IT Outsourcing Models: Types and Tips To Choose The Best One

Outdated interfaces, poor performance, and technological stagnation – these challenges have led leaders to make a crucial decision: investing in software maintenance cost. Software maintenance cost is not just an expense but an investment in the future of any business. It is the process of improving software after its release: fixing bugs, enhancing performance, adding new features, and ensuring it is secure against cyberattacks. All of these updates keep software reliable and, more importantly, adaptable to evolving user needs. By understanding software maintenance cost, businesses can support the long-term functionality of their systems while making informed decisions that optimize budgets and resources. Let’s keep reading to uncover comprehensive guidance for accurately estimating the cost of software maintenance, from analyzing key cost factors to exploring how to calculate maintenance cost. Table of Contents Toggle Different Types of Software Maintenance Corrective maintenance Adaptive maintenance Perfective maintenance Preventive maintenance Key Factors Affecting Software Maintenance Cost Technical factors Non-technical factors Software Maintenance Cost vs. Development CostEstimated Annual Maintenance Cost For A Music Streaming App1. Fixing bugs and addressing issues2. Ensuring compatibility with operating system updates3. Enhancing features based on user feedback4. Proactively optimizing for stabilityOutsourcing vs. In-house Maintenance: Pros And Cons For BusinessesOutsourcing software maintenanceIn-house maintenanceWhen To Implement Software Maintenance?Immediately post-deploymentRegularly scheduled maintenanceUpon detection of bugs or errorsDuring feature updates and enhancementsWhen adapting to environmental changesTo keep pace with technological and regulatory changesHow To Achieve Optimal Software Maintenance?FAQs On Software Maintenance CostFinal Thoughts About Software Maintenance Cost  Different Types of Software Maintenance  Software maintenance isn’t a one-size-fits-all solution. Each software has its own requirements, and addressing them requires different approaches. In fact, there are 4 distinct types of maintenance that every software product should undergo throughout its life cycle. Different types of software maintenance Corrective maintenance  Corrective maintenance in software engineering is the most apparent type of maintenance and the first thing that comes to mind when someone finds out about the process. This method is focused on identifying errors and making adjustments to enhance the operation of the software. These defects, which can appear as bugs, errors, or vulnerabilities, are identified and analyzed to determine the root cause. Corrective maintenance is required when users come across software bugs or when security risks arise. When applying appropriate patches or updates, corrective maintenance restores the software to a stable and secure state, preventing further disruptions and data breaches. Typically, corrective maintenance comprises around 20-25% of all software maintenance activities. Adaptive maintenance  Adaptive maintenance is about updating software to keep it aligned with changes in its external environment. This can involve modifications to secure compatibility with new operating systems, hardware updates, or third-party software dependencies. Such maintenance becomes essential when external factors, like technological advancements, infrastructure updates, or regulatory changes, impact the software’s ability to function smoothly. By keeping the software compatible with its surroundings, adaptive maintenance enables it to operate efficiently despite these outside changes. This type of maintenance is key to the software’s long-term resilience and sustainability. For instance, software was initially developed to run on Windows 10, but with the release of Windows 11, certain features start to misbehave due to changes in the operating system. While there’s no issue with the original code, adjustments are necessary to ensure seamless functionality on the updated platform. Adaptive maintenance accounts for about 15-20% of total maintenance efforts. Adaptive maintenance Perfective maintenance  Perfective maintenance makes up about 25-30% of maintenance spending, focusing on enhancing existing software by introducing new features or improving current functionality based on user feedback and market changes. This maintenance type supports continuous improvement of the product. Suppose your business launched a messaging app, and after gathering feedback, you find that users want the ability to edit messages after sending. To meet this demand, you add an “edit” option for sent messages, improving user experience. Modifying existing software based on user requests like this is a prime example of perfective maintenance. Perfective maintenance is implemented when businesses adapt their software to evolving market trends and rising user expectations. It’s often driven by a strategic need to stay competitive, improve user satisfaction, and capitalize on emerging technologies. Through perfective maintenance, software becomes more powerful, intuitive, and feature-rich, enabling businesses to deliver greater value and maintain a leading edge. Preventive maintenance  Usually, 5-10% of total maintenance efforts go toward preventive maintenance. Preventive maintenance, a proactive strategy, is designed with a focus on long-term stability and performance. The goal is to address potential issues before they can disrupt the software’s performance, providing a reassuring layer of stability. Preventive maintenance not only fortifies software and safeguards it for the future but also eases the burden of code maintenance. This strategic move serves as a shield against all potential alterations, making it easier to handle the legacy system securely, relieving the workload of code maintenance. Key Factors Affecting Software Maintenance Cost  When planning for software maintenance, decision-makers also need to consider various cost factors. These factors fall into 2 main categories: technical factors and non-technical factors. Factors affecting software maintenance cost Technical factors  1. Programming language The programming language you choose can significantly impact a software project’s maintainability and overall cost. Higher-level languages like JavaScript, Ruby, PHP, and Pascal offer a more intuitive and developer-friendly syntax, making them easier to learn, understand, and maintain compared to lower-level languages like C or assembly. This simplicity translates to reduced maintenance efforts, resulting in substantial savings in the long run. 2. Testing and validation The performance of software partly relies on the quality of its design and testing phases. Investing in a well-thought-out design and thorough testing before launch can substantially lower maintenance costs down the line. The cost of fixing bugs varies by type. Simple coding errors are usually affordable to correct, while design flaws can be more costly, often requiring substantial rewrites of the program. Bugs rooted in requirement issues are typically the most expensive, as they demand extensive redesign to align with intended functionalities. Taking these steps early on ensures not only smoother performance but also long-term savings in maintenance efforts. 3. Configuration management Reducing maintenance expenses also requires effective configuration management. Developers can access, update, and troubleshoot the system more easily when documentation is well-structured and consistent with the software’s architecture. Your team will spend more time creating valuable enhancements and less time deciphering how things operate if there is clear documentation. By the same token, maintenance can become expensive, leading to a resource drain with poor configuration management. 