In 2025, outsourcing can help your business successfully enter the target market. This statement holds true for a startup and a large-scale software development company. Outsourcing provides businesses with quick access to large pools of diverse professionals, a faster start, and flexibility.
According to Precedence Research, the total value of the IT services outsourcing segment, particularly software outsourcing, is expected to reach $1.149 trillion by 2032. This indicates a demand for offshore software development, support, or digital solution modernization services.
Learn from experts at Lampa Software how to outsource a software development company.
Outsourced Product Development vs. an In-house Team
If you're still debating between outsourced development and in-house development, outsourcing has more advantages due to many factors:
How to Outsource Software Development – A Step-by-Step Guide
Labor costs reduction. You don't need to pay salaries.
Development costs. The cost of work depends on the volume of work done and the time spent.
Business value. You can focus on core business processes without being distracted by project planning.
Business objectives. An outsourcing development partner always focuses on the development needs and goals of your business.
Talent pool. You can assemble an outsourced team of any format and scale.
Expert tips. A custom software development outsourcing partner will execute a project and help you improve it.
Business growth. With software outsourcing services, you'll have the opportunity to grow your brand rapidly.
Outsourcing can help you get lower-cost, trusted software, accelerate market entry, and focus on key business needs.
Review a comparison table of in-house and outsourced development teams.
Factors | In-House Development | Outsourcing Development |
Labor Costs | It demands to pay fixed salaries and bonuses, and to cover other corporate expenses. | Pay only for delivered work; no long-term salary or HR overhead |
Development Costs | Higher, regardless of workload; infrastructure required | Flexible — cost tied to project scope, time, and actual effort |
Business Value | Internal teams split focus between delivery and operations | You can focus on core business processes while a partner manages project delivery |
Business Objectives | The team may juggle multiple initiatives internally | Partner is contractually aligned to your goals and delivers against defined objectives |
Talent Pool | Limited to local hires and recruitment timelines | Global pool; scale team composition and size as needed |
Expertise | Dependent on in-house knowledge and training | Access to specialists with experience across industries, plus best-practice recommendations |
Business Growth | Growth constrained by hiring speed and budget | Rapid scaling of brand and product with faster time-to-market |
Market Entry | Slower due to hiring, onboarding, and setup | Accelerated entry with pre-assembled, skilled teams |
As you can see, outsourcing software development has many benefits. However, before making a decision, it is important to consider all factors, including the advantages of IT outsourcing and its potential disadvantages.
Why Companies Outsource in 2025 (beyond cost)
In 2025, outsourcing is no longer just about saving money — it’s a strategic lever for growth and resilience. Companies turn to external partners to access scarce skills without long recruiting cycles, especially in fields like AI, cloud, and test automation, where talent remains limited. Outsourcing provides agility for evolving roadmaps, whether through flexible time-and-materials arrangements or dedicated teams that scale with demand.
Businesses also accelerate time-to-market by leveraging vendors’ ready-made delivery playbooks, reducing delays tied to onboarding or tool setup. The opportunity cost of waiting to hire internally is often higher than engaging a proven partner who can start immediately. Finally, by blending nearshore and offshore resources, businesses achieve 24/5 coverage that enables continuous progress without overburdening local teams.
In short, companies that offer software development services in 2025 to gain speed, flexibility, and expertise, ensuring they stay competitive while focusing internal energy on core innovation.
10-Step Process for Successfully Outsourcing Software Development Projects
Looking for an extensive guide on how to hire an outsourcing agency successfully? We have prepared a detailed step-by-step guide on how to find and hire an outsourcing software team of developers matching your business needs and purposes, build an effective outsourcing strategy, and launch a software development project to get the most effective outcome at the end of your outsourcing journey.
Please note that this guide is designed for all types and scales of businesses, so you may need to adjust the stages to fit your specific case.
Step 1: Develop clarity around what you’re building
Start by assigning the task to an in-house project manager and a business analyst to create a clear vision of the project’s goals. They should define the initial concept, corporate style, development principles, and high-level functionality. These early foundations help you delegate work to an outsourcing team, ensure consistent execution, and provide the structure that is necessary to evaluate progress, manage risks, and validate achievements throughout development.
Step 2: Write a scope statement for your software project
The software development team must understand its short-term and long-term purposes. The scope of the project serves as a guide for what needs to be accomplished and the amount of work required. It ensures that an outsourcing team and a customer have a common point of view on the project’s goals. Defining the project scope is fundamental to project-based outsourcing and serves as the foundation upon which successful project execution is built.
