Why is it important to learn how to outsource software development? It’s simple. Unless you have a computing background, IT outsourcing is crucial. If you get it wrong, it could have grave ramifications for your business or software development company.

There are plenty of concerns about outsourcing (and we will address those at some point), but you can’t argue with the results. 68% of U.S. companies outsource, so you’d be hard-pressed to keep up with your competitors in the software development industry without a skilled, outsourced team to maximize your software development services.

If that statistic isn’t enough reason to try it, here’s our case for outsourcing development and other processes for your business.

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The case for outsourcing

Put simply, outsourcing is economic efficiency at work. It’s about getting value for money.

To get value for money, you must describe your software project in concise terms, consider the skill set the programmer(s) needs to deliver a final product that conforms with the brief and have a fairly good idea of the fee range so as to get a fair price without compromising on quality.

In recent years, outsourcing has received a bad rep from people who, in my opinion, don’t quite understand its benefits from a purely economic point of view. While some will argue that outsourcing takes jobs overseas, it actually encourages efficiency. Consumers globally benefit from lower prices of goods and services.

From a business’s perspective, it makes perfect sense to deliver a product or service at the lowest cost and highest quality.

Thus, for outsourcing to be successful, a business must reduce costs while achieving better quality or maintaining the same level of quality.

Is outsourcing software development a good idea? Let’s take a look at some pros and cons.

Pros and cons of outsourcing software development

Like any big decision, a great way to choose whether or not to outsource development talent is to list the pros and cons. Fortunately, we’ve taken some of the busy work off your plate and have done that for you below. Here are a few of the advantages and disadvantages of outsourcing software development:

Pros of outsourcing software development

  • Better time management and resource allocation. Outsourcing non-core functions frees up time and resources so that you can focus on core functions, such as marketing and business development, that impact your bottom line.
  • Cost savings. This is the most significant advantage of all. The value of one’s native currency varies worldwide; you can often save considerably by outsourcing work. For instance, the average salary for a U.S. developer is over $100,000. In the Philippines, it’s under $50,000 per year. 
  • Wider talent pool. When you outsource, you tap into a global pool of talent. Instead of limiting your business to the talent pool of your state or city, you’ll have access to professionals around the globe with unique skill sets you might not find in your backyard.
  • Increased coverage. You might find developers working in different time zones outside your country. This is a great way to provide around-the-clock coverage to prevent outages and other maintenance issues. 

Cons of outsourcing software development

  • Communication barriers. By looking globally, you’re opening your workforce up to new languages, customs, and other cultural variables that are less prominent in in-office work. Be conscientious and use the right strategies and tools to build chemistry. 
  • Timezone differences. If you outsource development work, you might need to stretch your hours at times for meetings, team building, and more. However, embracing asynchronous work can become a massive advantage in other areas. 
  • Quality assurance. The cheapest work available isn’t always the best, as outsourced developers often know that there is no cheaper option. Ensure you have internal staff that can thoroughly review work and try paying an above-average rate to sweeten the deal.

Steps to outsource software development

If you’ve weighed the pros and cons and have decided to move forward with outsourcing development work, we’re here to help that process go as smoothly as possible. Let’s take a look at the steps you’ll need to take to outsource software development: 

  • Identify your needs. First, determine what you need. Do you need full-time or part-time help? Front-end or full-stack developers? These are just a few questions you’ll need to consider. 
  • Research vendors and vet candidates. Just like filling any other position, you’ll need to research candidates. While you could simply list the role on LinkedIn or another professional networking site, some other ideas below might help. 
  • Create a contract. Once you find a candidate, you must type up a contract specifying the prospective developer’s employment status, pay rate, job expectations, and more. You’ll also need to be mindful of outsourcing law when creating contracts. 
  • Set up communication channels. With time zone differences and language barriers often at the forefront, it’s easy to forget to account for communication tools. Ensure you use tools that work for your devs and that your contracts specify communication expectations.

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  • Iterate on the process. Bringing on outsourced talent is the same as onboarding in-office employees. There will be growing pains, and challenges will often arise. Make sure to continually improve contracts, communication methods, and other aspects of the process as needed. 

Outsourcing examples 

Is it really that simple? We certainly think so — but don’t just take it from us. Countless tech companies are outsourcing work to take their respective businesses to new heights. Here are a few software outsourcing examples: 

  • Facebook. While Facebook has some world-class in-house developers, it knows not to burden them with simpler administrative tasks. That’s why it has outsourced moderation work to companies like Accenture
  • American Express. American Express and other credit card companies look to talent in the Phillippines, India, and Latin America to manage customer support. They save money while also creating more expansive availability windows. 
  • AppSumo. Founder Noah Kagan started AppSumo on a budget, so outsourcing was no exception. He allegedly found someone to make a credit card page and PayPal button for $50. 
  • Skype. Before tools like Zoom, Google Meet, and Slack entered the video conferencing space, Skype was a revolutionary idea built on the backs of European software developers. With 300 million active users today, it’s one of the better outsourcing success stories. 

