Software outsourcing and the increasing demand in 2023

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Software outsourcing

Remote working is the new normal. More and more companies are outsourcing software and software development processes. Businesses worldwide are undergoing digital transformation and have realized the importance of owning a digital space.Outsourced Software development is becoming more and more popular among modern businesses for their ease of use and cost-effectiveness. Companies are in favor of outsourcing developmental projects to freelancers and other companies with a rich development portfolio. This is because outsourcing helps save money and time while being productive at the same time.

What is software outsourcing?

Businesses outsource software development wherein they hire third-party companies to develop software. If we talk about most outsourcing industries, software development has the maximum percentage of outsourced processes. Outsourcing software development is the reason for the growth in the IT outsourcing business.

Even if we see future projections, software outsourcing will keep growing as businesses are going digitized. It is always better to outsource as the trends and technology keep changing, and it is essential to evaluate and adapt. 

Outsourcing means sending a project or a task to a third-party company. The companies considered for outsourcing should be competent enough to handle any tasks related to software development. They assure the task will be done on time and with quality.

Long-term business success is dependent on selecting the right outsourcing partner. Choosing the right type for outsourcing is essential, and it entirely depends on the company’s requirements. Making the right decision can help a business gain a competitive edge over its peers.

In general, software outsourcing enables businesses to address the challenges of cutting costs, quickly assembling a remote tech team, and shortening the time it takes for a product to reach the market.

Numerous outsourcing companies provide a complete outsourcing solution. Regardless of where a project is in the development cycle – from planning to development, delivery, and product release – software outsourcing companies can provide the expertise and resources needed to ensure overall project success for their clients.

Different Software Outsourcing Models 

In outsourcing,there are three main relationship based models that are often observed between client and developers. Each one of them offers a different amount of control over the project for the client and can be chosen according to the requirements of the client.

  • Staff augmentation model – As the name suggests, in this model the client has complete  ownership of their project from start to end. The client takes the most of the responsibility of hiring tech talents provided by an outsourcing company to strengthen the team responsible for the development projects.
  • Managed team model – In a Managed Team model, responsibility and ownership are shared between the client and the outsourcing provider. determining?. The autonomous team is in charge of developing the project but according to the blueprint by the company/client hiring them. 
  • Project-based model – This model and its project centric approach is quite popular amongst developers and clients alike. In this model, the development service providers take the most of the responsibility of crafting the projects from start to end. A company hiring these services is regularly updated with work progress and iterations for smooth development of the product.

Types of outsourcing

Outsourcing takes place in different ways. It depends on whether they are based onshore, offshore, or nearshore. These are also known as location-based outsourcing. Let’s have a look at these types of outsourcing.


Onshore software development refers to work done in the same country or region as the client. The perks of onshore outsourcing are that communication is more accessible as there is no language barrier, and the time zone would be the same or close to the same. However, cost-wise, there might not be much difference.


The term “offshore” refers to a company located in a different country with a different time zone. An offshore development center can result in a profitable business with high-quality technology at a lower cost. As the team selected would be from other countries, the project gains a global perspective with the ability to deliver projects on time.


The term “nearshore” refers to an outsourcing partner located in a neighboring country and is only a short distance away. A nearshore type of outsourcing is a perfect balance between onshore and offshore. The time zone differences are less, and also the project cost.

Advantages of outsourcing

Outsourcing simplifies software development and makes it more flexible. Some of the most significant advantages of adapting outsourcing are:

Low development cost

One of the most important factors is budget in any project. Outsourcing a software development project reduces  business development costs. Furthermore, outsourcing work to a third party can save labor costs, such as insurance, training, and vacations, while still paying outsourced teams a competitive wage. All of this while getting quality work at affordable rates. 

Faster & hassle-free development

As the outsourced team will already be experienced and well aware of the newest technologies related to software development, there will be no need to spend time on that. This saves considerable turnaround time and speeds up the development process. Outsourcing is beneficial in the context of large international corporations, where decision-making and approvals can take a longer time. Also, the outsourced team can address the errors or changes quickly as they work in the given timeframe.


There is no need for continuous involvement of the client company. With an outsourced team, there are no legal bonds, etc. which leads to easy execution of the project. It is highly beneficial while hiring a full-time employee. All expertise is needed for one project only.

Talent Pool

Companies get access to the big talent pool. Hiring a full-time employee takes an in-depth understanding of their experience and skills. Whereas in outsourcing, one gets already vetted candidates. The ones who have already been checked for their efficiency and accuracy.

Disadvantages of outsourcing

There are few disadvantages to outsourcing which one must also consider before deciding to hire a team for a software development project. However, the disadvantages of outsourcing often stem from underlying reasons such as ineffective hiring, lack of talent, lack of coordination etc. Here are a few cons of outsourcing software development to watch out for:

  • Lesser Control on project and workflows: By outsourcing, there is a certain loss of control over the project and it may not follow your company’s ethos. 
  • Data protection and confidentiality can be an issue if not addressed and taken care of early on.
  • If not resolved earlier, products developed through outsourcing sometimes fail to meet expectations of the clients. This can be avoided by regular meetings and client-team collaborations throughout the development process.
  • Less flexibility: Outsourcing is also considered by some to be less flexible in the manner that it restricts creative liberties through its rigid outsourcing contracts.
  • Outsourcing sometimes also leads to management difficulties where friction is observed between teams and the client.

How to outsource to a software development company?