You will provide convenient project management and simplify the entire development process because all participants will clearly understand what they are working on and how it should look at the end of the project.
Step 3: Decision time: To outsource or not to outsource
Deciding whether to outsource comes down to priorities, capacity, and risk tolerance. If your business needs speed, flexibility, and access to scarce expertise, outsourcing offers clear advantages — faster delivery, lower opportunity costs, and global talent on demand. It’s especially valuable for startups, SMBs, and enterprises tackling new tech or scaling fast.
However, if your project involves sensitive IP, long-term strategic core systems, or requires deep in-house context, building internally may be the safer path. Many companies adopt a hybrid model, outsourcing execution while keeping strategy and critical knowledge in-house.
Step 4: Decide between onshore, offshore, and nearshore outsourcing
When it comes to choosing between onshore, offshore, and nearshore outsourcing, pay attention to a range of factors, including your budget, collaboration needs, purposes, speed of completing tasks, and risk profile. An onshore format offers partnering within your own country, providing the strongest cultural fit, shared time zones, and easier legal compliance. Best when projects involve sensitive IP or require close daily collaboration.
An offshore format provides cost efficiency and scale with broad expertise while collaborating with teams in distant regions. This type of collaboration fits well-defined, repeatable work where 24/5 delivery matters. Risks include time-zone gaps, cultural differences, and higher coordination overhead.
A nearshore format allows balancing cost savings with collaboration. While choosing this format, your teams are in similar time zones (e.g., LATAM for US, Eastern Europe for EU). Thanks to this, you will get overlap hours, cultural affinity, and flexibility without the high premiums of onshore. Regional political or economic instability is one of the key risks.
When it comes to outsourcing vs offshoring, each of them has its advantages and disadvantages.
Step 5: Choose an outsourcing model
When engaging with an outsourcing team, you can choose between three software development outsourcing models, including Staff Augmentation, Managed / Virtual Team, and Project-Based Model. When you need to add specific professionals to your in-house team, pay attention to Staff Augmentation. For instance, if your software developers need extra QA engineers, DevOps experts, or a cloud architect for a limited time, this model fills the gap without the delays of hiring.
The Managed or Virtual Teams format allows a business to collaborate with a ready-made group of professionals and manage day-to-day delivery processes, while you control the product vision, backlog, and priorities. This format will be the best option when it comes to long-term functions such as software engineering, continuous QA, or mobile app development, where steady velocity and accountability are required.
When the scope is well defined and you want to get an end-to-end solution delivered on a turnkey basis, you can apply for the Project-Based Model. Your team can focus on its strategic initiatives when an outsourcing team plans, executes, and delivers a final product to a customer. Choose the most suitable model for you depending on key points, including capacity, autonomy, or complete delivery ownership.
Look through a comparison table of different outsourcing models.
Model | Use when | Trade-offs | Control | Budget predictability |
Fixed-Price | Scope and requirements are well-defined; short to mid-size projects. | Limited flexibility; scope changes increase cost/time. | Low | High |
Time & Materials | Requirements may evolve; discovery and iteration are expected. | Costs can grow if scope expands; requires active oversight. | Medium | Medium |
Dedicated Team | Long-term needs with ongoing backlog; steady velocity required. | Higher commitment; underutilization risk if backlog slows. | High | Medium–High |
Each pricing model comes with its own strengths and trade-offs, and the right choice depends on the clarity of scope, desired flexibility, and level of control your team wants to maintain. Fixed-Price provides predictability but limits adaptability, Time & Materials supports evolving roadmaps at the cost of variable spend, while a Dedicated Team model offers control and continuity but requires a steady flow of work. The key is to align the pricing model with both your collaboration approach and business priorities to balance delivery speed, budget discipline, and product quality.
Step 6: Evaluate providers
There are myriad software outsourcing companies on the market, but the key is to find one that can handle your project’s complexity without hidden costs or delivery risks. The wrong choice can harm your business and sour your view of outsourcing altogether, so careful and detailed evaluation of the team and its previous experience is essential.
When choosing an outsourcing software team, follow this step-by-step guide:
Start by considering company size: a provider with 30–120 specialists offers a broad enough talent pool without the overhead of a massive firm.
Look at business longevity as well — software development outsourcing companies with 5–10 years of experience are generally more stable and trustworthy than newcomers in diverse fields.
Equally important is their technology expertise: ignore inflated lists of tools and instead check their portfolio, client reviews, and feedback relevant to your stack.
