Want to supercharge your software development efforts and gain a competitive edge? 

Hiring an outsourced development team might be the game-changing solution you’re looking for.

Outsourcing development teams are the easiest way to bridge skill gaps and expedite your software or product development and time-to-market — all while reducing costs.

But to reap these benefits, you need to work with the right outsourced team. Not doing so may lead to project delays, increased costs, and a poorly designed product.

We’ll share 11 proven steps and essential tips to help you find the right team and manage it effectively. 

We’ll also introduce you to the ideal nearshore software development outsourcing partner — Distillery. 

This Article Contains:

Further Reading:
Considering a strategic approach to your IT needs? Learn how IT Outsourcing Services can streamline your technology operations.
Explore eight compelling benefits of Mobile App Development Outsourcing

What Is an Outsourced Development Team?

An outsourced software development team typically consists of a software developer, product owner, software engineer, project manager, business analyst, and other professionals hired from an external organization to work on your company’s software development projects. 

These external experts can be located anywhere in the world, but work collaboratively with your internal team. 

This way, you can access a wider talent pool and accelerate development timelines without the overhead costs of hiring full-time employees – all while focusing on your core business functions.

Here’s an example:

A startup wants to develop a mobile app featuring augmented reality shopping experiences but lacks the relevant in-house resources or expertise. The startup can quickly turn its concept into a high-quality, market-ready application by partnering with an outsourced software development team specializing in augmented reality and e-commerce platforms.

What Kind of Development Projects Can You Outsource?

Outsourced development teams typically take up tasks ranging from small, one-time projects to long-term development work, depending on your company’s needs and resources.

You can outsource projects like:

  • Web Development
  • Mobile App Development
  • Software Development
  • E-commerce Solutions
  • Database Management
  • Cloud Computing Solutions
  • AI and Machine Learning Projects
  • Internet of Things (IoT) Applications
  • Game Development
  • Cybersecurity Solutions
  • UI/UX Design Projects
  • Quality Assurance and Software Testing

When is the Right Time to Hire an Outsourced Development Team?

An outsourced development team could be a total game-changer in the following scenarios: 

  • You need to bridge an internal skills or expertise gap quickly while bypassing lengthy recruitment processes. 
  • You want to cut costs, including salary benefits and training costs, that are typically associated with expanding an in-house team. 
  • You need additional manpower to meet urgent software project deadlines.
  • You need more hands on deck to handle technical tasks so that your internal team can focus on core business functions.
  • You have a minimal viable product (MVP) and need to add new features or conduct software testing. In this case, an external team can offer the technical expertise and fresh perspective needed for successful implementation.
  • You want to enter a new market, and localized knowledge is essential for customizing your product to meet regional demands. 

Now, let’s take a look at how you can find the right team for your needs. 

11 Proven Steps to Finding the Best Outsourced Development Team

Here are 11 steps to help you outsource software development projects to the right team:

1. Clearly Define the Projects You Want to Outsource 

Begin by specifying the scope and objectives of your projects. Detail the technical requirements, expected outcomes, and timelines. 

A well-defined project scope helps in communicating your needs clearly to a potential outsourcing partner, ensuring alignment from the start and reducing the risk of misinterpretation or scope creep during development.

2. Decide on the Type of Software Outsourcing Model

Broadly, there are three primary types of software outsourcing models you can opt for: 

  • Staff Augmentation: Involves augmenting your current team with additional skilled professionals for specific tasks or software project phases. Suitable for both short- and long-term projects.
  • Dedicated Team: Specialized teams that work exclusively on your software development project and integrate seamlessly with your internal team. Works best for long-term projects.
  • Full-Cycle, End-to-End Software Development: An external team handles all software development stages, from conception and planning to deployment and support. 

3. Determine Your Budget

To determine your budget, you must first take into account the scope and complexity of your software development project, as this will influence the level of expertise and resources required. 

Then, research market rates for outsourcing development services similar to your needs to get a realistic idea of the cost. Include hidden expenses like software licenses and dedicated team training as well. 

Also, consider the costs specific to each outsourcing model. For instance, if you’re looking at staff augmentation, factor in the cost of integrating external personnel into your existing workflow and potential management overhead.

Your budget is key to determining the quality and expertise of the outsourced team, directly impacting project results. 

4. Decide Which Geographical Outsourcing Strategy Works For You

There are three geographical outsourcing strategies you can choose from:

  • Offshore: Delegating business functions to organizations in a distant country like China or India. Depending on the location you choose, this outsourcing model could be the most cost-effective and will give you access to a global talent pool. But, significant time zone differences and cultural variances can pose communication challenges.
  • Onshore: Outsourcing software development services to providers within the same country, ensuring the highest cultural and legal alignment, but at higher costs. 
  • Nearshore: Outsourcing software development to nearby countries like Argentina and Mexico. This approach offers cost savings compared to onshoring, with close proximity and shared time zones enhancing collaboration and communication. 

