Are you tired of juggling all the IT projects on your plate? You're not alone. Companies worldwide outsource about 37% of their IT tasks, and for good reason.
If you want access to specialized expertise and cutting-edge technology without the hefty price tag, you should consider IT project outsourcing. And for startups, outsourcing IT projects can be a savvy move when it comes to scaling the business and attracting investors.
And let's face it, who wouldn't want to delegate those tech tasks to an experienced partner and free up some time and resources to focus on the core business functions?
Our goal at Uptech is to make IT project outsourcing clear and easy rather than intimidating. After launching more than 150 projects and working with clients of different industries, like fintech, e-commerce, real estate, and healthcare – we have firmly established a transparent and effective IT project outsourcing process.
In this article, I'll explain how to take the max out of IT project outsourcing. You’ll know how to:
- optimize your operations;
- reduce costs;
- make IT project outsourcing a powerful tool in your arsenal.
Let's start!
When Should I Opt For IT Project Outsourcing?
First things first, it's essential for any business to understand when it's time to outsource IT projects before actually opting for it. From my experience working with Uptech clients, I rounded up some common cases when businesses opt for IT project outsourcing.
Case 1: Limited budget on development
Outsourcing IT projects is often a more cost-effective option than hiring an in-house team. IT project outsourcing companies often have lower labor costs. In addition, if you hire an outsourcing team on a dedicated model, you get the IT team fully devoted to your project and can complete it more quickly, which results in significant cost savings.
We wrote a lot about the cost-effectiveness of IT projects outsourcing on our blog. You can learn ways to reduce your development costs by 70% in our article.
Case 2: Timing constraints
As I mentioned above, IT outsourcing teams fully focus on your project and can complete it more quickly than an in-house team, allowing you to meet tight deadlines.
Case 3: Lack of in-house expertise
When your business lacks the necessary expertise to develop a particular feature or product, IT project outsourcing can give you access to a team of IT professionals with the skills and experience needed to complete your project effectively.
Case 4: Lack of specialized tech talents
Some IT projects require specialized professionals who your business may not have in-house. For example, if you need to develop a mobile application, you may need access to developers who are skilled in mobile app development and have experience working with cross-platform app development and frameworks such as React Native, Xamarin, or Flutter.
Outsourcing companies have a large pool of specialized resources and experts that can be quickly deployed to work on your project.
This means that you don't need to invest in building the resources yourself, which can be time-consuming and expensive. In such cases, outsourcing can be a good option to gain access to the necessary resources without investing in them yourself.
Case 5: Rapid business growth
It's hard to predict when you'll need to ramp up your resources to tackle a big project or when demand for your product will suddenly skyrocket. That's where IT project outsourcing comes in handy.
Outsourcing companies have a pool of developers ready to jump in and help when you need it most.
And the best part? When demand drops, you don't have to worry about layoffs or other drastic measures. You can simply scale back your outsourcing resources until demand picks up again. It's like having your very own on-demand workforce at your fingertips.
Why Is IT Project Outsourcing Important for Me?
As a startup owner, you're always looking for ways to grow your business while keeping costs down. But how do you allocate your funds efficiently, especially now, when investors are looking for a clear strategy in place for your investment more precisely than before?
That's where IT project outsourcing comes in. By outsourcing IT projects, you:
- Get access to specialized skills and expertise without breaking the bank;
- Focus on your core competencies while still achieving your goals.
Plus, investors love to see that you have a clear strategy in place for how you plan to use their investment. By reducing development costs and improving efficiency, IT project outsourcing can make your startup more attractive to investors, leading to more significant returns for both parties.
Or, to simply put it: IT project outsourcing helps you grow your business faster and at a lower cost, which can not attract potential investors.
IT Project Outsourcing: What Services Can I Outsource?
The good news, you can outsource almost anything related to IT, from software development to infrastructure management. IT project outsourcing can cover every part of product development, and here are some most common services that startups typically outsource.