Assess the team’s development process maturity by asking about cooperation, project management, and methodologies; clear, detailed answers signal professionalism. Agile dominates today, but if you need alternatives like Waterfall, confirm the skills upfront.
Evaluate their DevOps practices, English proficiency, and time-zone flexibility, as well as their industry experience — broad exposure often translates into faster adaptation.
Review the pricing structures offered (fixed-price, T&M, milestone-based) to align with your budget and risk appetite.
Ask for a strong portfolio, recognized certifications, and even GitHub contributions — they provide additional proof of competence.
Finally, pay attention to a provider’s business continuity plan — from long-term support to self-recovery systems — since sustainability after release is just as critical as the build itself.
We have prepared a table outlining the most essential criteria to consider when choosing an outsourcing team.
Criterion | What to Look For | Why It Matters |
Company Size | 30–120 professionals | Balanced capacity to cover project needs without excessive overhead. |
Business Longevity | 5–10 years in the market | Indicates stability and trustworthiness; reduces risk of sudden closure. |
Technology Experience | Relevant stack in portfolio and reviews | Real-world proof of expertise, not just a long “About Us” list. |
Process Maturity | Clear cooperation and project management explanations | Demonstrates commercial experience and ability to handle complex delivery. |
Methodology | Agile frameworks (unless Waterfall/RAD required) | Ensures adaptability and alignment with modern development practices. |
DevOps Maturity | Structured CI/CD and automation processes | Key for efficient, secure, and reliable software delivery. |
English Proficiency | Corporate working language | Enables smooth communication and reduces collaboration friction. |
Time-Zone Flexibility | Willingness to adapt meetings across zones | Critical for offshore cooperation and real-time alignment. |
Industry/Vertical Experience | Broad exposure with the ability to adapt | Diverse backgrounds allow teams to learn and deliver quickly. |
Pricing Structure | Flexible models (fixed-price, T&M, milestones) | Lets you manage budgets without overpaying or losing flexibility. |
Work Portfolio | Case studies, client reviews, and real implementations | Provides transparency on quality, reliability, and past results. |
Compliance Certifications | ISO, SOC, or industry-specific standards | Validates security, compliance, and professional maturity. |
GitHub Contributions | OSS projects with a balance of commercial work | Confirms coding practice, but check for real-world delivery experience. |
Business Continuity Plan | Long-term support or recovery strategy | Ensures product stability and sustainability post-release. |
Step 7: Request a free consultation
After choosing an outsourcing software team covering all your requirements, the next essential step is building clear communication. Apply to the provider’s manager to find out all the details of cooperation, including engagement models, project scope, timelines, and reporting practices. This communication at the earliest stages helps clarify expectations, build mutual trust, and ensure that both sides are aligned before the project is launched, reducing risks and paving the way for smoother collaboration.
Step 8: Draft and sign the paperwork
Legal aspects play a crucial role in outsourcing partnerships. With documents, your company will get a high-quality final product. They will help minimize business risks and provide assurance that the project will be delivered on time and within scope. To formalize the relationship, you’ll typically need to sign four essential documents.
NDA (Non-Disclosure Agreement): A contract that provides non-disclosure of confidential information shared between you and the outsourcing team, ensuring the security of sensitive data, trade secrets, and intellectual property. Sign a non-disclosure agreement to protect your sensitive data and strategy from your competitors.
MSA (Master Services Agreement): A framework contract outlining the general terms of cooperation, including payment terms, dispute resolution, liability, and legal protections. Individual projects then reference this master agreement.
SLA (Service Level Agreement): A detailed agreement that contains the quality standards, response times, performance metrics, and accountability measures the software development vendor must meet during service delivery.
SOW (Statement of Work): A project-specific document that contains information about the scope, deliverables, timelines, responsibilities, and acceptance criteria for a particular engagement under the MSA.
Together, these documents help build the legal and operational foundation of a suitable outsourcing partnership, ensuring clarity, accountability, and protection for both sides.
Step 9: Choose a communication tech stack
One of the essential points in our step-by-step guide is choosing a communication tech stack that supports reliable and effective collaboration. You can use diverse tools, including Slack or Microsoft Teams for daily messaging, Zoom or Google Meet for video calls, and Jira or Trello for task tracking. All these tools can cover diverse fields of professional communication. Additionally, you can use Confluence or Notion for documentation and a shared risk log. If you choose these tools for your job communication, they can provide your project with transparency, reduce miscommunication, and keep projects aligned across time zones.
