Imagine you have an idea for a software product, and you decide to outsource development. What comes next?
If you're unsure about this, you're not alone. Navigating the software development outsourcing process can be overwhelming. Although 78% of businesses enjoy satisfactory outsourcing, there's no guarantee you will too.
As you prepare to kick off your first project, it’s essential to cover all your bases. Here you'll find a roadmap and key points to undertake any IT outsourcing project. In short, the software outsourcing process includes eight steps.
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By understanding this process from start to finish, you can set up your project for success and create an enriching partnership in the long term.
Outsourcing software development means relying on a third-party partner for your IT needs. This enables companies to collaborate with specialized vendors who offer technical knowledge and established methods to handle complex development tasks.
There are a myriad of reasons why businesses choose outsourcing. Perhaps they don’t have the right kind of in-house experts. Or their teams may be swamped with projects. Other times, businesses struggle to access talent due to the developer shortage crisis, which persists in 2025 despite economic changes.
The global IT outsourcing market demonstrates the growing adoption of this strategy, with projections showing growth from $617.69 billion in 2024 to over $800 billion by 2029. This expansion reflects how businesses increasingly recognize outsourcing as a strategic tool for digital transformation rather than merely a cost-cutting measure.
Modern software outsourcing involves more than just lowering costs. Its main focus is to access high-quality engineering expertise and advanced technologies that can speed up project completion. Companies adopt this strategy to leverage specialized skills in diverse areas like artificial intelligence, machine learning, cloud computing, and mobile app development.
Executing a successful software development outsourcing project requires systematic planning and strategic decision-making.
Before you begin, get a full understanding of these steps and best practices. Take the time to prepare internally and dig into your requirements. Doing so will lead to first-rate software that wows your end users.
Delve into your needs and goals. Collaborate with stakeholders across all departments, directors, IT experts, end users, customers to gather complete insights.
By knowing their pain points, you can better define the scope of your project. Collect data, use surveys and undergo interviews. Get to the bottom of your business’ most urgent needs.
Your scope of work document is a project blueprint and prevents costly “scope creep”. A typical scope of work will include:
Comprehensive scope documentation can decrease project conflicts by 40% and ensures both parties have consistent expectations throughout the development process. Consult with legal and technical teams to review the scope before finalization to eliminate any uncertainties.
Collaborate with your CTO and in-house technical experts to define the optimal technology stack. Consider these key components:
Ensure that your technology stack choices are aligned with the specific needs of the project, scalability goals, and considerations for ongoing maintenance, and confirm your choices with potential outsourcing partners who can offer insights into the selected technologies.
Set a realistic budget based on the complexity of the project, the timeline, and prevailing market rates. Keep in mind these pricing models:
Include additional expenses such as project management, quality assurance, and support after launch. Set aside 10-20% of your budget for unforeseen requirements or changes in scope.
First, consider whether you want to maintain control of the project or not.
To build proprietary technology, you may want to keep development in-house. You might try extending your teams with body leasing, dedicated teams or resources-on-demand.
However, sometimes it's best to hand off management to a partner if you don’t have the resources or expertise. Project-based outsourcing, managed services or a hybrid model may be right here.
These options let you offload certain IT tasks, so you can focus on your core competency. In this case, you can leave your technical requirements to the experts.
It may seem obvious, but your outsourcing partner should align with all requirements. Some minimum areas to check for fit include:
Of course, these are bare minimum requirements. There may be a wealth of other factors that go into your decision as well.
As you get started, do due diligence about project security and GDPR compliance. Ask about protocols and policies to guarantee your product’s security and data. Be sure that user permissions make sense in order to limit access to the source code.
Implement comprehensive security measures to protect intellectual property and sensitive data:
Companies with security protocols experience on average 60% fewer data incidents during outsourcing projects.
Shepherding a project throughout all phases isn't easy. You'll need support across discovery, design, development, QA testing, deployment and post-launch.
Keep up with each iteration of your product with great PMs. Having an experienced leader at the helm will guarantee your product is progressing. Make sure your teams are thinking agile, too. The agile method helps teams iterate and improve the product, as well as adapt to any challenges.