Software Development
This includes developing software solutions for various platforms, such as mobile and web. At Uptech, mobile app development services include creating apps for iOS, Android, or cross-platform solutions. Our web development services cover everything from front-end development to back-end development, database management, and cloud infrastructure management.
Dollar Shave Club – a shopping app from the USA trusted us with its Android mobile app development.
GOAT – a global retail platform for products from the past, present, and future. If you haven’t checked their catalog with sneakers, you should definitely do that. It’s awesome. We’ve been partnering with GOAT since 2019, and our long-standing relationship has resulted in several ambitious projects, including the iOS and Android apps for GOAT.
Plai – a performance management platform for strategy execution, also leveraged our web development services to create the app from scratch.
Software Product Discovery
Product discovery involves understanding the problem you are trying to solve, validating it, researching the market, identifying customer needs and preferences, and defining a solution that will address those needs. Outsourcing product discovery can be beneficial for startups because it helps you ensure that you’re building the right product.
Software product discovery as a part of IT project outsourcing services at Uptech typically includes:
- Problem framing to clarify the problem statement and product’s goals;
- Market research and analysis to identify opportunities and trends;
- Competitive analysis to identify strengths and weaknesses of existing solutions;
- Customer research and analysis to understand customer needs and preferences;
- Concept ideation and validation to identify the most promising ideas;
- Solution validation to validate a product prototype, collect feedback, and iteratively improve the prototype;
- Scope evaluation and requirement setting to be fully aware of what it takes to build the app you planned.;
- Roadmap development to make accurate estimates, define features for the MVP, specify the timeline, and create a proposal for the product.
For example, Eatable – a food-tech company from Sweden, came to us with a request for product discovery. They were so impressed with our collaboration, so we moved further with the web app development.
Emanuel Possnert, CEO of Eatable, came to the Uptech office in 2022 to meet the team and shared his experience working with us. It was super nice to meet each other and have the opportunity to work arm in arm. Check how it was!
UX/UI Design
Outsourcing design services can cover a wide range of design needs, such as UX/UI design, graphic design, and branding. As an IT project outsourcing company, we at Uptech offer the following UI/UX design services:
- User research;
- Product design (websites, mobile apps);
- Wireframing & prototyping;
We also provide UI/IX design consulting to help you check if your product design is profitable and user-centered.
One well-known example of IT project outsourcing which includes design services, is how Apple outsourced its hardware design to Foxconn, which is based in China.
Yaza – a real-estate startup that created an app for recording and sharing video home tours, trusted us with its mobile app design.
Software Testing and Quality Assurance (QA)
This involves outsourcing the testing of your software application to ensure that it meets the required quality standards. IT project outsourcing companies like Uptech test the software for bugs, performance issues, and compatibility with different platforms and devices.
Examples of companies that have outsourced their software testing and QA include Microsoft, IBM, and Amazon.
Nomad – a personalized house-hunting platform for Europe and Middle East countries, outsourced its product development to us, and software testing services were a part of our responsibilities.
“I was definitely impressed by the intellectual rigor that goes behind how they structure projects and their thinking.” – Co-Founder & CPO, Nomad
IT Project Outsourcing Models: Which to Choose?
Outsourcing IT projects can be a game-changer for your business, but only when it’s done right. Choosing the IT project outsourcing model that suits your business best plays an important role here. It can save you time, money, and stress in the long run.
In this block, we'll take a deep dive into various IT project outsourcing models and provide you with insights to help you make informed decisions.
Project-Based Model
Under this model, you hire a team to execute a predefined piece of work. The outsourced team's project manager is solely responsible for delivering the project's quality and performance.
When to choose? The project-based model is suitable for relatively straightforward projects with well-studied functionality that you want to execute without overburdening your internal team.
Dedicated Team Model
With this model, you hire a team that works exclusively on your project. Compared to the project-based model, a dedicated IT outsourcing team is more invested in your project. The outsourced team becomes your product and technical advisor, suggesting alternative solutions and offering ideas to enhance the project.