4. Development platform The platform on which the software is developed also impacts maintenance costs. For instance, iOS-based software may incur different maintenance expenses compared to Android, partly due to varying developer rates. Selecting the right platform should consider both the business budget and future scalability needs. iOS software may have different maintenance cost from Android Non-technical factors  1. Business criticality Your software’s role in core business operations can influence how much support it needs. Mission-critical applications, vital to business operations, demand consistent and reliable maintenance to ensure stability and performance. This often translates to higher maintenance costs due to: Frequent updates: The need for frequent updates to prevent downtime and maintain operational continuity. Enhanced support: The requirement for heightened support to address issues promptly, potentially necessitating increased IT staffing or outsourcing. Organizations should plan for these additional expenses when deploying software that is integral to their operations. 2. Software setting Software with a clear, stable purpose and minimal anticipated changes tends to have lower maintenance costs. In contrast, highly innovative software, which must adapt quickly to shifting market demands, often requires ongoing updates and enhancements. This agile software development approach which is required to stay competitive with frequent feature additions means higher maintenance investment over time. For forward-thinking software, be prepared for a higher maintenance budget to cover regular updates and expert support. 3. Hardware’s dependability While software runs independently, the hardware it operates on can significantly affect maintenance. Outdated or unstable hardware often leads to compatibility issues, requiring extra patches or optimizations, especially in legacy systems. For many businesses, immediate hardware upgrades aren’t always feasible. Instead, being aware of hardware limitations and aligning software updates with them can help manage maintenance more effectively. 4. Geographical factors For software serving users across multiple regions, localization and compliance add layers of complexity to maintenance. Adapting software to meet diverse language requirements, regulatory standards, and regional preferences is necessary for seamless global functionality, yet it also demands additional resources and ongoing investment. Meeting these varied needs ensures your software remains effective and compliant across markets, supporting business continuity and customer satisfaction on an international scale. Software Maintenance Cost vs. Development Cost Total cost of ownership (TCO) is a term widely utilized when businesses assess software costs. TCO encompasses development, deployment, management, and maintenance, as well as indirect costs like employee training and client onboarding. While development is a one-time process, software maintenance is ongoing for all software types. Software maintenance cost vs development cost Here’s a concise comparison between development and maintenance cost to help clarify their distinctions and importance: Category Development Cost Maintenance Cost Nature of cost One-time investment Ongoing expense Scope Creating software from scratch Ensuring software runs efficiently post-deployment Key activities Design, coding, testing, deployment Bug fixes, updates, compatibility adjustments, optimization Cost frequency One-time Recurring annually Estimated cost Depends on project scale 15-20% of development cost per year Estimated Annual Maintenance Cost For A Music Streaming App In this article, we’ll use the example of a music streaming app, like Spotify, to illustrate typical software maintenance cost. Please note that these hypothetical numbers may vary based on factors such as app complexity, user base, and technology stack. Here comes a sneak peek. Keep scrolling for greater elaboration! Example of software maintenance cost for a music streaming app The cost to develop a music streaming app can range from $45,000 to $250,000 or more, depending on specific requirements and features. For this example, we’ll assume an initial development cost of $200,000. The software maintenance cost percentage is usually calculated at 15% to 20% of the initial development investment annually. Thus, the estimated annual maintenance cost would be approximately $40,000. A music streaming app like Spotify offers various features to users, including personalized playlists, offline access, multi-device support, and social sharing. To ensure these features perform smoothly and meet user expectations, continuous maintenance across several areas is necessary: 1. Fixing bugs and addressing issues Example issue: Updates from third-party platforms, such as Facebook or Instagram, may disrupt the app’s social sharing feature, requiring immediate fixes to maintain functionality. Maintenance impact: Corrective maintenance ensures stable integration with external services, providing a seamless user experience. Estimated annual cost: 20-25% of the maintenance budget (~ $9,000) 2. Ensuring compatibility with operating system updates Example issue: With each iOS and Android update, regression testing is needed to confirm that features such as playback and offline mode work properly on updated devices. Maintenance impact: Adaptive maintenance ensures compatibility with OS updates and includes necessary adjustments, keeping the app accessible on the latest devices. Estimated annual cost: 15-20% of the total maintenance budget ~ $7,000 3. Enhancing features based on user feedback Example: Adding new personalization features, like collaborative playlists and improved recommendations, to keep the app competitive and engaging for users. Maintenance impact: Perfective maintenance enables the app to evolve according to user needs, enhancing retention and engagement. Estimated annual cost: 25-30% of the maintenance budget (~ $11,000) 4. Proactively optimizing for stability Example issue: Regular server optimizations and code refactoring are conducted to ensure fast load times and smooth playback, even as the app’s user base grows. Maintenance impact: Preventive maintenance helps avoid performance issues by keeping the codebase clean and the infrastructure robust. Estimated annual cost: 5-10% of the maintenance budget (~ $3,000) By and large, an estimated annual maintenance cost of around $40,000, covering corrective, adaptive, perfective, and preventive maintenance, allows the app to stay reliable, user-friendly, and competitive in the rapidly evolving streaming market. Outsourcing vs. In-house Maintenance: Pros And Cons For Businesses When it comes to managing software maintenance, companies often face a crucial decision: should they keep it in-house or outsource it to an external provider? This choice significantly impacts costs, flexibility, and overall performance. Below, we explore the pros and cons of each approach to help you decide what’s right for your business. Outsourcing software maintenance IT outsourcing means hiring external experts to handle the work. Here’s a closer look at the benefits and downsides of outsourcing software maintenance: Pros: Specialized expertise: With outsourcing, you’re bringing in specialists with deep knowledge and experience. For complex tasks like API integration or security updates, outsourcing complements the in-house team with specialized expertise for greater efficiency. Scalability: Outsourcing is flexible – you can scale maintenance needs up or down based on demand, which is ideal if you have fluctuating needs or a limited budget. Cost efficiency: Outsourcing allows you to cut down on overhead costs related to recruiting, training, and managing an internal team. You also avoid the need to invest in maintenance tools and infrastructure. More time for core focus: By handing off routine maintenance, your in-house team can focus on core tasks that drive growth and innovation. Cons: Reduced control: Outsourcing means you give up some control over the timing and quality of maintenance tasks. If the provider doesn’t meet expectations, it can impact your operations. Communication gaps: Working with an external team, especially if they’re offshore, can lead to communication challenges due to time zones or language differences. Reliance on a provider: If you become too reliant on an external provider, any disruptions or delays on their end could impact your business. To maximize the benefits of outsourcing while mitigating its risks, establishing trusted partnerships and developing a well-crafted strategy are essential. With a thoughtful approach, business can ensure that the advantages of outsourcing far outweigh potential challenges. For deeper insights and stay