To improve software according to company needs, first document the problems users face and the business requirements, then rank them by value. Next, decide whether an in-house team, an outsourced partner (onshore, nearshore or offshore) or a mix will do the work, choose a fixed-price or time-and-materials contract, verify the provider’s security credentials, and deliver in short, tested iterations.
Key Takeaways
- Start with written requirements and a ranked list of problems; outsourcing does not fix an unclear brief.
- Offshore development is one form of outsourcing; onshore and nearshore teams trade higher rates for easier communication and overlapping hours.
- Fixed-price contracts suit a stable, well-defined scope; time-and-materials contracts suit changing requirements.
- Ask providers for evidence such as ISO/IEC 27001 certification or a SOC 2 Type II report, and keep in mind that legal responsibility for customer data stays with your company.
- According to Deloitte’s 2024 Global Outsourcing Survey of more than 500 executives, 80% planned to maintain or increase investment in third-party outsourcing.
Depending on your company, you might not have the IT staff and resources necessary to successfully take on your software development needs. Rather than settle for a lackluster DIY design or worry about going broke paying for a team of in-house professionals, many companies choose outsourcing, which means hiring an external provider to build or improve the software. Offshore development, where that provider is based in another country, is one common form of outsourcing.
How Outsourcing Can Help You Create or Improve Company Software
Benefit From the Knowledge and Experience of Experts
Just as you’re an expert in your respective industry, the same is true of the company you choose when it’s time to outsource IT projects. Such companies have the experience, resources and knowledge necessary to know exactly what your software development project needs to be its absolute best.
Not only does this yield better final results for your project, it also gives you a chance to learn from such professionals so you have a better idea of how software development works.
Save Money While Making the Most of Your Project
One of the biggest reasons to consider outsourcing is so you can reap the cost-saving benefits. If yours is a smaller company, you simply might not have the financial resources necessary to hire the best software development team.
Thankfully, outsourcing gives you the best of both worlds. Now you don’t have to worry as much about going broke in your efforts to create the best software possible for your unique needs.
Give Your Development Process a Boost
Companies that have handled their own software development in the past can attest to the varied levels of satisfaction with the overall development process. Handing a project to experienced external developers can improve the process, especially when the provider brings tested workflows, code review and automated testing that your team does not yet have.
Your software can be created faster than you might be used to, and you’ll have yet another opportunity to learn from the experts. Something else to think about is the fact that your customers and clients will benefit from this advantage as well.
Save Time
You can save just as much time as you do money with outsourcing. Sometimes, you don’t have as much time as you might like to develop your software, which can put you in a bind. By relying on an offshore development company, you can add developers quickly instead of recruiting, and a team in a different time zone can keep work moving outside your own business hours. That helps with tight deadlines only when milestones, reviews and acceptance criteria are agreed in advance.
Gain a New Perspective on the Situation
To stay well ahead of the curve, it’s necessary to have an inexhaustible source of inspiration, one that will make your software feel fresh and innovative. Unfortunately, this isn’t always the case. Outsourcing gives you access to new perspectives you might be missing in-house when you’ve been dealing with a project or problem for days and weeks on end. A fresh perspective can lead to better design decisions, which can translate into happier customers and better results.
Divert Company Resources Elsewhere
It’s no secret that it can be quite expensive recruiting, hiring and training employees for your in-house IT and software development team. You also have to worry about finding the space for your team to work, which might require a change of location, which is another expense to ponder.
With outsourcing, you don’t have to worry about expending such resources, time and energy, which means you can devote them elsewhere.
Better Overall Software Quality
Has the quality of your software development projects been rather lackluster in the past? To keep your audience from running into the arms of your competitors, consider outsourcing. With access to specialist testers and their testing tools, quality can improve, provided you define how quality will be measured (for example, defect counts and acceptance tests) before work starts.
Imagine having an easier time retaining and increasing your market share while giving your audience exactly what they expect and deserve and then some.
Improved Compliance
Something else to think about with software development is the fact that software has to be compliant with the most current standards.
Because you have a company to run, you might not have as much time as you might like to ensure your software is fully compliant. An experienced provider can help you meet current compliance requirements, but responsibility does not transfer with the work: under the EU General Data Protection Regulation, for example, the company that controls personal data remains liable for how its processors handle it.
There’s plenty to enjoy with outsourcing when it comes to software development. Be sure to look into it the next time you need to create new software or improve current software. 🙂
What Does Improving Software According to Company Needs Mean?
Improving software according to company needs means changing an application, or replacing it, so that it supports the way the business actually works: its processes, users, customers, data and legal obligations. The work can be done by an in-house team, an outsourced provider or both. For background on the discipline itself, see our guide on what software development is and its main processes.
How to Improve Company Software: Step by Step
- List the problems. Collect complaints, support tickets and workarounds from the people who use the software every day.
- Write the requirements. Turn each problem into a requirement with a measurable result, such as a report that loads in under five seconds or an order form that needs no manual re-entry.
- Rank by value. Order requirements by business impact and effort, and fix the most valuable ones first.
- Decide who does the work. Compare your in-house capacity with outsourcing options (see the table below). Our article on in-house versus outsourced IT support covers the same trade-off for support teams.
- Pick a contract model. Use fixed price for a stable scope and time and materials for changing requirements.
- Check security and compliance evidence. Ask for certifications, audit reports and a data processing agreement before sharing any data.