When to choose? The dedicated team model works best for early-stage startups expected to grow, complex long-term projects, and projects with ambiguous requirements. If you are looking to validate your idea, find a product-market fit or build an MVP to test the market, the dedicated team model is your best bet.
Outstaff Model
This model is ideal when you don't need a full-fledged development team and need to hire specific professionals to work on particular parts of the project. If you have a project that requires additional specialists, you can hire outstaff workers to cover that scope of work.
When to choose? The IT staff augmentation model is best suited for growing startups that need to scale fast and established companies that need extra hands or lack specific expertise. This is a great way to complete your in-house team with the right people who will strengthen your project.
At Uptech, we practice all three models. Whether you’re a growing startup that needs to develop fast to get investment or an established company that needs extra hands to develop a product – we can satisfy your needs.
Do’s and Don’ts for Successful IT Project Outsourcing
Finding the right IT project outsourcing partner and managing the project can be tricky. To help you succeed, I've put together a list of do's and don'ts for successful IT project outsourcing.
These tips will ensure you're on the right track from the outset and set you up for a successful outsourcing experience.
Do your due diligence
Before IT project outsourcing, it's essential to do your homework. Research potential outsourcing partners thoroughly, including their experience, reputation, and track record. Don't hesitate to ask for references and case studies from previous projects they've worked on.
Do start small and test the waters
Outsourcing can be a scary proposition for first-time founders. If it’s your first touch with the outsourcing partner, it’s better to start small and build trust before jumping in headfirst. Start with a small project or task and see how it goes. It’s much easier and enjoyable to commit to a larger project when you ensure that it’s a match.
Do set realistic expectations
IT project outsourcing can be a powerful tool, but it's not a magic solution. Set realistic expectations with your outsourcing partner and ensure that they understand your business goals and timelines. It's also essential to be realistic about budget constraints and any potential roadblocks that may arise.
Don't rush the selection process
Don't rush the selection process, and take the time to research potential partners thoroughly.
Don't forget to communicate effectively
Make sure you set transparent communication with your outsourcing partner. Also, don't forget to stay in touch regularly and provide feedback throughout the project.
Don't make assumptions
Don't assume that your outsourcing partner understands your business or your industry. Take the time to explain your goals and expectations clearly, and provide them with the necessary information and resources to succeed.
IT Project Outsourcing Process: 6 Steps
The process of IT project outsourcing is similar for most software products. So here are 6 steps that you definitely have to pass.
Step 1: Define project requirements
First things first, define the project requirements, including the scope of work, budget, timeline, and any other relevant details. If you don’t have all these details, it’d be enough to describe your idea briefly to have a picture of what services you need to outsource.
At Uptech, we have a contact form that literally consists of 4 questions. After submitting it, we will contact you, discuss how exactly we can be useful, and help you with defining the project requirements.
If you have time and want to ensure that the partnership between you and your IT outsourcing partner will be prosperous – write a request for proposal. It’s a handy tool that helps you stay aligned and clear things up.
Step 2: Search for potential outsourcing partners
Once you have defined the project requirements or described your project idea briefly, the next step is to search for IT project outsourcing companies you’d like to collaborate.
This can be done through online research, referrals from colleagues, checking relevant platforms like Clutch, GoodFirms, or by working with a third-party consultant.
Step 3: Evaluate & Select Partner
After identifying potential outsourcing partners, the next step is to evaluate them based on their experience, expertise, references, and other factors. The options to do that vary, from interviews and portfolio reviews to checking references.
We wrote a lot about the process of evaluating in our previous articles:
- How To Find A Reliable Long-Term Software Development Partner For Your Business
- How To Find An App Developer For Your Business
Check them out for more details!
Once you have identified a suitable outsourcing partner, you select them and negotiate the terms of the engagement. This includes agreeing on the scope of work, timeline, model of cooperation, budget, and any other relevant details specific to your business needs.
