establish well-defined communication channels and implement strict protocols. Scheduling regular progress monitoring meetings helps ensure efficient project management.
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• Intellectual Property and Data Protection: data security and intellectual property protection must be prioritized during outsourcing. Ensure that the outsourcing partner adopts strict security measures to protect sensitive data and sign strong legal agreements that clearly define data management responsibilities and protocols.

The life cycle of outsourced software development

Going deeper into the discussion, let's give a brief definition of the lifecycle of customized software development. The software development life cycle, also known as SDLC, represents a methodical approach that accompanies through all phases of software development, from initial conception and design to coding, testing, distribution and continuous maintenance.

As for the life cycle of software development in the field of outsourcing, it generally follows a path similar to the classic SDLC. However, there are some additional nuances and complexities to consider. So let's see all the various phases.

• Requirements' analysis: the software development life cycle begins with the analysis of requirements, essential to define the basis of the project. During this phase, the technical requirements of the software are outlined, the objectives and expectations of the project are defined, and the necessary skills are evaluated. It is a necessary step to avoid overlapping talent and ensure full coverage of the required skills.
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• Vendor selection: after identifying the needs of the project, the supplier is selected, which requires a careful evaluation of the following criteria:
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  1. Skills and experience: the supplier's specialization and experience in the software outsourcing market is evaluated, examining its portfolio and references.

  2. Budget: checks if the cost proposed by the supplier is compatible with the project budget.

  3. Flexibility: the supplier's ability to adapt to any changes and project requirements is evaluated.

  4. Terms of collaboration: we examine the legal aspects of the partnership, such as intellectual property rights and dispute resolution strategies.
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  Once the evaluation is complete, Request for Proposal (RFP) and Request for Quote (RFQ) documents are sent to the supplier to obtain detailed information on the purpose of the project and costs.
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• Development and testing: this phase represents the heart of the action, during which the selected vendor develops the software and verifies its correct functioning. During this phase, you manage the development process, monitoring progress through regular audits and ensuring that the testing process runs smoothly.
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• Deployment and maintenance: the deployment and maintenance phase represents the culmination of the project, during which the software is made available for daily use and its proper functioning over time is guaranteed. Although in some cases it is possible to avoid post-deployment maintenance, it is advisable to constantly monitor the software to ensure its relevance, security and optimization over time. While outsourcing offers many benefits, it also has challenges to address. It's important to prepare for the following challenges:
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  1. Cultural and Linguistic Differences: it is necessary to effectively manage cultural and language barriers when working with international teams.
  2. Disparity of Time Zones: it is important to coordinate activities based on time zones to ensure effective communication between teams distributed in different geographical areas.
  3. Project Management: it is essential to adopt a solid project management strategy to ensure the success of outsourced software development operations. Tools like Trello and Asana can be used to coordinate activities, manage tasks, and monitor project progress.

Software outsourcing operating models

Outsourcing teams can adopt different SDLC (Software Development Life Cycle) models when developing software systems.

Here are a few examples:

• Waterfall Model: this is a linear, sequential SDLC model that involves completing each phase of the development process before moving on to the next. This template is suitable for projects with well-defined requirements and a fixed budget structure and timeline.
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• Agile Model: this SDLC model involves iterative and incremental development, with a project divided into small manageable iterations. It is useful for projects with constantly evolving requirements, where the development team must adapt to the changing needs of stakeholders.
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• DevOps model: this model focuses on collaboration between development and operations teams, with an emphasis on continuous integration, distribution, and release. It's suitable for projects that require frequent updates and releases.
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• Spiral model: this risk-driven model involves iterations through a series of development phases, each building on the results of the previous one. It is suitable for projects with high risk factors and evolving requirements.
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• Rapid Application Development (RAD) Model: this SDLC model involves prototyping and rapid development, with a focus on obtaining timely and continuous feedback from stakeholders. It's practical for projects that require prototyping, quick and frequent updates.
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Choosing the appropriate SDLC model for outsourcing depends on a number of factors, including specific project requirements, stakeholder needs, budget, and timeline.

Costs of outsourced software development

The cost of outsourcing software development can vary greatly depending on several factors. Among these, the geographical location, the complexity of the project, its scope and the skills required to play a key role in influencing the total from expenses.

• Geographic position: Developer hourly rates vary greatly depending on where you outsource. For example, in North America or Western Europe, rates can be significantly higher than in countries like India and the Philippines.
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• Developer expertise and experience: senior developers or those with specialized skills will require higher fees than less experienced developers. The quality and experience of the development team will have a direct impact on the overall cost of the project.
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• Complexity and scope of the project: larger and more complex projects will require more time and resources, affecting the total cost of outsourcing. Projects that involve cutting-edge technologies or require extensive integration. They may incur additional costs.
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• Commitment model: the chosen outsourcing model, which is based on projects, dedicated development teams and managed services, will have cost implications. Fixed-price contracts are common for well-defined projects, while other models may be based on time and materials used.
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• Additional services: services such as project management, quality assurance and post-implementation support can be offered as part of the outsourcing package or as additional paid services.
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• Currency Fluctuations and Taxes: currency fluctuations and applicable taxes may influence the final cost of outsourcing, especially for long-term contracts involving international transactions.