- Agree ownership in writing. The contract should state who owns the source code and intellectual property, how confidential information is protected and how the work is handed over if the relationship ends.
- Deliver in small, tested increments. Review working software at each milestone and sign off only against agreed acceptance tests.
- Plan maintenance. Budget for bug fixes, security updates and future changes after launch.
Onshore vs. Nearshore vs. Offshore Development
Offshoring means relocating a business process to another country, with or without a third-party provider; offshore outsourcing means hiring an external company in another country. Nearshoring is outsourcing to a provider in a nearby country, and onshore outsourcing uses a provider in your own country.
| Model | Where the team is | Main advantages | Main drawbacks |
|---|---|---|---|
| In-house | Your own staff | Full control, deep business knowledge | Recruiting, salary and office costs; slower to scale |
| Onshore outsourcing | Same country | Same language, laws and business hours | Usually the highest outsourcing rates |
| Nearshore outsourcing | Nearby country (for US firms, often Mexico, Canada, Costa Rica, Colombia or Brazil; for Western Europe, often Poland, Czech Republic, Hungary, Romania or Bulgaria) | Overlapping time zones, easier visits, closer cultural ties | Smaller cost difference than distant offshoring |
| Offshore outsourcing | Distant country | Large talent pools and lower costs in many markets | Time-zone gaps, language and cultural barriers, intellectual property risk in some jurisdictions |
For a country-by-country comparison, read our guide to the best countries for offshore software development.
Fixed Price or Time and Materials: Which Contract Fits?
A fixed-price contract pays the provider a lump sum for the agreed work, whatever the provider’s own costs. A time-and-materials (T&M) contract pays for the hours actually worked plus materials used.
| Factor | Fixed price | Time and materials |
|---|---|---|
| Best for | Clear, stable scope | Uncertain or changing requirements |
| Budget | Predictable | Varies with effort |
| Flexibility | Low; changes need renegotiation | High |
| Main risk | Provider may cut corners to protect margin | Scope creep and cost overruns |
Many T&M contracts add a guaranteed maximum price, which caps total spend while keeping flexibility.
Which Security and Compliance Checks Should a Provider Pass?
- ISO/IEC 27001. This international standard sets requirements for an information security management system. The current edition is ISO/IEC 27001:2022 (amended in February 2024), which lists 93 controls in four themes: organizational, people, physical and technological. Certification bodies had to move certified clients off the 2013 edition by 31 October 2025, so a certificate should now reference the 2022 edition.
- SOC 2. SOC 2 reports, defined by the American Institute of Certified Public Accountants (AICPA), assess controls against five trust services criteria: security, availability, confidentiality, processing integrity and privacy. A Type I report checks whether controls are designed properly; a Type II report tests whether they worked over a period, typically 9 to 12 months, so it gives stronger assurance.
- GDPR, if you handle EU personal data. The General Data Protection Regulation has applied since 25 May 2018. Personal data may leave the European Economic Area only to countries the European Commission has declared adequate, or under safeguards such as standard contractual clauses or binding corporate rules. The most serious breaches can draw fines of up to €20 million or 4% of total worldwide annual turnover, whichever is higher. See also why some firms need a GDPR representative.
If developers will work remotely with your systems, our cybersecurity guide for remote employers lists practical access controls.
What the Latest Outsourcing Data Shows
- Deloitte’s 2024 Global Outsourcing Survey, the newest full edition, polled more than 500 executives: 83% were using AI as part of their outsourced services, 80% planned to maintain or increase investment in third-party outsourcing, and 70% had brought some previously outsourced work back in-house over the previous five years.
- In an April 2026 analysis of the same survey, Deloitte reported that 67% of organizations had adopted outcome-based outsourcing models, up from 45% two years earlier, and that 92% were integrating or planning to integrate AI into service delivery.
- In-house cost context: the US Bureau of Labor Statistics put the median annual wage for software developers at $135,980 in May 2025, before benefits, equipment and recruiting costs.
Risks of Outsourcing Software Development
- Security breaches and fraud if access to systems and data is not controlled.
- Lock-in through penalty clauses and code only the provider understands.
- Communication barriers from language, culture and time-zone differences.
- Intellectual property exposure in jurisdictions with weak enforcement.
- Single point of failure if one provider holds all knowledge of the system.
Reduce these risks by keeping the source code in a repository your company owns, requiring documentation, and running a structured selection process; our guide to choosing a software development company walks through it.
Frequently Asked Questions
Is offshore development the same as outsourcing?
No. Outsourcing means hiring an external provider for work; offshore outsourcing means that provider is in another country. Onshore and nearshore outsourcing use providers in the same or a nearby country.
Is outsourcing software development cheaper than hiring in-house?
Outsourcing is often cheaper for short or specialized projects because you avoid recruiting, salaries and office costs; the US median software developer wage was $135,980 in May 2025, according to the BLS. Savings depend on the provider’s rates, management overhead and how clearly the scope is defined.
Which contract type is best for improving existing software?
Time and materials usually suits improvement work, because requirements tend to change as problems are uncovered. A fixed-price contract fits a small, precisely defined change.
What certifications should a software development partner have?
Common evidence includes ISO/IEC 27001:2022 certification and a SOC 2 Type II report. If the provider will process EU personal data, also require a GDPR-compliant data processing agreement.
Who owns the code when development is outsourced?
Ownership depends on the contract, so the agreement should explicitly assign source code and intellectual property to your company and require handover of code and documentation.
1 Comment
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Harshil,
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Praveen verma