Proven Ways to Save on Software Outsourcing Costs
Saving on costs is the main business decision behind software development outsourcing. But signing up with an outsourcing partner does not guarantee saving on the costs of custom software development.
This post breaks down some solid ways to save on software outsourcing.
Use review websites to select a reputable software company
Websites that aggregate reviews of software companies are a good place to find reputable outsourcing providers. Clutch, for example, is a company that collects verified reviews.
In addition to reviews, you can request for a portfolio. It helps to find out what specific development tasks the software company did and how long those were completed.
Question to ask a potential software vendor: Where can I view your portfolio?
Write a solid software requirement document
Software requirements are a technical documentation of what you want your software to be. This document guides the development team so that software is coded exactly as you want it, saving time (time = money) on reworking the code.
You will need to work with a chief technology officer, business analyst, or project manager when writing software requirements. This can mean extra time on video calls. But it is time worth investing on.
If you have not written a software requirement document before, a software partner can give you a template and the proper guidance on how to write one.
Question to ask a potential software vendor: How can you help me write software requirements?
Choose the right pricing model
You can save on software development costs by finding the right pricing model for your project.
Fixed-price model
In the fixed-price model, a budget is guaranteed regardless of the time or expense needed to complete a project.
Advantages
The main advantage of the fixed price model is that it allows the client to set an exact budget.
It is highly suitable for smaller, extremely predictable development work such as building a minimum viable product (MVP).
Disadvantages
You will need to plan thoroughly, which can take weeks or months.
The contract needs to be modified whenever there are major changes to the plan or software requirements.
Time and materials
In the time and materials model, you pay for the resources and human hours needed to complete a project. There is no fixed price, but a price range is typically agreed upon.
Advantages
It is flexible and well-suited to changing market needs.
Because of its flexibility, the time and materials model is ideal for projects that do not have clear requirements.
Thorough planning is not required since the development team has the freedom to change strategy as they learn more about the product and its market. This is particularly productive in an Agile setting.
It is ideal for continuous development.
Disadvantages
The full cost of a project can be difficult to estimate. (However, this should not be confused with difficulty in managing the budget -- since project restraints and software requirements are in place to keep costs manageable.)
It requires client involvement as the project progresses -- in contrast to the fixed price model where the client is involved mostly at the planning stage.
Question to ask a potential software vendor: What pricing model works best for my project?
Choose the right team size
Freelance developer: Less than 500 hours of work
Freelance developers are ideal for small projects. Hiring just one person to complete a project saves greatly on costs. The main disadvantage is that there are no essential support personnel such as project managers or quality engineers.
Dedicated software development team
A fully-staffed dedicated software development team is made up of 3 to 5 people.
A dedicated software development team is ideal for recurring, long-term work that need domain specialization and product knowledge.
The longer that a team works on a project, the more they understand it. They become better at giving the right ideas for improving a product. They also become advocates of the product, meaning they are become more committed towards the success of a product.
Question to ask a potential software vendor: How many people will work on my project?
Test Early, Test Frequently
As a client, you have a say on which approach to software development to take. One of the most cost-efficient ways of developing software is test-driven development (TDD). In this approach, code is written to meet pass tests that were written beforehand.
This saves costs in two ways:
- It prevents bugs from accumulating.
- Bugs are discovered earlier in development, reducing the amount of future rework.
Question to ask a potential software vendor: What software development process do you follow? How does it incorporate testing?
Prioritize Features
Time and money are finite -- but the potential of your app is not. Choosing which features to build first sets up the necessary return in investment to pursue further web development.
Question to ask a potential software vendor: How will you prioritize potential product features?
Work with a Team that Understands Business Needs
The goal of a software company is to add business value. Writing code is just the means towards that goal. It is necessary that a development team understands your business. This is where domain expertise is particularly advantageous.
Domain expertise is a deep understanding of a specific field. Some software development companies can be experts at fintech or educational technology.
A software company that is an expert in your domain can reduce development time and provide expertise that can increase your ROI.
Question to ask your potential software vendor: What experiences do you have in my business domain?
Work with a Development Team that Has a Well-Defined Process
Working with tool sets, people, and many intangibles create the need for a structure.
Software development requires a process. There is no better or worse process: it all depends on the context. Following a process is important because:
- It enables a software company to provide reliable budget and timeline estimates.
- It allows you to keep track of the project.
- It standardizes tasks so that the development team can work more efficiently.
Question to ask a potential software vendor: What processes do you have in place so that software development is completed in the most cost-efficient way possible?
Software development is an undertaking that entails risks and rewards. Asking the right questions can help you to stack odds towards your favor.
Do you want to learn more about managing your software project? Schedule a call with our CTO.