ahead in your strategy, check out our eBook on IT outsourcing trends now. In-house maintenance In-house maintenance involves building a team within your company to handle software upkeep. This is what you gain and what to watch out for when choosing in-house maintenance: Pros: Direct oversight: An in-house team is entirely under your control, so you can directly oversee quality and ensure standards are met. Stronger cultural fit: In-house teams understand your business culture and goals, making them more invested in maintaining the software to your standards. Faster response times: With maintenance staff onsite, issues can be resolved quickly, reducing downtime and keeping things running smoothly. Cons: Higher costs: In-house teams come with higher costs, including salaries, benefits, and ongoing training. These expenses can strain budgets, especially for smaller businesses. Staffing challenges: Maintaining an in-house team means dealing with potential turnover, skill shortages, and recruitment needs, which can impact service continuity. Skill gaps: Your in-house team may need more specialized skills for specific tasks, leading to quality gaps or limitations in their work scope. So, what’s right for your business? Outsourcing or in-house maintenance Deciding between outsourcing and in-house maintenance depends on your specific needs, budget, and goals. IT project outsourcing is ideal if you’re looking to save on costs and tap into specialized expertise, though it does mean less control over daily processes. In-house maintenance, on the other hand, gives you more control but comes with higher overhead and potential staffing challenges. Ultimately, the right choice depends on the complexity of your maintenance needs, your budget, and your preference for control. Many companies find that a blended approach – managing certain in-house tasks while outsourcing specialized tasks effectively – gives them the best of both worlds. When To Implement Software Maintenance? When to implement software maintenance Software maintenance comes into play to keep your applications running smoothly, securely, and relevant to your business needs. But knowing when to dive into maintenance can be the difference between a well-oiled system and one constantly putting out fires. Immediately post-deployment Imagine that your team has just launched a new software application. Initial feedback is positive, but users start encountering minor issues. Small bugs and a few performance lags can happen as the system adapts to real-world use. This post-deployment period is optimal for initial maintenance, where small adjustments can solidify functionality, meet business requirements, and prevent minor issues from affecting user experience. Think of it as the final layer of quality assurance, ensuring the system’s reliability from the start. Regularly scheduled maintenance Regularly scheduled maintenance – such as monthly or quarterly checks – can catch and resolve issues early, preventing potential failures. Routine tasks may include performance monitoring, system updates, and security patches. These regular check-ups help you identify vulnerabilities, extend your software’s lifespan, and avoid unexpected disruptions. When you prioritize routine maintenance, you invest in smoother operations and ultimately lower overall maintenance costs over time. Upon detection of bugs or errors No matter how well-designed, the software will occasionally experience bugs or errors that require corrective action. Promptly addressing these errors is critical to preserving stability. For instance, if a customer-facing feature malfunctions, corrective maintenance can restore functionality before significantly impacting user experience. While reactive in nature, corrective maintenance contributes much to preventing minor issues from escalating into major disruptions. During feature updates and enhancements A maintenance layer is necessary when updating software to incorporate new features or improved functionality to guarantee seamless connection with current systems. Perfective maintenance, for example, facilitates updates like adding a user-requested feature or enhancing the user interface without causing interruptions or inconsistencies. This strategy guarantees that the software maintains competitiveness and adapts to changing user requirements. When adapting to environmental changes Changes in the operating environment – such as OS upgrades, network adjustments, or server migrations – often necessitate software modifications. Adaptive maintenance at these times ensures that the software remains compatible and performs optimally in its new environment. Suppose that your organization migrates to a cloud-based infrastructure, adaptive maintenance aligns your software with this shift, ensuring uninterrupted functionality and efficiency. To keep pace with technological and regulatory changes As industries shift, so do compliance rules and tech standards, making it essential to keep software up-to-date. Adaptive maintenance ensures your software stays compliant and relevant, ready to meet new demands. For example, new data protection laws or enhanced cybersecurity standards may necessitate updates to the software’s data handling practices. Regularly performing adaptive maintenance not only secures compliance but also enables responsible innovation, keeping your organization agile and ready for what’s next. How To Achieve Optimal Software Maintenance? To keep your software systems secure, efficient, and aligned with business needs, it’s essential to implement a proactive and structured maintenance plan. From setting a regular update schedule to leveraging automation and investing in team training, these best practices are key to reducing downtime and extending the life of your applications. Check out our comprehensive software maintenance guide for a deeper dive into maintaining software effectively. Choosing the right partner is crucial for successful software maintenance. Using third-party support effectively reduces software maintenance costs, especially with an offshore IT partner. With deep expertise in proactive monitoring, adaptive updates, and comprehensive support, LTS Group provides reliable, tailored solutions that help keep your software robust and responsive to changing needs. FAQs On Software Maintenance Cost How much does software maintenance cost? Software maintenance typically costs 15-20% of the initial annual development cost. For example, if a software project costs $200,000 to develop, the yearly maintenance cost would be around $30,000 to $40,000. Annual maintenance costs can rise 40-90% of the original development cost for complex or large-scale applications. Can maintenance costs be reduced? Yes, implementing best practices can help manage and reduce costs. Regularly scheduled maintenance, investing in high-quality initial development, automating routine tasks, and documenting changes contribute to lower long-term expenses. Partnering with a specialized maintenance provider, especially working with an offshore software maintenance service provider, can also offer cost-effective support without compromising quality. Is it better to manage maintenance in-house or outsource it? This decision depends on your organization’s needs and resources. In-house maintenance offers more control but can be costly, especially if specialized skills are required. Outsourcing maintenance, particularly offshore, can provide cost savings and access to expertise, but clear communication and a well-defined SLA (Service level agreement) are essential to maintain quality and accountability. Final Thoughts About Software Maintenance Cost  Investing in software maintenance costs is crucial for keeping your application functional, competitive, and secure. From bug fixes and feature updates to compatibility and performance improvements, effective maintenance drives user satisfaction and business success. If you’re looking for a trusted partner to manage and enhance your software, LTS Group offers the expertise, dedication, and scalability needed to keep your application running at its best. At LTS Group, we approach maintenance by anticipating future needs and preventing issues, rather than just addressing problems as they arise. Our expert team is committed to delivering maintenance that extends the lifespan of your software while optimizing for performance and cost. Connect with us today to learn more about our software maintenance services and how we can help extend the life of your software while reducing overall maintenance costs. Website: https://ltsgroup.tech/  Tel: (+84) 96-238-7474 Linkedin: https://www.linkedin.com/company/lts-group-vietnam/ { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [{ "@type": "Question", "name": "How much does software maintenance cost?", "acceptedAnswer": { "@type": "Answer", "text": "Software maintenance typically costs 15-20% of the initial annual development cost. For example, if a software project costs $200,000 to develop, the yearly maintenance cost would be around $30,000 to $40,000. 