Basically, it’s all about clearly communicating your expectations. Like in any other kind of relationship:)
Step 4: Develop a contract
To put all the expectations on, you need to develop a contract. Typically IT project outsourcing contracts include specific and measurable performance metrics like:
- Scope of work;
- Timelines;
- Deliverables;
- Pricing;
- Payment terms;
It should also address intellectual property, confidentiality, security, termination, and dispute resolution.
This will allow you to objectively evaluate the vendor's performance and ensure that they are meeting your expectations. By setting clear expectations and holding the vendor accountable, you can improve the quality of the work and minimize the risk of disputes or delays.
Uptech tip: I do really recommend hiring a professional, such as an attorney or a contract specialist, to help you draft and review the outsourcing contract.
While this may involve an additional expense, it can be a worthwhile investment in ensuring the success of your outsourcing project.
Step 5: Begin the project
So, you've inked that contract! Congrats, you're officially in business with your outsourcing partner. Now, it's time to put those regular check-ins and progress updates into play.
It's crucial to establish effective communication channels to keep your remote team on the same page. Trust me, remote teams are the way to go these days, but managing them can be a challenge.
At Uptech, we practice regular progress updates, status meetings, and other forms of communication that are essential for keeping everyone on track and aligned with the project goals.
And don't forget to keep a watchful eye on the progress bar. You don't want to miss any curveballs that might try to throw your project off track.
So, keep those communication lines open and make sure everyone feels supported and heard. And remember, with the right approach, managing a remote team can be a breeze!
Step 6: Project closure
The final stage of an IT project outsourcing engagement is the project closure phase. It involves completing all outstanding activities and formally ending the project.
Usually, during this phase, we review the project plan and compare it to what was actually accomplished. We also ensure that all deliverables have been completed and that the project meets the agreed-upon quality standards.
The important part is a formal sign-off. This sign-off is critical because it signals that the project has met all of the agreed-upon requirements and any remaining issues have been resolved.
It’s a common case when clients are so impressed with the results of the collaboration that they decide to extend the outsourcing contract. It’s always a pleasure for us to see how we help our clients achieve their business goals and deliver high-quality results.
IT Project Outsourcing: How Much Will It Cost Me?
Last but definitely not least – is the price. I mentioned in this article, and I bet you have heard it from everywhere, that outsourcing IT projects lets you reduce costs. But how much exactly? Let’s try to answer that question.
There are main factors that make up the IT project outsourcing price:
- Location of the outsourcing company;
- Company’s profile and expertise;
- Type of cooperation;
- Amount of services you outsource
Based on our experience, the ballpark range of IT project outsourcing costs is between $50,000 to $250,000.
We recently shared a detailed guide to offshore software development rates in different countries and explained how we make cost estimations at Uptech in the article “How Much Does Software Development Cost?”
Check them out, or you can share your project details with us briefly, and we’ll contact you to make a cost estimation for your project.
Also, we have an App Development Cost Calculator, which can be handy.
Sum Up
Defining project requirements, looking for IT project outsourcing companies, selecting the best, managing the communication, and tracking the progress – it all may sound a bit overwhelming. Take your time to process all the information above.
I’m not gonna lie, IT project outsourcing is complex. But the good news is that partnering with a reliable and experienced team is 80% of success. Tell us about your project. Then, we do the development part, and you have more time to think about the strategy and growth. This is what founders are for.
FAQs
What is the meaning of IT project outsourcing?
IT project outsourcing is the cooperation with external software development service providers to help you grow and scale your business faster and at a lower cost.
When to outsource an IT project?
There are some common cases when you should consider outsourcing a IT project.
- If you want to reduce development costs;
- If you have timing constraints;
- If you lack in-house expertise;
- If you require specialized tech talents;
- If you are scaling and growing fast
What it the process of IT project outsourcing?
Here are 6 steps of IT project outsourcing: defining project requirements, searching for IT project outsourcing companies, evaluating and selecting the partner, developing and signing a contract, starting the project, and closing the project.
How much does IT project outsourcing cost?
The ballpark range of IT project outsourcing costs is between $50,000 to $250,000.