As you can see, nearshoring offers the best of both worlds.

5. Find the Right Outsourced Development Team

Whether you’re choosing the offshore, onshore, or nearshore model, you need to look for teams with a proven track record in your industry offering the specific software development services you need.

Also, consider factors like their technical expertise, project management approach, and effective communication style.

Here are some common ways to find an outsourced development team:

  • Working with Outsourcing Service Providers: Consider specialized talent providers like Distillery for tailored expertise.
  • Personal Referrals: Consult with your network, particularly those with experience in software development outsourcing in similar industries.
  • Google Search: Use targeted keywords related to your project to find appropriate companies.
  • Online Directories: Browse platforms like Clutch to filter and select outsourced development teams by service type, size, and expertise.

Why Nearshoring Your Software Development Project through Distillery Is The Best Option

Distillery is a top-tier nearshore software development company offering skilled talent, including advanced engineering expertise, to augment your team.

You can choose any of our nearshore outsourcing software development models:

We ensure excellence by:

  • Acquiring top tech talent with specialized skills through a rigorous selection process.
  • A tailored Service Delivery Approach (SDA) catering to specific business needs.
  • Adaptable team structures aligned with your unique project requirements.
  • Broad expertise in areas from cloud technology to UX/UI design, QA, and project management.
  • Consistent, effective communication for smooth project execution.

6. Check Their Portfolio and Domain Expertise

Review the prospective team’s portfolio to gauge their experience and quality of work. 

Pay close attention to projects within your domain or similar industries. This will give you insight into their capability to handle projects like yours and their expertise in specific technologies or solutions.

7. Check Their Reviews, Testimonials, and Ask for References

Evaluate the team’s reputation through reviews and testimonials. These can be found on their website, professional networks, or review platforms. 

Don’t hesitate to ask for references from previous clients, as firsthand feedback can provide valuable insights into their reliability, responsiveness, and quality of work.

8. Check their Processes and Technologies Used

Ensure the dedicated software development team you choose uses up-to-date, industry-standard tools and follows best practices like Agile or DevOps. 

This step is crucial to confirm their development process aligns with your project requirements and that they can adapt to emerging technologies.

9. Interview the Outsourcing Service Provider

Set up an interview with your potential outsourcing partner to discuss their project management approach, problem-solving strategies, and how they tackle unexpected issues. 

Address key aspects such as their security protocols and quality assurance measures. 

This way, you can assess their expertise, adaptability, and whether their communication approach and ethical practices align with your project’s needs and values.

10. Evaluate Their Culture and Retention Strategies

The outsourcing development partner’s company culture and its approach to employee retention play a crucial role in project success. 

So, examine how their values resonate with your own and explore their strategies for keeping a motivated, skilled team. A positive, stable work environment is key to ensuring consistent, high-quality output.

11. Sign a Contract

Finalize a detailed contract with the outsourced team to outline project scope, deliverables, timelines, and payment terms. 

This legal document should clearly state expectations and responsibilities, reducing the likelihood of misunderstandings and providing a framework for dispute resolution.


Hiring the right team is half the job done. 

Successfully managing this outsourced development team is also key to the complete success of your project. 

Here’s a handy guide to help you navigate this stage smoothly:

10 Essential Tips on How to Manage an Outsourced Development Team

Use these tips to manage your outsourced team effectively and achieve optimal results:

1. Ensure the Team Understands Your Product Vision and Timeline

Communicate your product vision, goals, and timeline clearly to the dedicated software development team.

Regular meetings and detailed briefs help ensure that everyone is aligned with the project’s objectives, leading to a more cohesive development process and end product.

2. Ensure Intellectual Property (IP) and Quality Control with NDAs and SLAs

Protect your IP and ensure quality control by having Non-Disclosure Agreements (NDAs) and Service Level Agreements (SLAs) in place. 

NDAs safeguard your confidential information, while SLAs set clear standards for quality and timelines, ensuring accountability.

3. Establish Clear Communication Channels

Set up dedicated channels for communication, such as email, a project management tool, or video conferencing platforms. 

Clear and consistent communication channels prevent misunderstandings and ensure that all team members are updated and aligned with the project’s progress.

4. Establish a Leadership Hierarchy and Point of Contact

Designate a leadership hierarchy within the outsourced team, including a primary point of contact. 

This structure clarifies who is responsible for decision-making and streamlines communication, making it easier to address issues or changes efficiently.

5. Have the Right Tech Stack in Place

Ensure that the technology stack used by your outsourced team aligns with your project’s requirements. 

Compatibility in tech stacks between your in-house and outsourced teams facilitates smoother integration, efficient workflow, and easier maintenance and updates post-development.