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Over the past decade, IT outsourcing has proven to be a strategic choice for businesses seeking to accelerate software development, shorten time-to-market, cut costs, and fill skill gaps. In fact, Clutch reveals that 90% of small businesses turn to outsourcing business tasks to foster growth and reduce wage expenses by 70% to 90% in top outsourcing hubs like Vietnam and the Philippines. However, to fully realize these advantages, it’s important to have clear guidelines to effectively outsource development team. Failing to do so can result in project delays, increased costs, and underperforming products. So, how can companies choose and manage an outsourced development team for maximized success? Keep reading to find out! Table of Contents Toggle What is an Outsourced Development Team?How to Find the Best Outsourced Development Team?Step 1. Clearly define the projects for outsourcingStep 2. Decide on the relationship-based type of outsourcing modelStep 3. Determine the budgetStep 4. Choose the geographical outsourcing strategyStep 5. Start searching for potential outsourced development teamsStep 6. Review their portfolios and domain expertiseStep 7. Check their testimonials and referencesStep 8. Assess their communication skillsStep 9. Evaluate project management capabilitiesStep 10. Consider their cultural fit8 Tips to Manage an Outsourced Development Team EffectivelyWhy Build an Outsourced Development Team with LTS Group?When is the Right Time to Hire Outsource Software Development Team?FAQs about Outsourcing Development TeamFinal Thoughts about Outsourcing Development Team What is an Outsourced Development Team? An outsourced development team refers to a group of skilled professionals from an external company brought on board to handle specific software projects. These teams typically include software developers, product owners, project managers, business analysts, and other specialists. What is an Outsourced Development Team? The team members may operate from various locations globally, providing access to a diverse set of skills and knowledge that may not be readily available within the organization. By leveraging this approach, companies can tap into a broader talent pool that accommodates a wide range of IT outsourcing trends and speed up project timelines without the financial burden of hiring full-time staff. How to Find the Best Outsourced Development Team? With countless IT outsourcing companies available, it can be challenging to identify the right partner and narrow down their options. Follow this step-by-step guide below to outsource a full-stack development team successfully. How to Find the Best Outsourced Development Team? Step 1. Clearly define the projects for outsourcing The first step to take is to articulate the scope and objectives of the projects intended for outsourcing. This includes specifying the technologies involved, the required level of expertise, anticipated outcomes, and timelines. A well-defined project scope allows for effective communication of the company’s needs to potential software development outsourcing partners, thereby fostering alignment from the outset and minimizing the risk of misunderstandings or scope creep during development. Check out project specification template curated for stakeholders. Step 2. Decide on the relationship-based type of outsourcing model Secondly, organizations need to choose their preferred relationship-based outsourcing model from the three primary options: staff augmentation, dedicated team model, or project-based model. Staff augmentation model augments the current team with additional skilled professionals for specific tasks or phases of a development project – suitable for both short- and long-term engagements. Dedicated team model features specialized teams that work exclusively on the software development project, integrating seamlessly with the internal team – ideal for complex, long-term projects. Project-based model involves an external team managing all stages of software development, from conception to deployment and maintenance – working best for those with a clear product vision but limited workforce resources. For more insights into selecting the right model, refer to our blog on IT outsourcing models: Types and tips to choose the best one. Step 3. Determine the budget Budget plays an important role in determining the quality, expertise, and outcomes of IT projects outsourcing. As a result, here, organizations need to first consider the scope and complexity of their software development project. Then, they need to research market rates for similar software outsourcing services to gain a realistic understanding of costs. Following that, stakeholders should account for hidden expenses such as software licenses and training for the dedicated team. The costs associated with each outsourcing model should also be taken into account. For example, when opting for staff augmentation, companies need to factor in the expenses of integrating external personnel into existing workflows and any potential management overhead. Step 4. Choose the geographical outsourcing strategy The choice of where to outsource significantly impacts the success and cost of software development. Organizations can take into account three geographical outsourcing strategies: Offshore software development refers to partnering with a company situated in a different country, even on the opposite side of the globe, such as Vietnam. Depending on the chosen location, offshore outsourcing can be highly cost-effective while providing access to a global talent pool. Onshore entails outsourcing software development projects to providers within the same country. While this ensures maximum cultural and legal alignment, it typically comes at a higher cost. Nearshore software outsourcing means outsourcing to nearby countries, offering a balance between cost savings and enhanced collaboration due to geographical proximity and similar time zones. Here are a few useful resources to help businesses make a well-informed decision: Nearshore vs Offshore Software Outsourcing: Which is Better? Top Offshore Software Development Company Review in 2023 Offshore Software Development Rates By Country Essential Guide For Offshore Development Center Setup Vietnam Offshore Development Center – A Full Guide To Success Step 5. Start searching for potential outsourced development teams Now is the time to actively search for outsourced development teams that deliver the specific software development services desired. Below are 3 common methods for finding an outsourced development team: Common methods for finding an outsourced development team Personal referrals: Consulting the professional network about partners they have successfully collaborated with can be an excellent starting point. This approach often gives the most unbiased and reliable insights. Online directories: Directory listing of software outsourcing solutions can be a great help in finding top agencies in their respective fields. Clutch, DesignRush, G2, The Manifest, and GoodFirms are notable platforms for compiling an initial list of potential partners. Google Search: Both paid and organic search results on Google can bring businesses useful insights as long as relevant keywords are entered. Step 6. Review their portfolios and domain expertise The next phase is assessing potential outsourced development teams.  Evaluating past work and portfolios plays a significant role in this process since it gives a tangible demonstration of their capabilities and a clearer understanding of what they can deliver. 