The Ultimate Guide to Software Development Outsourcing

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Download Ebook

Outsourcing as a concept first appeared in the late 20th century. It means that we’ve been hearing about the benefits of this business model for the past 30 years. Over time, it’s gone through a significant (digital) transformation, however, the idea behind it remained the same: to find a partner who specializes in delivering services your company lacks skill in.

In 2020, software development outsourcing really proved its worth. When everyone was looking for the best ways to cut costs, pivot, and build or cement their position in the online world, IT outsourcing enabled businesses to respond to drastically changing demands effectively. It played a significant role in reducing operational costs while filling skill gaps to meet the growing customer demand. 

But even though we’ve been bombarded with the advantages of outsourcing, we still see a great number of companies confused by what this model is and how to approach it.

This eBook is intended to teach you everything you need to know about outsourcing, different types, benefits (and challenges), how it can help you scale, and guide you on your quest to find the ideal outsourcing partner.

In this guide to software and app development outsourcing, you’ll learn more about:

  • The state of the outsourcing market
  • What is software development outsourcing?
  • 3 Main Types of IT Outsourcing
  • Most Common Outsourcing Partnership Models
  • 6 Most Common Payment Models
  • Pros and Cons of Outsourcing Software Development
  • How to find an outsourcing partner
  • Outsourcing opportunities in Eastern Europe
  • How to build an onboarding strategy

Software Development Outsourcing FAQs

What is an IT outsourcing company?

An IT outsourcing company is a provider of specialized IT services hired as an outside partner to fill the resource gap. Unlike in-house IT employees, an outsourcing company provides remote assistance to organizations looking for external subcontractors to perform specific tech roles. 

What is the difference between in-house vs. outsourcing software development?

In-house software development refers to all activities performed by an organization’s internal team. On the other hand, outsourcing involves hiring an outside person or a team who specializes in software development to perform some or all development activities instead of or in addition to in-house employees.

What is the difference between staff augmentation vs. IT outsourcing?

Staff augmentation is a type of IT outsourcing that includes hiring outside help on a temporary basis. They assume roles within the company for which the in-house team lacks expertise. Staff augmentation is a practical approach for short-term projects when you don’t have enough or the right resources within your internal team to handle the workload. 

What are the most sought-after programming languages?

According to the research conducted by Berkeley, the top five most in-demand programming languages are:

  1. JavaScript
  2. Python
  4. Java
  5. SQL

Which sectors invest most in IT outsourcing?

Whether or not an organization will engage in outsourcing often depends on the sector in which it operates. At the moment, the top sectors that invest in app development outsourcing are financial services (over 70%), retail (60%), manufacturing (almost 60%), tech services (over 50%), government (close to 50%), and healthcare (over 30%).

Should I outsource my software development project?

To determine whether or not you will benefit from outsourcing, it is critical to define your goals and evaluate the available resources for achieving them. Ask yourself the following questions:

  • Do we have the people for the job?
  • Do we have the skills and tech stack necessary to complete the work?
  • Do we have the budget for an in-house team?
  • Will we be able to up or down-scale quickly without any hiccups?


Business illustrations by Storyset (used in ebook)

Book mockups found on Freepik by Vectonauta and