Step 10: Set up ongoing monitoring and continuous improvement
The work doesn’t end after the start. A launched project demands ongoing monitoring and continuous improvement. Establish KPIs such as lead time, deployment frequency, and defect development rates, and review them regularly in operational meetings. Utilize dashboards and reports to monitor quality, productivity, and risks of the project. They will help you pick feedback from in-house and outsourcing teams. This sophisticated approach allows proactive adjustments and enhances efficiency over time.
Things to Consider When Outsourcing Software Development
Following a previous step-by-step guide, perform additional optimization of collaboration with an outsourcing team, and pay attention to several aspects. They will help you better formulate a working framework and prioritize tasks. Ultimately, you will get an optimal outsourcing model that meets the project's needs:
Analyze your problems and requirements. Identify the aspects that potentially affect the outcome of your development. Define and describe the requirements, possible nuances, and alternatives in case issues arise.
Select the suitable model. Pick the model that fits your project type and budget. Even if you don't implement all the functionality at once, you will still have a robust foundation for scaling the product.
Select an outsourcing team. Choose a responsible team that will implement the project for you fully. For instance, the Lampa Software team has a stellar reputation in the IT outsourcing market.
Create a design and software specification document. Outline the requirements, specifications, typical user stories, and design. This will help the contractor execute the project correctly and reduce risks.
Manage the project effectively. Use a combination of in-house and external project managers to synchronize the product vision and timelines and focus on goals. Use effective tools to manage current tasks and final goals, as well as software for building reliable and effective communications.
Each step and aspect of choosing and building collaboration with an outsourcing team is important and needs your attention. When following our extensive guidelines without missing details, you will achieve success in building your project.
4 Tips for Not Getting Scammed When Outsourcing Software Development
Following the previous recommendations, enhance the efficiency and reliability of the collaboration with an outsourcing team by following several useful tips. They will help you build a better working framework and prioritize tasks. Ultimately, you will get an optimal outsourcing model that meets all the project's needs and allows you to accelerate time-to-value.
Know your goals
Clearly define your project goals from the very beginning and follow them throughout the work process. Even if an outsourcing team changes the format, scope, or type of product, ensure that every decision aligns with your original objectives. Stay focused on your priorities — this will prevent scope errors and help you evaluate whether an outsourcing software company truly supports your vision and achieves the purposes of the project and roadmap.
Thoroughly vet a contractor’s background
Before hiring an outsourcing team, request several client references from a company similar in size and domain. When communicating with a contractor, verify not just outcomes against the plan, but also communication quality, how outsourcing issues were handled, and whether the vendor maintained a project on the post-production stage. Ask for anonymized dashboards or redacted post-mortems to view delivery in practice — these aspects help you find out how a team tracks progress, manages risks, and learns from setbacks.
Be thorough in communication
After hiring a software development outsourcing team, build clear communication with the partner and define your purposes, implementation, and functionality. Additionally, select work tools for effective collaboration, including project tracking, documentation, and risk log cadence. Choose a working style and establish overlap hours to manage workflow and check the results provided by an outsourcing team at different stages of the collaboration.
Ensure that data security is a top priority
One of the most crucial aspects of successful cooperation is high-level security. When choosing an outsourcing team, pay attention to whether they meet baseline standards such as ISO 27001 or SOC 2, follow a secure SDLC, manage dependencies via SBOMs, and enforce strong secrets management and access control. Additionally, request evidence, including the latest audit letter, key policy excerpts, and an incident response plan summary, to validate trust and maturity.
Why Outsource with Lampa Software
Lampa.dev is an outsourcing software development company that has successfully worked in the IT field for 10 years, offering a wide range of top outsourcing services, including mobile app development, smart TV, and TV box apps development, web development, software testing, UI/UX design, project management, and outstaff solutions. We carry full responsibility for the outcomes of collaboration with our customers and deliver end-to-end with a predictable, metrics-driven process and clear SLAs.
Our experienced outsourcing team has implemented built-in quality and security practices, including code reviews, automation, CI/CD, and least-privilege access in the full-stack product development process. A wide range of awards highlights our commitment to delivering high-quality software development. Whether you are a startup or an SMB/enterprise, you will get cutting-edge AI-based solutions.
One of the brightest examples of our successfully developed software is THD, a cloud-based solution designed to transform urban mobility. This cutting-edge solution uses state-of-the-art connected vehicle and machine learning technologies to prioritize the flow of vehicles in the city and across a corridor. This project showcases our ability to combine cutting-edge technologies with practical applications.
Want to find out more about the services provided by our leading outsourcing software development team?
Get a free consultation.