4 key aspects to focus on are as follows: 4 key aspects to focus on when reviewing portfolios Range of projects: A diverse portfolio reflects versatility and adaptability. It suggests that the team has navigated various challenges and can likely manage the complexities of the project. However, if the portfolio lacks focus and is overly broad, it may indicate a lack of specialization. Industry experience: Consider whether the team has worked in the desired sector before. Prior experience in the same industry means they already understand the specific challenges and needs of the business niche. This can translate to more customized and effective solutions. Quality of work: Pay close attention to the quality of their output. Is their code well-structured and efficient? Is the software free of bugs? High-quality work is a strong indication of technical expertise and a commitment to delivering excellence. Similar projects: Most importantly, look for completed projects similar to what organizations need. A proven track record of handling similar work suggests they are well-equipped to meet requirements. It’s worth noting that software outsourcing companies may sometimes be restricted from sharing details of previous projects due to non-disclosure agreements. Nevertheless, they should be able to provide a general overview of their past work, the development processes employed, and the benefits realized by clients. Step 7. Check their testimonials and references Client testimonials and references serve as invaluable resources when evaluating prospective partners. They offer firsthand accounts of what it’s like to collaborate with the team, revealing insights that a portfolio may not convey. When evaluating testimonials, take into account key aspects such as the team’s strengths and weaknesses, their ability to meet deadlines and commitments, adherence to budgets, and the overall satisfaction level of their clients. If necessary, don’t hesitate to contact previous clients for detailed references regarding specific projects, the team’s management approach, and any setbacks they faced. Step 8. Assess their communication skills Effective communication is fundamental to the success of any outsourcing partnership. 3 essential factors to consider when assessing an external team’s communication abilities are: Language proficiency: The outsourcing software development company must possess strong relevant language skills. Feedback reception: The team should be open to listening and making necessary adjustments based on your input. Communication tools and channels: Consider the team’s preferred communication methods and platforms. It’s perfect if their tools are compatible with those of your organization. Step 9. Evaluate project management capabilities Checking the project management capabilities of an outsourced development team can give companies insight into how well they can plan, execute, and deliver projects. Here’s what to review: Methodologies: Does the team follow a structured project management methodology such as Agile, Scrum, and Waterfall? Progress tracking: How do they monitor the project’s progress? Do they use tools like Jira, Trello, or Asana? Project documentation: Do they document the projects well, from project requirements and plans to meeting notes and issues? Change management: Do they have a structured change management process? Are they able to adapt to changes without any disruptions? Delivery: Do they deliver projects in a timely and consistent manner as promised? Step 10. Consider their cultural fit Cultural fit is often an overlooked yet vital component of a successful outsourcing relationship, which encompasses shared values, work ethics, and attitudes. To have a good understanding of the outsourced development team’s cultural fit, look into their work ethics, values, and approach to work. In other words, determine if they demonstrate a strong commitment to quality, punctuality, and professionalism. It’s also necessary to check whether their core values, such as integrity and innovation, align with those of organizations. Additionally, review their working style—whether they favor a structured or flexible approach—since a compatible work dynamic can lead to smoother interactions and increased efficiency. Pro Tip: To gather all the necessary information for selecting the best outsource dedicated software development teams, check out our 12 questions to ask before hiring a software development company. With the right team in place, businesses are already halfway to success! The remaining task is to effectively manage this outsourced development team. So, here’s a handy checklist to help them navigate this phase smoothly. 8 Tips to Manage an Outsourced Development Team Effectively 8 Tips to Manage an Outsourced Development Team Effectively Align the outsourced team with product visions and timelines Clearly communicate product vision, goals, and timeline to the dedicated outsource web development team. Regular meetings and detailed briefs help align everyone with the project’s objectives, leading to a more cohesive development process and a successful end product. Guarantee intellectual property and quality control with NDAs and SLAs Protect intellectual property (IP) and guarantee quality control by implementing non-disclosure agreements (NDAs) and service level agreements (SLAs). NDAs safeguard confidential information, while SLAs establish clear standards for quality and timelines, holding the team accountable. Establish clear communication channels Set up dedicated communication channels, such as email, project management tools, and video conferencing platforms. Recommended tools for remote work are Trello, Slack, and Zoom. Set up a leadership hierarchy and point of contact Designate a leadership hierarchy within the outsourced team, including a primary point of contact. This structure clarifies decision-making responsibilities and streamlines communication, making it easier to address issues or changes efficiently. Treat outsourced software developers as part of the team Integrating the outsourced team into the company’s culture and internal processes through regular meetings, company updates, and other team activities helps cultivate a stronger sense of unity and commitment to the project’s success. Define and track KPIs Set specific KPIs to assess the outsourced team’s performance, such as code quality, bug count, deadline adherence, and budget compliance. Conduct visits and face-to-face meetings In addition to regular video calls, organize periodic on-site visits or face-to-face meetings to confirm that the outsourcing team meets project standards. Direct interactions build trust and allow you to observe their working methods firsthand, guaranteeing compliance to established processes and quality benchmarks. Address any cultural differences Acknowledge and respect cultural differences, especially in offshore outsourcing setups. Training or awareness sessions can help bridge cultural gaps, improve communication, and enhance overall team cohesion. Why Build an Outsourced Development Team with LTS Group? Working with the right outsourcing development company can significantly bolster organizations’ tech capabilities. LTS Group stands out as a top-tier software outsourcing provider, offering a wealth of skilled talent across various domains, including software development, software testing, and many other digital BPO services. Here’s why selecting LTS Group for outsourced development needs is the smartest choice: Why Build an Outsourced Development Team with LTS Group? Flexible outsourcing models We offer a variety of flexible outsourcing software development models, from dedicated teams and staff augmentation to project-based and time-and-material options. This adaptability allows businesses to find the perfect fit for their project requirements and budget. Comprehensive service offerings We provide an extensive array of software development outsourcing services. Whether it’s web & mobile app development, software maintenance, or web & mobile app testing, LTS experts have it all. Broad technology expertise We leverage the best technologies to deliver exceptional results: Web development: HIBERNATE, Java, PHP, AngularJS, .NET, and more Mobile development: Flutter, React Native, Xamarin, etc. Database management: MySQL, Oracle DB, SQL Server, etc. Cloud infrastructure: Microsoft