Any business, small or big, can now outsource a software development service provider in few simple steps given below:

  • Define Objectives and goals: Since there are many stakeholders involved in the software development process, it is very important to be on the same page with clearly defined goals. 
  • Prepare scope: Plan budget and requirements along with the number of deliverables, interaction cycles and expectations. Documenting everything at the start reduces complexity and ambiguity at the later stages of the developmental process.
  • Consult and decide on the techstack you would like to use: Since software development would be done remotely it would be wise to decide on the required skills for the job before one starts the hunt for top software developers. Creating a resource list helps in choosing the right developer for your project.
  • Start your hunt for the developer-project fit: Outsourcing an expert developer or a team of developers and bringing them onboard, can be a game changer for your project so make sure to invest in the right one. There are many reliable software development service providers in the market. Searching for the same can be tiring but worth it.It not only ensures quality but also promises companies’ long term success.
  • Developers, Assemble! : Once your team is ready, you can sit back and relax and leave it to the pros to develop your project. Outsourcing software development is not only inexpensive but also less time consuming than usual in house software development.

Top Software Outsourced Case Studies 

The trend of outsourcing software has matured, and there are plenty of successful case studies of the same. Many well-known companies have outsourced either some part or the complete development process. Let’s have a look at some of the most successful outsourcing examples:


Yes, you read it right; the popular app was outsourced. The Whatsapp idea was founded in 2009 where outsourced teams from Eastern Europe handled the iOS development first, and then all of the core development. The app gained popularity almost on all platforms and took over the ancient SMS technology of messaging. This process of outsourcing was carried out for cost optimization and was very successful in accomplishing that.


Google is one of the biggest corporate giants which keeps on innovating in the software development field and often outsources its software development projects. The most recent of them is “Google AdWords.” AdWords is a service provided by Google which covers around 90% of Internet users worldwide, and is used extensively by many marketers. Many outsourcing companies were trusted for their services across the globe. The experience was profitable enough for Google to expand its software development, IT infrastructure management, and other services. 


This application is quite popular amongst office employees. Slack has been very successful as a team collaboration tool, with almost ten million members as daily active members. The app and its website design were outsourced for a need of better UX. Post development, in 2017, the app gained immense popularity while raising a $250 million round of investment and the rest is history.


Yet another big name. A British-Dutch enterprise, was the one that handled the outsourcing process for Unilever. In 2005 the company already had more than 200,000 employees worldwide and still needed a development team from outsourcing. There was a need to merge various ERPs in their operating sphere. The hired outsourced company helped resolve their issues and delivered on their needs. 


Skype needed outsourcing for its backend development. Back in 2003, the founders hired backend development of the platform to Estonian professionals who created the app. Outsourcing for skype grabbed attention. Estonia, Ukraine, Poland, Russia, and several other countries in the region have successfully outsourced development and IT infrastructure for skype projects.

Challenges of outsourcing 

Despite its many advantages, outsourcing comes with its own share of challenges. 

  • One major challenge is to find the right outsourcing model fit for a company’s project
  • Outsourcing services providers are not always reliable
  • Hidden costs, if any
  • Cultural and language differences between hiring team and developing team can slow down the development process
  • Incomplete relay of data and lack of communication
  • Lack of expertise and talent in selected team

These challenges come with remote hiring for software development but can be dealt with the right measures and understanding of a businesses needs and expectations along with their ethos.

Top outsourcing services and leading countries that offer them

Some of the most popular IT services that are outsourced include

  • Custom Software Development
  • Mobile App Development
  • Web Development
  • Front-end development
  • Ecommerce App and website development
  • SaaS development etc.

These services amongst many more are outsourced to software development service providers globally. According to a survey, the Asia – Pacific region is considered as the largest revenue holder in the global IT outsourcing market. With an expected market share of 349 USD billion dollars by 2030, Asia- Pacific region has some of the greatest contributors to the industry with India as the largest contributor with China as a close second. In North America, USA is the leading contributor with USD 161 billion market share thus amounting to the second largest regional contributor to the industry. UK and France are growing outsourcing development hubs in Europe which have also seen rapid growth in recent years.

Expected global IT outsourcing trends of 2023 (


All the successful software outsourcing companies are result-oriented as they have a strong vision. Businesses can specify who to contract with after they have decided what they want to outsource and what all they would need. Skilled specialists can assist in identifying the right people to help businesses realize their goal.

Outsourcing can be beneficial to all companies irrespective of company size. It is also healthier to a company’s budget compared to in-house development, which gives businesses time to focus on other attributes, leaving the rest to the outsourcing team. While outsourcing, one must also be careful about the IT contract. It is important to get a  complete check before partnering.  Background check on an Outsourcing software development company is also a must.

Outsourcing with OpenXcell

Are you looking for leading developmental talent for your next big project? At OpenXcell, our team of skilled developers can cater to your business requirements like no other. We provide infrastructure, readily available resources, a wealth of product development knowledge, and more. Our years of experience and rich portfolio of global clients speaks of our consistency and work ethic. We employ the most recent technologies and train our personnel regularly to meet your futuristic demands.

Our team of professional experts work on your project with 100% quality assurance and within the decided timeframe. 

We can assist you in finding the best solutions to your objectives.

Connect with us today at

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Bluein Christian

Content Writer with experience of 6+ years. Have experience writing content for different industries, such as travel, education, fashion, and more. A creative person by birth and by profession. She loves learning new concepts and creating useful content about them. She loves traveling and is always up for new challenges.


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