How to Successfully Outsource Your Software Development to the Philippines
After you've solved the nuts and bolts issues of your product, it's time to push it to grow. Outsourcing is a fine way to go about it. The Philippines is an excellent country of choice.
This short post will give you tips on how to successfully outsource your software development to the Philippines.
First things first: let's go through what you need to know if it's your first time to outsource software development.
What are the things to look for when choosing a country to outsource to?
Highly developed IT market.
The Philippines saw an uptick in the demand for its software development services in 2020. Currently, more than 400 software companies in the Philippines serve U.S.- and European-based clients. It is a large number when compared with the country's size.
Lower costs.
India is arguably the Philippines' biggest competitor in the realm of outsourcing software development. The two countries share similar rates as well. In India, developer salaries range from $19 to $40 an hour. The Philippines offers more competitive pricing, ranging from $13 to $25 an hour. The actual upper and lower limits may vary.
High levels of education.
The Philippines is ramping up its IT curriculum with backing from the government. This initiative is inspired by the country's success in the call center and software development industries.
Ability to communicate in your preferred language. In the Philippines, English is both a government-recognized language and a lingua franca. Foreign clients find conversing with Filipinos is easy because Filipinos have a fairly neutral accent.
Which part of your software development can you outsource to the Philippines?
Development: Writing code for a new feature or a minimum viable product.
Modernization: Rewriting outdated software to make it faster, more secure, and compatible with new app integrations.
Testing.: Using manual and automated methods to deliver quality software faster.
UI/UX Design. Creating new designs or improving existing designs to improve the usability of software or increase conversion.
Project management. Deploying strategies to increase the efficiency and quality of software development.
What are the different pricing models for software development in the Philippines?
Fixed price = pay for the cost of the project
In the fixed-price model, your outsourcing partner bills a specific price for a project.
A fixed price model is ideal if your project meets the following criteria:
- The scope and requirements of your project are clear and unlikely to change.
- The project delivery method is clear.
Advantages of a fixed contract:
Low financial risks. Unforeseen costs are shouldered by the vendor.
Predictable scope and timeline. The contract is planned out in detail.
Disadvantages of a fixed contract:
Miscommunication is a huge risk. The software you will get can be completely different from what you want if you miss a detail or write unclear requirements. It's important to choose a software company that communicates well and helps you write clear software requirements.
The fixed price model is not ideal for complex projects. Projects like e-commerce websites or multi-functional web apps have too many dependencies, integrations, and complex functions. It is hard to accurately predict the costs and timeline of projects of that nature.
The scope is limited because adjusting the scope means adjusting the price and timeline of deliverables.
Time-and-materials = pay for the time it takes to complete a project
In this model, you pay for the expertise of the software development team that you hire.
Benefits of a Time-and-materials model
The scope is flexible so you can respond to changes in the market and customer behaviors.
You can build more and plan less. Instead of writing a 20-page software requirement document, you can ship features in small increments.
Disadvantages of a Time-and-materials model
The project can drag on without any feature being released, especially if no prioritization framework is implemented.
The overall cost of the project is hard to estimate because the timeline is flexible.
How do you decide between a fixed cost and a Time-and-materials contract? It depends on the nature of your project. Time-and-materials is ideal for complex and large-scale projects. On the other hand, fixed-price contracts work best for small projects with tight deadlines, such as building a minimum viable product.
How can you increase the likelihood of a successful software outsourcing?
Fixed price = pay for the cost of the project
In the fixed-price model, your outsourcing partner bills a specific price for a project.
A fixed price model is ideal if your project meets the following criteria:
- The scope and requirements of your project are clear and unlikely to change.
- The project delivery method is clear.
Advantages of a fixed contract:
Low financial risks. Unforeseen costs are shouldered by the vendor.
Predictable scope and timeline. The contract is planned out in detail.
Disadvantages of a fixed contract:
Miscommunication is a huge risk. The software you will get can be completely different from what you want if you miss a detail or write unclear requirements. It's important to choose a software company that communicates well and helps you write clear software requirements.
The fixed price model is not ideal for complex projects. Projects like e-commerce websites or multi-functional web apps have too many dependencies, integrations, and complex functions. It is hard to accurately predict the costs and timeline of projects of that nature.
The scope is limited because adjusting the scope means adjusting the price and timeline of deliverables.
Time-and-materials = pay for the time it takes to complete a project
In this model, you pay for the expertise of the software development team that you hire.
Benefits of a Time-and-materials model
The scope is flexible so you can respond to changes in the market and customer behaviors.
You can build more and plan less. Instead of writing a 20-page software requirement document, you can ship features in small increments.
Disadvantages of a Time-and-materials model
The project can drag on without any feature being released, especially if no prioritization framework is implemented.
The overall cost of the project is hard to estimate because the timeline is flexible.
How do you decide between a fixed cost and a Time-and-materials contract? It depends on the nature of your project. Time-and-materials is ideal for complex and large-scale projects. On the other hand, fixed-price contracts work best for small projects with tight deadlines, such as building a minimum viable product.
How can you increase the likelihood of a successful software outsourcing?
Fixed price = pay for the cost of the project
In the fixed-price model, your outsourcing partner bills a specific price for a project.
A fixed price model is ideal if your project meets the following criteria:
- The scope and requirements of your project are clear and unlikely to change.
- The project delivery method is clear.
Advantages of a fixed contract:
Low financial risks. Unforeseen costs are shouldered by the vendor.
Predictable scope and timeline. The contract is planned out in detail.
Disadvantages of a fixed contract:
Miscommunication is a huge risk. The software you will get can be completely different from what you want if you miss a detail or write unclear requirements. It's important to choose a software company that communicates well and helps you write clear software requirements.
The fixed price model is not ideal for complex projects. Projects like e-commerce websites or multi-functional web apps have too many dependencies, integrations, and complex functions. It is hard to accurately predict the costs and timeline of projects of that nature.
The scope is limited because adjusting the scope means adjusting the price and timeline of deliverables.
Time-and-materials = pay for the time it takes to complete a project
In this model, you pay for the expertise of the software development team that you hire.
Benefits of a Time-and-materials model
The scope is flexible so you can respond to changes in the market and customer behaviors.
You can build more and plan less. Instead of writing a 20-page software requirement document, you can ship features in small increments.
Disadvantages of a Time-and-materials model
The project can drag on without any feature being released, especially if no prioritization framework is implemented.
The overall cost of the project is hard to estimate because the timeline is flexible.
How do you decide between a fixed cost and a Time-and-materials contract? It depends on the nature of your project. Time-and-materials is ideal for complex and large-scale projects. On the other hand, fixed-price contracts work best for small projects with tight deadlines, such as building a minimum viable product.
How can you increase the likelihood of a successful software outsourcing?
Outsourcing can open exciting possibilities for your software product. If you are not sure where to start, the best way is to talk to a chief technology officer (CTO). A CTO will help you navigate the business and technical sides of outsourcing your software development to the Philippines. Drop us a message to know more!