Azure, AWS, Amazon EC2, etc. Automation testing: Perfecto Mobile, Soap UI, TestComplete, etc. Management tools: Jira, Backlog, HP Quality Center, etc. Client-centric approach With over 8 years of experience collaborating with 60+ global businesses, LTS Group understands the nuances of development outsourcing. We’re committed to continuous improvement, actively seeking client feedback through detailed surveys post-project. Such dedication helps us consistently meet and exceed clients’ expectations. Proven track record Our competitive pricing, effective communication, and extensive experience in a wide range of development projects empower businesses of all sizes to thrive. Check out our portfolio for more details. Don’t miss out on the opportunity to partner with a team that values reliability, expertise, and innovation. Contact us today to explore how we can elevate your development projects! Ready to hunt for your perfect outsourced development partner? When is the Right Time to Hire Outsource Software Development Team? A software development outsourcing company can greatly benefit an organization in many different scenarios: When is the Right Time to Hire Outsource Software Development Team? Filling skill gaps: When there’s a need to fill internal skills or expertise deficiencies without the delays of traditional hiring processes, outsourced teams come in handy to offer the necessary capabilities swiftly. Reducing costs: Companies seeking to lower expenses tied to salaries, benefits, and training that come with growing in-house teams often find outsourcing to be a budget-friendly alternative. Meeting urgent deadlines: When software projects face urgent timelines, extra manpower may be needed. An outsourced team can provide the required resources to ensure timely delivery. Focusing on core functions: When technical tasks begin to overwhelm the internal team, outsourcing allows them to concentrate on core business functions, boosting overall productivity. Upgrading MVP development: For businesses with a minimum viable product that requires new features or software testing, an augmented team can bring specialized technical skills and fresh perspectives, which are integral to successful implementation. Entering new markets with local expertise: Embarking on a new market often necessitates localized knowledge to adapt products to meet regional demands. An outsourced development team steps in to provide valuable insights into local market trends. FAQs about Outsourcing Development Team What is an outsourced development team? An outsourced development team comprises skilled professionals from a software development company who are hired to execute and oversee software projects, often beyond the primary geographic and operational boundaries of the hiring firm. Should I outsource software development or handle it in-house?  The decision to outsource software development team or rely on an in-house team depends on numerous factors, such as budget limitations, project complexity, and resource availability. If a company’s existing development team lacks the expertise for additional projects, outsourcing can offer access to a global talent pool and specialized skills that expedite development. On the other hand, smaller projects requiring intensive oversight might benefit from the closer integration that an in-house team provides. How much does outsourcing developers cost? The costs of outsourcing software developers can fluctuate based on the geographical location of outsourced team members, project complexity, required expertise level, etc. Generally, outsourcing to regions with lower living costs—such as Asia, Eastern Europe, and Latin America—can yield substantial savings compared to hiring in-house teams in Western countries. For example, while hiring a software developer in the U.S. can range from $62 to $209 per hour, a software developer in Southeast Asia typically costs between $18 and $71 per hour. In fact, companies in developed countries may save between 30% and 70% by outsourcing to developing nations like Vietnam. What to look for in outsourced development teams? When evaluating potential partners providing outsource custom software development services, businesses should prioritize technical expertise, a strong portfolio, positive client testimonials, effective communication, solid project management practices, and cultural compatibility. Additionally, it’s essential to consider their security measures and capacity to scale as project demands evolve. Final Thoughts about Outsourcing Development Team Outsourcing software development services has become the new norm. By collaborating with the right outsourced development team, organizations can tap into a global talent pool, reduce costs, speed up time-to-market, etc. To select the right partner, clearly define the outsourcing project, choose the appropriate software outsourcing model, establish a budget, decide on the geographical strategy, and evaluate potential teams by reviewing their portfolios, expertise, testimonials, communication skills, and cultural fit. As for tips to effectively manage outsourced teams, make sure they grasp product visions and timelines, secure intellectual property and quality control with NDAs and SLAs, establish clear communication channels, set up a leadership hierarchy, treat them as internal staff, define KPIs, organize visits, and address cultural differences. Ready to outsource development team with ease? LTS Group is here to help. Contact us for a free consultation. Website: https://ltsgroup.tech/ Tel: (+84) 96-238-7474 Linkedin: https://www.linkedin.com/company/lts-group-vietnam/ { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [{ "@type": "Question", "name": "What is an outsourced development team?", "acceptedAnswer": { "@type": "Answer", "text": "An outsourced development team comprises skilled professionals from a software development company who are hired to execute and oversee software projects, often beyond the primary geographic and operational boundaries of the hiring firm." } },{ "@type": "Question", "name": "Should I outsource software development or handle it in-house?", "acceptedAnswer": { "@type": "Answer", "text": "The decision to outsource software development team or rely on an in-house team depends on numerous factors, such as budget limitations, project complexity, and resource availability. 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Introduced over two decades ago, the concept of a minimum viable product (MVP) remains a fundamental principle in software development. As the originator of the term, the CEO of SyncDev – Frank Robinson – defined an MVP as a product that “is big enough to cause adoption, satisfaction, and sales, but not so big as to be bloated and risky”. Today, MVP software development is an essential component of the agile methodology, emphasizing iterative improvement and responsiveness to user feedback. Many successful software, such as Facebook, Instagram, Snapchat, Dropbox, and Airbnb, started as MVPs before evolving into their current forms we know now. In this guide, we’ll explore MVP development comprehensively, from its definition and benefits to detailed steps and more. Table of Contents Toggle What is MVP in Software Development?7 Key Steps in MVP Development ProcessStep 1. Identify the problem your product should solveStep 2. Analyze the competitionStep 3. Define core featuresStep 4. Prototype potential solutionStep 5. Develop your MVPStep 6. Launch, monitor, and improveStep 7. Prepare to scaleBenefits of MVP DevelopmentMVP vs. PoC vs. PrototypeFAQs about MVP DevelopmentFinal Thoughts about MVP Development What is MVP in Software Development? An MVP in software development refers to a version of the software that includes only the essential features needed to make the product functional and meet the core requirements. What is MVP in software development? Consider your organization is developing a new task management solution. The MVP version of this software might include necessary features such as adding tasks, setting due dates, and marking tasks as completed. It would not, however, encompass all the additional features you might plan for future versions like integrations with other applications or advanced analytical tools. The intention is to provide a usable product to users promptly, allowing the business to