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companies outsource software development

Why Do Companies Outsource Software Development? (Easy Guide)

Software Development

Advances in information technology and the complex dynamics of our competitive global economy demand that organizations identify innovative tactics to streamline their processes, enhance cost efficiency & optimize team productivity.

Commercial software has been regarded, by professionals worldwide, as the ideal solution to enhance the ability of businesses to activate scalable growth. Software development has consistently bloomed as a popular segment of the I.T. industry, with spending on enterprise software amounting to $783 billion (2022), as reported by multiple research studies.

Businesses across every sector invest in custom software that enhances efficiency, lowers costs, improves team productivity & collaboration, simplifies routine workflows, and automates entire functions.

Great examples are cloud-based software like the QuickSimpleAccounting ERP by Progatix (customizable for multiple industries) and leading customer-centric mobile applications like AirBnB (travel & hospitality personalization app).

So, why do organizations outsource software development? Historically, only two significant factors influenced the decision to outsource instead of building software in-house: time & cost savings. Today, there are more strategic reasons to contract software development projects to external providers; we will discuss them later.

What is Software Development Outsourcing?

Popular research from the University of Melbourne defines software development outsourcing as contracting out the development (of an enterprise application) to third-party development companies and is generally of two types.

Total outsourcing is when the entire development process is delegated to a 3rd party software development company. Selective outsourcing is when organizations outsource a specific software component to development companies.

Why Do Companies Outsource Software Development Projects?

Organizations are increasingly seeking development companies to build scalable, secure, stable, and high-quality software with evolving customer preferences & global business dynamics. A recent Deloitte survey identified why organizations choose to outsource software development projects, visualized by priority below:

why do compaines outsource software

Source: Deloitte

Customers across different industries are demanding more personalization & customization from brands today. Therefore, organizations increasingly turn to intuitive software to improve communication and team collaboration and include customization through various solutions

By including mobile applications, web applications, and high-performance websites, organizations seek to provide added value within their core offerings. Let’s quickly discuss the top five reasons companies outsource development, as identified by Deloitte.

It’s Definitely the Cost

Professionals determine that cost is the most crucial factor when outsourcing software development. Hiring an in-house developer can cost 2.7 times more than outsourcing it to a professional software development company.

A great example comes from the social giant WhatsApp. In 2012, creators Brian Acton and Jan Koum hired a Russian iOS developer to complete work on WhatsApp’s code since the region offered more skilled professionals for a lesser price. With the idea to cut costs, they outsourced the WhatsApp development, getting great value in return, with developer Igor Solomennikov becoming a permanent member of their team.

cost sheet sample

Source: Existek

Business First

Deloitte’s survey identified that outsourcing software development to specialist service providers enables organizations to focus on their core business processes. Businesses must evolve & adapt to the changing environment (especially post-COVID19 trends) to survive the competitive global ecosystem.

Business professionals determine that outsourcing offers a concentration on and strengthens business operations. While your in-house team focuses on achieving business goals, the outsourcing partner can conveniently work on the development process.

Similarly, organizations can only instantly diversify their business model; sometimes, they require a software solution. Development companies establish that building a new infrastructure, hiring developers, and managing a new development team can be very costly & less strategic for any business specializing in something other than the I.T. sector.

Outsourcing development to providers equipped with the necessary knowledge, infrastructure, resources, and tools ensures you are always focused on the core competency, your unique business workflows.

Resolve Capacity Issues

It ranked the third most crucial reason in the Deloitte survey, and professional opinions suggest that it is true for most vertical markets. Experts discuss that it can become difficult for SMBs to meet the capacity & timelines for software development projects.

Deploying limited staff for software development, most of whom may need more skills & knowledge, can cause severe delays and costly errors. Outsourcing the complete project or software component resolves the capacity issue for organizations, irrespective of size.

Enhance Service & Product Quality

Premium quality software is one of the most important reasons our partners choose our high-performance software development services at Progatix. A stable, fully functional, and secure product or service is essential in today’s complex & competitive business ecosystem.

Usually, a specialist software development company offers business the ‘works,’ most commonly known as the ‘software development lifecycle.’ During this total outsourcing model, the development provider tests the code for inconsistencies, errors, bugs, and vulnerabilities to ensure its quality for end users.