Use this checklist structure to successfully deliver project across all phases:
Software development outsourcing functions through various models designed to meet diverse business demands and project specifications. In essence, the power of outsourcing is the flexibility it allows.
Staff augmentation involves hiring external developers to work directly alongside my existing in-house team. This model provides the highest level of control over project development since augmented staff follow internal processes and report to my management structure.
External professionals integrate the current team, often working from their office or temporarily increase team capacity for certain projects. You can maintain direct oversight of all development activities while benefiting from specialized skills that complement my team's capabilities.
This approach works best when I need to fill specific skill gaps or temporarily boost team capacity for particular projects. The augmented developers function as extensions of my internal team, allowing me to scale resources quickly without compromising project control or company culture alignment.
Key advantages:
This model is ideal for businesses looking to turn their ideas into fully developed, custom software products without building an internal development team. With Software Projects model, you don’t just rent developers—you receive a dedicated, expert-led solution where the entire project is managed from start to finish.
From early-stage workshops and analysis to the final release and maintenance, Netcorp takes full ownership of the delivery process. You benefit from a team that brings deep technical expertise, follows proven processes, and aligns closely with your business objectives.
Whether you’re a startup launching a new platform or an established company modernizing legacy systems, this model ensures a reliable, structured, and scalable path to development success.
Why choose this model?
Outsourcing consultation model is designed for companies in the decision-making phase of outsourcing. Netcorp offers a free 30-minute consultation with senior outsourcing consultants to help you assess your needs, navigate your options, and plan your outsourcing approach with confidence.
With years of experience advising companies across Europe, Netcorp understands the nuances of setting up successful outsourcing partnerships. During your consultation, you’ll receive expert insights on topics like which roles to outsource, where to outsource from, how to choose the right partner, and how to structure collaboration for long-term success.
This service is perfect if you’re new to outsourcing, have had poor results in the past, or want to scale responsibly without making expensive mistakes.
What this consultation helps with:
Other popular models are:
Of course, you should customize the software development outsourcing process to your business. Success will mean something different for every type of product.
Even so, software development projects outsourcing is subject to the same hurdles. Here are some key considerations to help you overcome common pitfalls along the way.
It sounds simple, but your IT outsourcing partner can make or break a project. To guarantee you’ve found the ideal provider to guide your through your project, make sure to:
Plus, you might try a test project with a potential partner. Doing so will help you get a sense of their working style, product quality and partnership. This is vital to know before committing to a long-term contract.
Take the pulse on the market conditions that may impact your outsourcing relationship.
For example, get an in-depth understanding of IT outsourcing trends and market statistics. This will help you define your outsourcing strategies for long-term growth.
In addition, performing market research for your product idea is essential. In concert with your IT partner, you should have a full picture of your value proposition in the market. This way, you can make sure your product meets your unique customer demands.
Your outsourcing partnership will go smoothly if you get on the same page. Don’t make any assumptions when getting started, or you may face challenges.
Create a well-defined roadmap with KPIs that are clear and achievable. Align your teams from the first week with open-style meetings. And utilize collaboration tools to synergize teams and document all decisions.
Lastly, your contract should include a conflict resolution clause and a failure-to-perform clause. This way, there’s a set process if things go sour.
In addition, you should prioritize communication with your provider. Surprisingly enough, 56% of outsourcing relationships fail due to miscommunication.
You can streamline communication by giving your hybrid teams access to collaboration tools. What’s more, your PM should be encouraging bottom-up communication from developers. Holding regular stand-up meetings can also help get a real sense of what’s going on.
Company culture matters here, too. Try setting clear milestones, giving honest feedback and encouraging an open environment.
Having a reliable partner can greatly minimize the risks of outsourcing. Yet, you should also put measures in place to reduce your liability.
In particular, consider IP protection, GDPR compliance, currency rates and more. This is best handled by drafting a detailed contract with clauses for each of these areas.
What’s more, follow up to ensure security and data protocols are implemented properly. Do your due diligence to safeguard your product in the long term.
Your source code is the foundation of your product. For this reason, it’s key to perform quality checks during the development stage.