gather early feedback and make iterative improvements. By focusing on the core value and limiting the scope of features, an MVP enables developers to avoid unnecessary complexities and reduces time spent on non-essential components. This pragmatic approach highlights that delivering a basic, yet useful, product is often more beneficial than attempting to achieve perfection from the outset. Does Your Business Need an MVP? Before actually embarking on the development of an MVP, it’s essential for your company to assess whether an MVP is necessary for your project or not. Here are 5 major factors to consider: Important factors to determine if your business needs an MVP Problem complexity If your project involves complex problems that can benefit from a step-by-step approach, starting with an MVP can help streamline the process. Conversely, for straightforward issues with minimal complexity, it might be feasible to bypass the MVP and directly build the complete solution. Market uncertainty In uncertain markets, such as those that are constantly evolving or highly competitive, an MVP is great for testing demand and adapting to shifting user preferences. Meanwhile, in stable markets with well-defined user preferences and clear demand, an MVP may be less ideal. Resource availability If your business has limited resources, an MVP can be an effective strategy to utilize available time, budget, and expertise. On the other hand, if your company has ample resources, you might consider moving directly to a full-fledged product without an MVP stage. Risk tolerance  For companies prioritizing risk mitigation, an MVP offers a way to validate assumptions and reduce potential risks before committing more resources. But if your stakeholders are comfortable with higher risks or have a well-defined product strategy, you may choose to skip the MVP phase. Product viability When there is uncertainty about your product’s demand or potential success, an MVP offers a controlled environment to certify the idea. However, if you have strong confidence in the product’s viability and user demand, opting for full-scale development might be the preferred approach. 7 Key Steps in MVP Development Process Developing an MVP follows a similar path to general software product development, albeit with a strong focus on validating core assumptions, attracting early adopters, and achieving product-market fit early on. Now, let’s go over 7 crucial stages of MVP for software development! Key steps in MVP development process Step 1. Identify the problem your product should solve MVP development begins by clearly defining the problem the software seeks to solve. Here, project leaders must craft a compelling value proposition, which encompasses: A defined target audience with distinct needs How the product addresses those needs The benefits users can expect To achieve this, your team should do thorough research: Market research: Analyzing market size, trends, and identifying target customer demographics, preferences, and pain points. Customer interviews and surveys: Directly engaging with potential users to understand their challenges, needs, and opinions on existing solutions. Focus groups: Conducting group discussions with a diverse set of prospective customers to gain insights into their attitudes, expectations, and reactions. Online polls and social media engagement: Using these tools to collect direct feedback on public interest and trends relevant to your product concept. Needless to say, this research step is of great significance since, according to CB Insights, a number of startups fail just because they overlook market demand for their products. Step 2. Analyze the competition Chances are there are plenty of existing solutions similar to yours in the market. Therefore, in the next step, we strongly recommend conducting a thorough analysis of direct and indirect competitors and organizing the findings systematically, at least in a spreadsheet for later use. By identifying similar products, your team has a chance to look closely at how your solution can differentiate itself effectively from rivals. What’s equally important is estimating market size to ensure there would be enough potential customers willing to buy your product. Step 3. Define core features Once you’ve validated your product idea and grasped market dynamics, it’s time to outline the features that will constitute your MVP. It’s crucial at this stage to adhere strictly to the minimalist philosophy of MVP in development, avoiding the temptation to include every feature intended for the final product. Prioritizing features is critical, so here are 3 effective prioritization frameworks we highly recommend: 3 effective MVP feature prioritization frameworks MoSCoW method: Classifying features as must-have, should-have, could-have, and won’t-have. Kano model: Categorizing features into must-be quality (expected features), performance quality (linear impact on satisfaction), and excitement quality (delighters). Value vs. effort matrix: Evaluating features based on potential value versus implementation effort. It’s also advisable to develop a feature roadmap where your team outlines not only MVP features but also those planned for future iterations. This strategic approach guarantees a clear vision beyond the initial release, although further adjustments are inevitable as feedback, data, and insights are constantly gathered throughout the MVP development process. Step 4. Prototype potential solution Next is prototyping, which plays a big role in shaping the design and functionality of the final MVP. It basically involves creating an interactive representation of your concept to map out user flow, estimate development costs, and gather early feedback. There are various UX tools available including Figma, Marvelapp, Miro, AdobeXD, and Axure, many of which offer free pricing plans. Once done building a prototype, test it with early adopters to gauge interest in the product and use their feedback to refine the prototype. Step 5. Develop your MVP Now, it’s time to bring your MVP to life! There are several ways to realize your idea, and not all of them demand deep programming expertise: 3 main approaches to develop your MVP No-code approach If your organization does not want to start from scratch and write codes, many methods are available: Flintstone method: Operating the product’s functionalities manually behind the scenes until automation becomes feasible. Landing page: A simple landing page explaining your product and offering early opt-ins to gain customer insights and leads. Constructor method: Combining open-source software and other available platforms to address the problem. While this method may involve integrating different APIs, it’s still far less complex than developing a software from scratch. In-house development If your business has the necessary expertise and manpower to develop the MVP internally, this approach is often preferable. However, MVP agile development isn’t solely about technical know-how; it also needs input from designers, business analysts, and marketers. Therefore, ensure your team has all the required talent in place. A key thing to note here: doing it yourself expects your team to choose the right tech stack. So below are quick notes to help you make a well-informed decision: Consider team expertise: Opt for technologies that are familiar to your team to minimize learning curves and accelerate development. Evaluate project needs: Refer to the essential features identified earlier and consult with software engineers to understand technical specifications. Factor in long-term scalability to prevent significant reworks. Outsourcing development  Another common approach is outsourcing talent or partnering with companies providing MVP software development services. Platforms like Upwork or Freelancer provide easy access to freelance software engineers, along with their ratings, project histories, and client feedback. However, it’s important to be cautious since hiring freelancers carries numerous risks if your company doesn’t do proper vetting. For a more reliable approach, organizations should consider partnering with established MVP development companies like LTS Group. Our IT engineers are proficient in a wide array of tech stacks, ensuring we deliver top-tier solutions—from custom mobile and web development to advanced