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Let’s Get There First, and Fast

The speed at which software is developed and deployed for end users is detrimental to competitiveness. Outsourcing software projects enables you to determine exact timelines and the pace of building the app.

Especially in the case of a customer-facing mobile application, website, or software, the time to deliver a functional MVP can make or break a brand. Software development providers can assemble teams quickly and begin developing the solution, prioritizing faster time to market with a high-quality product.

How Do You Outsource Software Development to Progatix?

Outsourcing software development requires careful planning, analysis, research, and oversight. While it’s cost-friendly and efficient, outsourcing development requires following a strategic process to ensure the quality of your solution.

our software development process

At Progatix, we follow a professional step-by-step software development process that facilitates businesses with enhanced transparency, collaboration, communication, and superior quality. Our unique mission-driven process identifies your core development idea, visualizes your unique concept, and creates a strategic development action plan.

Concept Planning  

The concept planning phase is usually when a business develops the goals of the development project and the same challenge that the solution will solve. Progatix conducts a detailed consultancy led by our business consultants & project managers to outline the software development project’s goals clearly.   

This crucial planning phase identifies resource requirements, which tech stacks to deploy, the timelines, security requirements, and several other aspects of the project. With a clear goal defined, organizations can conveniently begin the outsourcing process.   

U.I. & UX Design  

The U.I. & UX design phase is critical to the overall success of the development process. The design team performs this function. Progatix hosts a fantastic team with certified expertise in Adobe X.D., Photoshop, Figma, and other technologies to build progressive & aesthetically pleasing user interfaces with high-quality user experiences.  

Software/ Application Development  

Once the U.I. & UX are completed, the development team takes over and begins coding the outsourced software. Progatix follows agile development methodologies, with SCRUM and rapid development being our specialist modus operandi.  

Our remarkable developers create multiple iterations of your software, delivering results for feedback and improving versions based on your reviews. Once a full feature MVP is ready, it is pilot tested with real-time business data and delivered for approval.    

Testing & Quality Assurance  

Testing and quality assurance are the most critical phases of any outsourced development project. This crucial function significantly optimizes the software for stability, functionality, security, and reliability, eliminating bugs & errors and assuring overall code quality.  

Progatix testing professionals deploy an innovative mix of automatic & manual techniques with certified expertise in Selenium, Appium, Katalon Studio Apache JMeter, and many others. Our proficient testing & Q.A. experts constantly experiment with the limits of the code to ensure premium quality software.   

Deployment & Support  

The deployment stage announces the completion of development, and a DevOps engineer installs your new software or makes it available for end-users. Most outsourcing companies generally end their contract at this point.  

Progatix engineers deploy your solution, conduct real-time testing, and take diagnostic feedback to confirm the successful deployment. Once approved, our team also provides your organization with ready support & training to adapt to the new software.    

Maintenance is also one of the most critical stages of the software development life cycle. As your software ages, it can develop vulnerabilities, dependencies, and redundancies, which can cause errors. The Progatix team routinely audits your software for these changes to ensure your solution is in optimal condition.  

Connect with our team today to learn more about our project costing & budgets, timelines, and tech stacks. Our business development & consultancy teams will provide a complete brief about our solutions and how we can help your organization develop high-quality solutions faster. 

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What Are Software Development Service Models?  

As mentioned above, the research identifies total and selective outsourcing services. Modern software development providers customize their offerings to provide three main models for outsourcing development projects: project-based, dedicated development teams, and out-staffing models.  

1)A project-based model is considered one of the most effective for organizations with a clear idea and concept for their software project. The organization provides the development company with its project plan, which executes the full software development lifecycle.

2)The dedicated development team service model is when an organization contracts a software development provider for long-term project management. A dedicated team is assigned to the project (working with in-house resources) that works both remotely & on-premises, collaborating with management personnel on a routine basis.

3)Out-staffing is a popular outsourcing model where the organization contracts with a development provider, hiring their remote team (developers, designers, testing experts, DevOps engineers, project managers, etc.) to work exclusively on their software project.


Custom software development is a cost-effective and efficient way for organizations to build highly productive solutions faster. From securing highly professional & proficient development teams to creating software using the latest tech stacks, outsourcing software development has many advantages for businesses.


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