8 Ways To Save Software Development Budget In IT Outsourcing

4 min readApr 17, 2020

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?”

save software development budget in IT outsourcing by agiletech

The 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.

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.

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.

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.

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.

price model in it outsourcing by agiletech

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.

The list goes on. Let’s take a look at full article to know more!