Choosing the right outsourcing partner

Learning to outsource software development effectively starts with finding the right partner. While there are several ways to outsource software development, each has pros and cons. You’ll need to do some homework to find the right software outsourcing company for you and your team to help you successfully outsource software development.

The first method? Freelance websites. 

Freelance websites

There are numerous online marketplaces where freelance workers from all over the world register to find work. At these sites, you can find high-quality programmers at an affordable fee—sometimes at dirt-cheap rates.

But, and this is the biggie, identifying a good programmer at an online marketplace is daunting. You can check their portfolio, ask for references, and still get a dud.


Well, there are several reasons. First, an unethical freelancer can easily fake a portfolio or claim another programmer’s online portfolio. For example, a web programmer can claim to have worked on the back end of a site, but you have no way of verifying such a claim. References can also be “cooked.”

At the same time, some freelancers are notorious for subcontracting work. There have been documented cases where outsourced work ends up being performed by a third or even fourth programmer, with each person on the chain taking a small markup.

There is also the problem of defining what you want in accurate terms. Remember, programmers are a technical bunch, and you may speak different languages. Some programmers also assume they know what you want much better than you do. So you have to be careful you aren’t receiving a canned product.

If you still think you are up to the task, the following are some of the leading software development outsourcing companies that specialize in outsourcing software development:


Upwork is great for outsourcing software development projects. After all, it’s the leading online marketplace in the world. It came about as a result of a merger between Elance and oDesk. Today, over 2 million companies globally outsource work on Upwork. Over 8 million freelance workers are registered at the sites, and the combined annual fees paid through the site in 2013 was $750 million.


Freelancer is another great software development outsourcing company. It’s listed on the Australian Stock Exchange and comes in second in terms of revenue and usage. Since its inception in 2009, it has grown to become one of the leading online marketplaces. Freelancer has been on a buying spree in recent years. Some of the competitors they have acquired include Scriptlance, vWorker (formerly RentACoder.com), digital marketing community, and marketplace Warrior Forum. Read more about Upwork vs Freelancer.


PeoplePerHour is one of the other top software development companies based in the UK, and it has grown fast over a relatively short period. One reason for the site’s impressive growth is its “hourlie” feature. This allows freelancers to post a brief pitch about a service they can offer within a specified period and fee. For example, “I can Code a Simple Mobile App in 3 Days for $100.”

This way, a buyer can purchase the service immediately without creating a project and entering a description —  a significant savings for anyone who knows what they want and is pressed for time.

In addition to these three big online marketplaces, there are smaller ones like Guru.com, Getacoder.com, and Fiverr.

Direct recruitment

Another way to outsource software development is to recruit directly. You can do this by placing advertisements on sites like Craiglist or your local newspaper. Responses are usually in their hundreds, and sifting through the applications to find the right match can take some time.

When hiring directly, you also need to deal with legal aspects and contracts, read traps in software development contracts for a guide on how to avoid this.

Alternatively, you can outsource this job to a recruitment agency—assuming you have the budget for it, as it is expensive.

Get help with code

Are you a programmer simply short of time to complete your code? You may have self-taught software development skills and want someone to complete a piece of code for you. If so, you can always get help with code online. In most cases, you can get this service for free by posting your code on a coding forum and asking for help. The online coding community is friendly (for the most part), and some philanthropists will usually post a correct version of the code or point out the error for you to fix.

The main disadvantage is that you can’t post code that you want to remain proprietary. Once it’s out there, anyone can use it.

If you are interested in exploring this option for outsourcing software development, try the following leading forums for help with code: warriorforum.com, stackoverflow.com, and forums.digitalpoint.com.

Outsource payments anywhere with Hubstaff

When you weigh the pros and cons of outsourcing development and see how other companies have benefitted, there’s only one remaining concern: execution. Paying teams across a variety of currencies, rates, and platforms can be a major headache—but not with Hubstaff. You can pay employees in their preferred currency and edit rates right from the Hubstaff app. You can also use payroll integrations with tools like Wise, PayPal, or Deel to pay outsourced developers using their preferred app.

Hubstaff payment integrations

Are you looking to empower your contractors by helping them maximize your software development life cycle and the tools they use? Check out the Hubstaff Insights add-on to see real-time performance data, utilization rates, and more from your dashboard. You can use it to maximize even the most challenging software development project on your to-do list.

When outsourcing software development, you can create empowered, productive teams worldwide. Hubstaff is here to help give your development team a new life and relieve the pressure on your in-house team with time tracking and project management tools for software developers.

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Category: Outsourcing