Ask your partner about their QA processes. They should design and plan regular testing, as well as follow-up to resolve any issues. Testing should be done across all target devices and systems, too.
Throughout this process, make sure your IT provider is staying transparent about bugs. For example, partners may log issues in a tool for you to view in real time.
There’s no such thing as “set and forget” when it comes to outsourcing. Stay in the loop with your outsourcing project through tracking processes.
Your partner should enable real-time tracking, including weekly milestones and meetings. Get project updates regularly to guarantee it’s going according to plan.
In addition, your product roadmap should prioritize scalability. As your team plans their milestones, look ahead to what may be next on the horizon for your business. Strategize about next steps to maximize scalability in the long term.
(Source: Deloitte’s 2022 Global Outsourcing Survey)
Essentially, any IT functions that you require can be outsourced. Keep in mind that every business has unique requirements. That's why your partner should fit their services to your needs. Here are some of the most popular outsourced IT services today.
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At 79%, software development is one of the most common outsourced IT functions. Outsourcing enables businesses to get a software solution customized to their specific requirements.
Businesses are outsourcing QA testing to guarantee top product quality. Testing teams must understand business goals, design tests and get insights for improvements. In turn, this helps achieve the highest caliber product possible.
Just consider that 90% of IT leaders are planning to accelerate cloud adoption today. Outsourced teams can handle seamless cloud-based integrations to streamline business efficiencies. Overall, this helps boost digital preparedness and opportunities. Many businesses rely on cloud platforms such as AWS, Azure, and Google Cloud to improve scalability and reliability. Technologies like DevOps and Kubernetes are often part of these solutions, enabling faster deployment cycles and better infrastructure management. Overall, cloud outsourcing helps boost digital preparedness and unlocks new opportunities for growth and innovation.
Mobile app and web app solutions are often the heart of great customer engagement. Businesses are outsourcing these services to guarantee stunning, user-friendly interfaces. This boosts their brand reputation and sales in the long run.
AI and machine learning have become central to how companies improve products, automate workflows, and gain competitive insights. As the demand for intelligent systems grows, many organizations are turning to outsourcing partners.
Outsourcing AI gives you access to niche expertise—data scientists, ML engineers, and cloud AI architects, without needing to build those capabilities in-house. This is especially valuable for companies looking to build solutions like customer behavior prediction, intelligent automation, fraud detection, or real-time analytics.
A growing area of interest is AI agent development, which involves autonomous systems capable of performing tasks, communicating with users, and integrating with existing tools. These agents are often powered by large language models (LLMs), custom datasets, and API orchestration.
73% of IT support services are now outsourced – and for good reason. IT support requires a dedicated team for monitoring, updates, best practices and so on. Outsourcing simplifies IT support, allowing for optimal performance and reliability. Services like 24/7 server monitoring, proactive alerts, and cloud-based visibility help businesses stay online and perform reliably. Netcorp, for example, offers dedicated NOC engineers and fast setup in just 2–8 weeks.
Data breaches have become a major challenge for companies today. It’s no wonder than that cybersecurity has become the #1 most outsourced IT area. 81% of these services are outsourced, likely due to the specialization required. Cybersecurity experts create protocols and test them regularly to ensure airtight systems.
In today’s digital age, 75% of data analytics services are outsourced. Businesses today have a wealth of data to collect, clean and analyze. Outsourced analysts can craft data-driven strategies that elevate business processes and decisions.
IoT can revolutionize your business through new sensors, data and monitoring. Having outsourced IoT experts can reimagine your processes. Doing so results in greater efficiencies, strategic decision-making and customer engagement.
User experience (UX) is essential for building successful digital products. Outsourced UX developers focus on designing beautiful interfaces with seamless touchpoints. In turn, this leads to a competitive edge in customer engagement and loyalty.
Finally, outsourced teams can create a Minimum Viable Product (MVP) to verify ideas. This prototype includes basic features for meeting your customer needs.
Outsourced MVP processes can give you a sneak peek into your product’s impact on customers. From here, you can iterate as needed. When development begins, you'll know you're moving in the right direction.
Drive results for your project with a rigorous software development outsourcing process. Our in-depth guide will enable your business to pave the way to IT outsourcing success.