Contract models

The first step in outsourcing software development services is identifying the most suitable contractual model for the project in question.

Organizations often opt for one of the following three main contract models:

• Fixed price: this model is commonly used for large scale implementations where there is defined and very clear information about the project objective. It is effective for projects based on Waterfall model (waterfall). In this type of contract, the supplier does not receive payments until the work is completed or significant milestones are reached, thus transferring financial risk to him. Defining and verifying the acceptance criteria for each deliverable can be challenging without the supervision of an experienced IT project manager.
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• Time & Material: in this type of contract, the supplier offers a quote based on time and on the materials used during the project and can be developed in a manner Nimble, however, defining a macro objective of and maximum cost. Proper planning of the T&M project, even during its execution, can be advantageous, but the lack of an accurate definition of the details of the project can lead to delays and excessive costs.
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• Incentive-based: this contractual model provides a reward for providing based on the achievement of performance objectives, both related to time and to other factors. In addition to fixed offer and T&M models, incentives based contracts can motivate the supplier to exceed pre-established objectives. For example, you can establish an incentive system where you pay for the full-time commitment of a specific team or expert. In return, the company receives a discount for its long-term commitment to keeping that resource in the project.

Choosing the partner for the development of outsourced software

There are several outsourcing solutions available to meet specific project needs. In particular, four main types of outsourcing are relevant:

• OnShore/local outsourcing: this type of outsourcing involves finding outsourcing partners in the same region or country where the client company is located. Local outsourcing offers the possibility of exploiting the local talent pool, facilitating communication and project management. However, the costs may be higher than other options and the pool of professionals may be limited.
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• Nearshoring (Nearshoring) outsourcing: Nearshoring involves searching for outsourcing partners in countries geographically close to or adjacent to the client country. This approach allows you to benefit from efficient and economic communications, while maintaining a certain geographical proximity. Geographic proximity can facilitate project management and collaboration, while reducing costs compared to local outsourcing.
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• Offshoring (Offshoring): Offshoring involves the search for outsourcing partners in regions or countries that are geographically distant from the client country. This type of outsourcing offers access to a wide range of global talent and potentially lower costs. Offshore partners are usually able to provide assistance in multiple time zones, facilitating communication and allowing for 24/7 coverage. However, challenges may arise related to managing geographical and cultural distance.
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• Hybrid mode: this modality combines elements of local and offshore outsourcing. For example, a company might have a local development team for customer roles, such as project management, and an offshore team for development and testing. This hybrid approach allows you to take advantage of both modalities, while reducing the risks associated with managing remote teams and facilitating collaboration between distributed teams.

Conclusions

This article contains the main notions necessary to know when you want to outsource software development to an external company. It may be obvious, but the fundamental characteristic that will define the success of the software project lies in the selection of the partner and the relationship that you decide to establish with it.

FAQ on outsourced management software development

What is outsourced management software development?

‍Outsourced management software development refers to the practice of hiring external teams or companies to handle the design, development, and management of software projects. This approach allows businesses to leverage specialized expertise and reduce in-house workload.

What are the key benefits of outsourced management software development?

‍Outsourced management software development offers several benefits, including cost efficiency, access to a broader talent pool, faster time to market, and the ability to focus internal resources on core business activities.

How do I choose the right partner for outsourced management software development?

‍When selecting a partner for outsourced management software development, consider factors like their technical expertise, industry experience, communication skills, and previous client references. It’s crucial to ensure they align with your project goals and business culture.

What are the risks associated with outsourced management software development?

‍The risks of outsourced management software development include potential communication challenges, cultural differences, and the possibility of lower control over the project. However, these can be mitigated by choosing a reliable partner and establishing clear communication channels.

How can I ensure quality in outsourced management software development projects?

‍To ensure quality in outsourced management software development, it's important to define clear project requirements, set measurable milestones, and conduct regular progress reviews. Establishing a strong collaboration with the outsourced team and using quality assurance practices can also help.

Is outsourced management software development suitable for all types of projects?

‍Outsourced management software development is suitable for a wide range of projects, particularly those requiring specialized skills or rapid development. However, for projects that require tight control or highly sensitive data, it might be better to evaluate other options.

How does communication work in outsourced management software development?

‍Effective communication in outsourced management software development is maintained through regular meetings, clear documentation, and the use of collaboration tools. Establishing clear expectations and maintaining transparency with your outsourced team is crucial for success.

Can outsourced management software development help in scaling my business?

‍Yes, outsourced management software development can significantly aid in scaling your business by providing the flexibility to quickly ramp up resources, access new technologies, and enter new markets without the overhead of expanding your in-house team.

What are the cost considerations in outsourced management software development?

‍The cost of outsourced management software development can vary based on factors such as the complexity of the project, the geographic location of the outsourced team, and the scope of services provided. Generally, it is more cost-effective than maintaining a large in-house development team.

How do I manage intellectual property in outsourced management software development?

‍Managing intellectual property (IP) in outsourced management software development requires clear contractual agreements that outline IP ownership, confidentiality, and non-disclosure terms. It’s essential to ensure that all IP created during the project is securely transferred and protected.