6. Treat Outsourced Developers like Internal Staff

By integrating remote developers into your internal team, you foster a strong sense of unity and alignment with company objectives, which deepens their investment in the project’s success. 

So, ensure the outsourcing team is regularly included in team meetings, updates, and company culture activities.

7. Establish KPIs 

Define specific KPIs to gauge your outsourced team’s performance. 

This can include metrics like code quality, number of bugs or issues reported, adherence to project timelines, and staying within budget constraints. 

Regular assessment of these KPIs will not only track the team’s efficiency but also ensure alignment with your project’s objectives and quality standards.

8. Conduct Sprint Reviews

If you’re using Agile methodologies, conduct regular sprint reviews to assess the work completed in each sprint. 

This provides an opportunity for feedback and adjustments, ensuring that the development is on track and aligns with the project’s objectives and standards.

9. Conduct Visits and Face-to-Face Meetings

Besides conducting regular video calls, organize periodic on-site visits or face-to-face meetings to ensure that the outsourcing team is meeting your project’s standards. 

These direct interactions not only build trust but also allow you to observe their working methods firsthand, ensuring that the team is adhering to your established processes and quality benchmarks.

10. Address Any Cultural Differences

Recognize and respect cultural differences that may exist between your team and the outsourced group – especially in an offshore outsourcing setup. (You might not encounter this challenge as much in nearshore and onshore outsourcing teams). 

Implement training or awareness sessions to understand these diversities better. Addressing cultural nuances can improve communication, foster mutual respect, and enhance team cohesion.

Now, let’s look at why you should hire an outsourced software development team in the first place. 

6 Main Benefits of Working with an Outsourced Development Team

From scalability to improved teamwork, here are six note-worthy benefits of working with an outsourced development team:

  • Lower Costs and Operating Expenses: Outsourcing software development reduces costs like individual salaries and benefits and hiring and training costs commonly associated with full-time hires. For instance, you need to pay a US software development team lead around $142,857 annually. On the other hand, you’ll only need to pay their Mexican counterparts around $33,000 per year. Additionally, you can reduce operating expenses like office space, utilities, and tech infrastructure. 
  • Flexibility and Scalability: Quickly scale your team size up or down based on outsourced project needs and market changes. For example, a tech firm can expand its team for a major product launch and reduce post-launch.
  • Top Talent and Expertise: Gain access to world-class professionals with niche skills. For example, a US tech company specializing in advanced healthcare apps, aiming to integrate sophisticated AI-driven diagnostic tools into their app, can tap into the highly skilled AI experts in Latin America.
  • Faster Time-to-Market: Outsourced development teams, with their specialized skills and scalability, enable faster product development and release. They work in parallel with in-house teams, often across different time zones, ensuring continuous progress.
  • Free Up Internal Resources for Growth: Redirect your in-house team’s focus to core business areas. A healthcare startup, for example, might outsource app development to concentrate on research and partnerships with healthcare providers, enhancing patient care services.
  • Improved Methodologies: Leverage advanced methodologies for efficient project management. A US e-commerce company, for instance, could employ an Argentine development team skilled in Agile methodologies, resulting in faster iteration cycles and more responsive product development.

While outsourced development teams offer numerous benefits, it’s important to be aware of the potential challenges as well.

The Risks of Working with an Inexperienced Outsourced Software Development Team

Here are five challenges you may face if you’re not working with a reputable, experienced service provider:

  • Less Codebase Knowledge: Inexperienced outsourcing development teams may have difficulty understanding your company’s codebase, taking them longer to start contributing effectively.
  • Complicated Review Process: The review process can become complex due to differences in coding standards or practices between the US company and the outsourced team.
  • IP Risks: Working with an offshore outsourcing company in countries like China and India necessitates stringent agreements to protect IP, as different nations have varying IP laws and enforcement levels.
  • Timezone Limitations: Time zone differences can still affect real-time collaboration and coordination, especially in offshore models. For instance, a tech team based in New York would face notable challenges in synchronizing with their outsourced development team in China due to the substantial 13-hour time difference. 
  • Cultural and Linguistic Barriers: Cultural nuances and language differences, though often less significant in nearshore software development models, may still pose challenges in communication and outsourced project alignment with English-speaking teams. 

But rest assured, you won’t have to worry about these challenges if you work with a top-tier nearshore outsourcing partner like Distillery.

Hire the Best Nearshore Outsourced Development Team through Distillery

There’s no doubt that outsourced development teams offer a plethora of advantages, from cost savings to accessing global talent. 

But to truly reap the full benefits while effectively navigating the challenges of outsourcing, consider opting for a nearshoring approach.

By partnering with an outsourcing company like Distillery, you can benefit from cost savings while avoiding significant timezone and cultural differences.

So, what are you waiting for? Connect with Distillery now to streamline your software development projects.