As you launch your next software project, lean on the expertise of an elite IT partner. At Netcorp, we offer personalized consultations to ensure you're on the right track. Reach out to us to learn how our pros elevate efficiency, innovation and transparency.
The practice of outsourcing software development is a revolutionary business strategy. Growth of the global IT outsourcing market to more than $800 billion by 2029 shows that businesses which will hire external development teams will benefit from cost savings and speed up project timelines, and sustain competition and encourage chances for innovation and technological progress.
Carefully choose your vendor, establish clear expectations, implement comprehensive quality assurance processes, and active project oversight. Keep in mind, that flexibility in outsourcing models allows businesses to scale development resources dynamically.
The goal of outsourcing partnerships is to allow internal teams to concentrate on their core strengths while external teams manage specialized technical issues.
Understanding the trade-offs between in-house vs outsourcing is key to choosing the right setup for your project. In-house development gives you direct control over teams and facilitates closer collaboration but requires in hiring, infrastructure, and training processes. Companies meet geographical barriers when they search for specialized talents, also they must manage employee benefits, training expenses, and long-term commitments.
Outsourcing software development allows them to be quicker time to market, scalable and access to a diverse range of global expertise. External teams come with established workflows, specialized skills, and the ability to adjust resources according to project requirements. The choice depends on project complexity, required expertise, budget constraints, and long-term business objectives.
Businesses often combine both strategies. They keep in-house teams and outsource for specific skills.
Outsourcing means access to a global talent pool and enable companies to find developers with niche skills unavailable locally, and businesses save as they don't make recruitment expenses, employee benefits, and infrastructure investments.
When you outsource software developers you get access to a global talent pool, and you can find any specialist with specific skills that may not be available locally, so you have flexibility to scale development resources up or down based on project requirements and help to reduce time to market for software products and handle technical challenges and project complexities.
Outsourcing software development is a great scalability option for businesses experiencing growth. External vendors can efficiently integrate developers with specialized skills into current teams or establish entirely new development groups according to project needs.
Staff augmentation models allow seamless integration of external developers, while dedicated team models provide complete development units. Both models removes the lengthy process of hiring and onboarding internally.
Scaling typically happens during weeks instead of months and allows for a swift reaction to market opportunities or project needs.
The staff augmentation strategy is most effective for organizations that require specific expertise to enhance their current teams while retaining oversight of project management, as this method offers the flexibility inn terms of to engage specialized developers for different duration.
Dedicated team models suit businesses requiring complete development units for complex projects or long-term initiatives. External teams operate independently while following company standards and reporting structures.
Project based outsourcing is good choice for projects which have well defined requirements and timelines. External partners manage all aspects of development, including project management and quality control.
When you choose outsourcing models, consider factors such as the complexity of the project, the desired level of control, deadlines, and budget constraints. You always can pick hybrid strategies, merging different models according to particular project requirements.
Many businesses are concerned about loss of direct control over development processes and quality standards. If clear communication is set up, that can help to reduce these risks.
Developer turnover during projects can disrupt continuity and require passing knowledge to new team members. Your goal is to find partners with low turnover rates and good documentation practices, which will lower these risks.
To prevent scope creep you need detailed project specifications, clear requirements documentation, and regular milestone reviews help.
Also make sure not to share sensitive business information with external teams to reduce data security issues. NDAs, security audits, and compliance certifications protect intellectual property and confidential data through the outsourcing relationship.
Paavo Pauklin is a renowned consultant and thought leader in software development outsourcing with a decade of experience. Authoring dozens of insightful blog posts and the guidebook "How to Succeed with Software Development Outsourcing," he is a frequent speaker at industry conferences. Paavo hosts two influential video podcasts: “Everybody needs developers” and “Tech explained to managers in 3 minutes.” Through his extensive training sessions with organizations such as the Finnish Association of Software Companies and Estonian IT Companies Association, he's helped numerous businesses strategize, train internal teams, and find dependable outsourcing partners. His expertise offers a reliable compass for anyone navigating the world of software outsourcing.
Download the free copy of our "Software Development Outsourcing" e-book now to learn the best strategies for succeeding in outsourcing!
