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8 Ways To Save Software Development Budget In IT Outsourcing

By March 13, 2020August 3rd, 20203 Comments

Software development is never an end. There are always more features and functions you want to add. No matter where it ends up or what goals it sets out to achieve, almost every agile software development project begins with the same questions. Someone begins with: “Does outsourcing save money?” And next, it probably is “Will I need to hire a software outsourcing development company?”“How much should I budget for a custom software development projects?”. “How to reduce my IT budget in outsourcing?”

how to save software development budget in it outsourcing by agiletechThe list goes on. Truthfully, planning a software development budget can be challenging. But it is important to have a clear goal with the details. You must know what you are looking at in the long-term cost efficiency of outsourcing software. At AgileTech, we embrace the term “responsible budget” – one that gives you steps-by-steps outsourcing tips to minimize cost in software process. So if you want to know how to save the perfect software development budget, please read the following lines.

Read also: How To Define Mobile App Development Budget In 3 Steps!

1. Choose The Company With High Quality And Cost-Effective Services

How much is this project worth to you? Before planning a software development budget, figure out how much you hope to earn or save! Because cost saving is one of the main reasons to go for IT outsourcing. There is a fact that many businesses are looking for IT offshore outsourcing companies to reduce software development budget. Let see the statistic about the top global outsourcing industries.

For example, the US, Australia, and Western Europe are sources of the most expensive freelance developers. Their hourly rates go from $70 to $250. Yet they can provide outsourcing services with the latest trends and technology innovations. While Asian countries are among the locations with the lowest offshore development rates in the world. The average rates for outsourcing IT services in India range between $18–25. Other countries in Asia, such as Vietnam, Malaysia, and Indonesia, are also gaining ground and offer similar software development services between $30 and $40.

So, you will get a lot of budget savings if you contract an Indian or Vietnamese software developer compared to the same developer in the U.S. There will be more cost-efficient because you can afford to add more developers to complete a project. You also save more money from expenses associated with hiring additional in-house employees.

But then again, you shouldn’t only look for a low software developer salary. Choosing an IT outsourcing partner should be less of an economic sense and more of a fit for your company’s strategy. In addition, pay attention to previous experience with methodologies, company’s culture and location.

Read also: How To Outsource Software Development? Complete Guide For Outsourcing!

2. Estimate All The Requirements Of Your Project

Let’s get started by brainstorming a list of major features the project should have. For example, you can pay a little attention to competitor analysis, UI/UX, security standards, production monitoring. Don’t forget to ask the right questions for a realistic estimate on a software development budget!

  • Define exactly what you want to accomplish then ask how much these will cost in IT outsourcing
  • If you already have a dedicated team modal for outsourcing, determine how long it would take (in hours) to build the product
  • Or estimate how much can be saved in software development budget including ongoing support, executive time, the opportunity cost of internal resources, etc.

Completely project requirements are one of the effective ways to minimize cost in a software development process. In other words, you should work with a business analyst to help collect and clarify all the requirements. With a skilled BA, your project is defined what’s technologically possible as well financially and functionally reasonable. As a result, it will yield scalability, usability and security.

3. Define The Right Price Models

Once the project is well-defined, the development team can begin to answer the question “How to choose the right size IT outsourcing partner”. The key to this approach is defining a reasonably sized project. If your project is estimated under 500 hours to complete, it’s ok to hire freelance developers. Other, if your business is small, you can hardly get good results from a large IT software outsourcing company.

Read also: Software Outsourcing Company: How To Choose The Right Size For Startup?

Once the project scope is well-defined, it’s worth taking time to discuss the workflow, cooperation terms and, of course, define the cost of the services.

Fixed price development is considered to be the most efficient and reliable for small and medium projects. Moreover, the fixed price approach is great for short-term products which takes a few months or less. By contrast, hiring a dedicated team is mostly used for long-time and complex projects. While working with a dedicated team, you can manage the development process with them, assigning tasks and changing priorities.

Now, the development team can begin to answer the question of how much will it cost. Every software development budget should be based on an ideal project plan, some contingency time and software costs estimation.

4. Watch Out Any Details In Outsourcing Contract

Adding more time is adding cost for employing people for longer. Adding more team members, and you will increase the cost. This is the reason why every principle in fixing time and team members and allowing scope is a variable component. So what should an outsourcing contract focus on?

  • A clear description of the goods and services related to the agreement
  • Timelines
  • Conditions or standards which must be met
  • Insurance requirements
  • Provisions for terminating the agreement

As long as there is trust, communication, collaboration and a readiness, the Agile software project will be delivered on time and on budget. Of course, there will be occasions where a project is delivered early or late and we deal with these variations with the utmost transparency.

Read also: Contract Loopholes: How To Avoid Mistake In Software Outsourcing?

5. Communicate With Outsource Team Effectively

Many outsourcing projects fail because of not clearly communicating their goals and overall plans. When an outsourced team doesn’t have enough information on the strategic business, they can’t apply their experience to the full to help you innovate your product. So that, budgeting on software development will increase.

Let’s meet and communicate with your team frequently! Without it, it’s impossible for you to make the changes necessary to improve. For examples, daily roundup meetings can start the day off on a good note. In some cases, time zone differences make daily meetings a little difficult. If yes, you can find a balance that works for your team and your needs. As long as habit of healthy communication is encouraged, your software development budget are at much less risk of stagnating.

6. Understand The Knowledge Transfer In Software Project

Knowledge transfer is a critical factor in ensuring the success of offshore outsourcing software development projects. In detail, unshared knowledge affects software development cost. In addition to language barriers, factors such as cultural differences, time zone variance can all lead to problems. As a result, knowledge transfer will negatively impact a project’s overall success.

Thus, knowledge transfer should be performed from a client to a vendor or from a previous vendor to a new vendor. When new members join the team, they need to acquire important knowledge on the project to work efficiently. In fact, it takes a lot of time and money to build up this knowledge. But if you don’t do this, it leads to missing deadlines and high employee turnover rates.

7. Choose Company Manage Your Team Well

Team management is not always easy. How to manage your project in the right hands? Many software outsourcing company provide delivery managers to their customers. Most of their work means navigating the cooperation model and setting up a work process with people. They also help to balance your own tasks and keep the goals in mind. It takes a lot of works to get this right including business processes integration, technology alignment, operations management, and regular performance and financial reports.

8. Keep Track On Outsourcing Services With KPIs

An established, specific and measurable KPIs will benefit your business. When KPIs are not connected with your business strategy, you’re wasting huge amounts of time and money. The ideal outsourcing company should measure KPIs like percentage increase in operating costs, the percentage increase in revenues, accounts receivables. It can be judged through KPIs such as the number of clients, privacy issues, number of outsourcing activities handled and integration capabilities. Don’t hesitate to ask your technology partner to use metrics tools and reports to analyze their work. Then, you will find out that your software development budget is being used well or not.

When you know how to save your software development budget, it’s time to start auditing software development costs and choose a partner that offers you the best value for money. AgileTech is a quality software outsourcing company that providing many outsourcing services at affordable prices. 

By providing multiple needs and services, AgileTech is here to ensure your technology project as a successful element of your omnichannel strategy. We have expert Project Managers along with excellent teams who have delivered the best products to customers in more than 10 countries, namely the U.S, U.K, Germany, France, and Singapore.

As a leading mobile development company in Vietnam, we have huge experiences in many fields including e-commerce, car-sharing platform, health care, Livestream and many more. Our dedicated software development team is ready for your custom requirements. You can contact us at [email protected] or via (+84) 936 281 059 for more information.

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