development projects like AI, blockchain, and embedded systems. Whether you require MVP or feature-rich software development solutions, LTS Group is your trusted partner in achieving excellence. Step 6. Launch, monitor, and improve Launching your MVP includes several baby steps like deploying, monitoring errors, gathering user feedback, and refining features: Deploy your MVP on a server or hosting environment to ensure it runs smoothly in a production setting Implement error monitoring and tracking mechanisms to promptly identify and resolve issues Prepare for launch activities, including marketing, promotion, and user acquisition strategies Collect user feedback diligently and prioritize feature requests and bug fixes to enhance your MVP continuously Here, your company can adopt 3 main launch approaches to introduce your MVP to the market: 3 ways to launch your MVP Soft launch: Releasing your product to a limited user base to mitigate risks, identify bugs, and refine your monetization strategy. Hard launch: Executing a widespread release with extensive marketing efforts to attract a broad audience. However, this approach is advisable only when there is a predictable audience. Dark launch: Introducing product features gradually to a select group of users to validate functionality and usability in a controlled environment. Step 7. Prepare to scale Once your software establishes a solid user base and gathers insights into their needs, it’s essential to prepare for scaling beyond MVP development stages towards a complete solution. Follow these steps to ensure a smooth transition: Clearly outline the complete product’s vision based on user feedback and market analysis Develop a detailed product roadmap for feature prioritization and timeline Assess your team’s capabilities and expand resources as needed to support the product’s growth trajectory Evaluate the MVP’s architecture to accommodate new features and increased complexity Adopt an iterative development approach for ongoing enhancements Ramp up software testing methods to uphold product reliability and quality standards as you expand Publicly release the enhanced product version and closely monitor performance metrics and user feedback Finalize and implement a revenue model that aligns with your product’s value proposition and market expectations Benefits of MVP Development Software development MVP provides numerous advantages for businesses. Here are 6 key benefits: Benefits of MVP development Rapid validation of product viability MVP enables organizations to swiftly determine if their product concept is viable by offering it to real users for evaluation. With user feedback, your team is equipped with invaluable insights to ensure the product meets the needs of your target audience. This ultimately helps your business avoid investing resources in products that may lack demand or market value. Minimized development costs By focusing on essential features during the MVP development process, your company prevents resource wastage on non-critical components. This leads to reduced development costs and more efficient use of available resources. Reduced risks Testing the market with an MVP eliminates the risk of developing a full product that might not be successful. If the MVP receives positive feedback, then your organization can be more confident about investing additional resources into further development. Faster time-to-market MVP accelerates the software development timeline by prioritizing only core features. This rapid development approach facilitates quicker launch of a functional product, giving your solution an early competitive edge in the market. Iterative improvement An MVP lays the foundation for iterative development. Using user feedback and real-world usage data, project managers can make informed refinements, ensuring the product evolves to meet user needs. High adaptability to market changes The flexibility of an MVP allows a company to quickly adapt to changing market conditions. Starting with a basic version makes it easier for your software to pivot or adjust alongside rapidly-evolving trends. MVP vs. PoC vs. Prototype In software development, MVP, proof of concept (PoC), and prototype are terms that are often misunderstood. Let’s clarify each one: MVP vs. PoC vs. Prototype Proof of Concept  PoC is a preliminary validation of an idea or solution’s technical feasibility. Typically, a PoC involves creating a simplified version to showcase core functionalities. Its primary goal is to determine if a proposed solution is technically viable and worth further investment. Check out comprehensive PoC template for your upcoming project. Prototype A prototype is a physical or digital model that represents the design and functionality of a product. It provides a visual and interactive preview of how the final product will look and operate. Prototypes range from basic sketches to detailed, interactive mock-ups and are used to gather user feedback, test usability, and refine design elements. Minimum viable product Unlike a PoC or prototype, an MVP is a fully functional version of a product with essential features that deliver value to targeted users. It’s developed for actual use by customers and focuses on solving real problems, albeit in a simplified form. The purpose of an MVP is to collect user feedback, validate assumptions, and iteratively improve the product based on real-world usage. FAQs about MVP Development How much does it cost to build an MVP? Developing a minimum viable product typically costs between $25K and $50K. However, the budget can vary based on the complexity of key features and cutting-edge technologies exploited. How long should it take to build an MVP? The timeline for MVP development ranges from 3 to 5 months, depending on factors such as feature complexity, design intricacy, and the resources allocated to the project. What are some successful MVP software development examples? Many well-known companies started with MVPs that have evolved into major enterprises, including: Amazon: Originated as an online bookstore and expanded into a vast e-commerce platform. Airbnb: Began as a platform for renting spare rooms and homes, catering to travelers seeking affordable lodging. Dropbox: Initially launched as a file-sharing service with cloud storage, later enhancing features based on user feedback. Instagram: Started as a simple photo-sharing app and grew with added functionalities like filters, stories, and video sharing. How to measure MVP success? Success metrics for an MVP vary based on your company’s specific goals. However, key indicators of success are: User engagement Conversion rates Retention Customer lifetime value (CLV) Revenue growth Qualitative feedback from users Comparisons against industry benchmarks to assess performance relative to competitors. What are some types of MVP? MVPs generally fall into two categories: Low-fidelity MVPs: These validate core ideas with minimal development, such as pre-order pages or landing pages. High-fidelity MVPs: More functional and closer to the final product, offering detailed and interactive experiences, e.g., concierge MVPs, Wizard of Oz MVPs, and single-feature MVPs. Final Thoughts about MVP Development MVP development offers significant benefits to businesses by allowing them to test their ideas in the market with minimal investment. This approach ensures concepts are viable and meet market needs before committing to full-scale development, thus reducing risks and optimizing resource allocation. Hopefully, our detailed guide has been of some help to your business’ MVP development journey. If your company needs skilled developers to carry out an MVP project, our team at LTS Group is ready to assist. We offer custom web and application development services tailored to meet your unique requirements. Whether it’s full-scale or MVP development services, our solutions are high-quality and efficient to help your business thrive! Website: https://ltsgroup.tech/ Tel: (+84) 24-6660-7474 Fanpage: https://www.linkedin.com/company/lts-group-vietnam/ { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [{ "@type": "Question", "name": "How much does it cost to build an MVP?", "acceptedAnswer": { "@type": "Answer", "text": "Developing a minimum viable product typically costs between $25K and $50K. 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