How Can You Tell When to Outsource Software Development?

By | April 26, 2023

As we are moving faster in the digital transformation landscape, outsourcing software development has gained popularity over the past years as more and more businesses have started to recognize the benefits that outsourcing software development can offer. According to Statista, the revenue of software outsourcing is projected to reach an annual growth rate of 7.54% from 2023 to 2027. Indeed, outsourcing software projects can offer a host of benefits, such as lower costs, faster time-to-market, access to specialized skills and resources, and more. However, it is not always the right choice for every business, and it can be challenging to know when to outsource software development and when to keep it in-house. In this post, we will discuss how businesses can tell when it is the right time to delegate their projects to third-party companies and how to plan proper strategies for outsourcing for success.

What is Outsourcing Software Development?

Software development outsourcing is the act of hiring a third-party service company or an individual to develop software for your business. This third party is usually located in the same or different country or a different part of the world (known as offshore, onshore, or nearshore outsourcing services), and they work remotely from your office.

Why Is Outsourcing Software Development Popular?

Outsourcing software development has become increasingly popular over the years, and there are several reasons for this. First, outsourcing software development can save businesses a lot of money. Hiring a full-time software development team can be quite expensive, as it requires paying for salaries, benefits, and other expenses, such as office space and equipment. Outsourcing software development can be significantly cheaper, as it allows businesses to pay only for the work that is done without being concerned about the overhead costs associated with recruiting a full-time team in-house.

Second, outsourcing software development can allow businesses to access specialized skills and resources that may not be available in-house. For example, if a business wants to develop a mobile app but does not have the necessary in-house expertise, it can outsource the development to a company that specializes in mobile app development. This can result in a better quality product, as the outsourced company has the necessary skills, resources, and experience to develop the app. Additionally, the scarcity of qualified developers makes outsourcing the only way out for companies and organizations to solve their manpower issues.

Third, outsourcing software development can help businesses to speed up time-to-market. Developing software in-house can take a lot of time, as it requires hiring and training a team, setting up the necessary infrastructure and tools, and testing the software. Outsourcing software development can be much faster, as the outsourced company is usually ready to start working on the project as soon as the contract is signed.

Finally, outsourcing software development can allow businesses to focus on their core competencies. Developing software is not the core competency of most businesses, and outsourcing software development can allow businesses to shift their focus on what they do best while leaving the software development to the experts.

Some Factors to Care about When Deciding Whether to Outsource Software Development

While outsourcing software development can offer many benefits, it is not always the right choice for every business. There are several factors that businesses should consider when making this decision, such as the complexity of the project, the budget, the timeline, the availability of resources, and the risks involved.

The Complexity of the Project

One of the primary factors to consider when deciding whether to outsource software development is the complexity of the project. If the project is relatively simple, such as developing a small website or a simple mobile app, it may make sense to keep the development in-house. However, if the project is complex, such as developing a large-scale enterprise software or a complex mobile app, it may be better to outsource the development to a specialized company that has the necessary expertise and experience.


Another important factor to consider when deciding whether to outsource software development is the budget. Outsourcing, in most cases, can be cheaper than hiring an in-house team, but it still requires a set budget. Businesses should carefully consider the cost of outsourcing software development and compare it to the cost of hiring an in-house team. They should also consider the quality of work that they can expect to receive from an outsourcing company, as cheaper does not always mean better.


Timeline is another important factor to consider when deciding whether to outsource software development too. Outsourcing software development can be faster than developing software in-house, but it still requires a certain amount of time. Businesses should carefully consider their timeline and compare it to the timeline of the outsourcing company. They should also consider the risks of delay, as such situations can be quite costly for businesses.

Availability of Resources

The availability of resources is another crucial factor to think about when deciding whether to outsource a software project or not. If the business already has a team of experienced developers in-house, it may be better to keep the development internal. Nevertheless, if the company does not have the necessary resources to conduct the project on its own, such as the necessary technical expertise, it may be wiser to entrust the development process to an outsourcing company that can provide those resources.

Risks Involved

Finally, businesses should carefully consider the risks involved in outsourcing software development. Outsourcing can be beneficial and risky at the same time, as it involves trusting a third party with the development process. Therefore, as a business owner, you must be aware of the risks involved in outsourcing and make sure that you are comfortable with them before making a decision.

Outsource Your Software Development Projects If You Encounter These Problems

Now that we have discussed the factors to consider when deciding whether to outsource software development, let’s dive further into when it makes sense to outsource software development.

Lack of Technical Expertise

If your company lacks the technical expertise required for a specific programming language or a complex software development project, outsourcing can be the most viable solution. Rather than experimenting in-house, it’s better to work with an outsourcing company that specializes in this field. This outsourcing company will have the technical expertise to take your project from start to finish and ensure that you get the desired results.

Lower Costs

Another key factor for outsourcing is lower cost. When you outsource your IT needs, you can save much on hiring and training new developers, salaries and benefits, and overhead expenses. This way, you can use the money you save to invest in other parts of your company, such as marketing, product development, or customer support.

Faster Time-to-Market

Software outsourcing can help you get your product to market faster. When you outsource, you don’t have to spend time hiring, recruiting, and training a new team.  Moreover, outsourcing companies have enough resources to begin working on your project right away, so you can expect a faster turnaround time.


Outsourcing software development can also allow for scalability. If you are having a lot of work to be done but don’t have enough developers in your in-house team, outsourcing can help you scale quickly. Outsourcing companies can easily handle fluctuations in workload and can provide additional resources quickly.

Access to a Wide Range of Skills

Outsourcing software development can also provide you access to a wide range of skills. Service companies have experienced software developers who specialize in various programming languages like Java, Python, Ruby, and more. Additionally, they offer a wide range of expertise, such as UI/UX design, quality assurance, and project management.

Global Delivery

Outsourcing software development can help your project to be delivered across the globe. You can work with an outsourcing company that has a distributed team in different time zones, making it easier to work around the clock and get the project completed quickly.

Focus on Core Business Activities

You can focus on your primary business activities and objectives. By giving the software development job to outside experts, you will have more time to focus on planning, marketing, and re-energizing your core business activities.