This article is for those who have decided to build their project with an outsourcing company but question whether their approach to product development is right. We'll examine the best methodologies for developing scalable projects and explore what to pay attention to when selecting a vendor for custom outsourced development of pilot projects.

What is a pilot project and why choose outsourcing development?

Before we discuss outsourcing development models and methodologies, some terms might need clarification.

A pilot project is almost the same thing as a Minimum Viable Product (MVP), developed to test the product idea on the market. The difference lies in the perspective. An MVP serves businesses wanting to check project viability, whereas a pilot project is the first version of the project for users and has full functionality for convenient usage.

An outsourced team is a group of professionals or specialists hired from outside an organization — typically through a third-party service provider — to perform specific tasks, projects, or functions that would otherwise be handled by internal staff

Reasons to choose outsourcing software development for pilot projects include saving resources on recruitment, infrastructure, and employee benefits; accessing specialized technical expertise; and delegating software tasks while focusing on core business. Since startups rarely begin with a large expert internal team, developing a pilot project with an outsourced development team is a popular choice.

Now, having discussed the context, let's explore the software development outsourcing models.

Choosing the right software development outsourcing model

The main criterion distinguishing different outsourcing models is geographic location. Based on this factor, entrepreneurs can choose from the following outsourced development team types:

Offshore development outsourcing

Choosing offshore outsourcing for cost efficiency depends on where the client is settled. Other benefits of partnering with an offshore dedicated team include access to a wider talent pool and niche software development skills that can solve specific problems. However, disadvantages include time zone differences, cultural compatibility issues, and language barriers. Entrepreneurs should carefully assess the team before proceeding with a partnership.

Nearshore development outsourcing

Nearshore development outsourcing involves contracting services to a neighboring or nearby country, often in a similar time zone. For US companies, this might include countries in Latin America or Canada. The benefit of this outsourced teams type is cultural compatibility with some cost savings compared to onshore outsourced software development. The disadvantage is a more limited talent pool and higher costs compared to an offshore outsourcing development team.

Onshore development outsourcing

Hiring onshore outsourcing companies involves contracting services within the same country. The primary benefit is seamless communication, as there are no language barriers or significant time zone differences, enabling real-time collaboration with an outsourced development team and quick issue resolution. The common legal and regulatory environment reduces compliance complexities and risks. However, the main downside is cost, as domestic service providers generally have higher wages compared to offshore options, which might limit cost savings.

Hybrid development outsourcing

Hybrid approach blends onshore, nearshore, and offshore outsourced development to optimize benefits and mitigate downsides. By strategically distributing tasks based on project requirements complexity and the need for real-time interaction, businesses can balance cost management, quality, and flexibility. Hybrid outsourced software development models are particularly useful for large projects requiring a diverse skill set and scalable resources, but they may introduce project management complexity and require robust coordination practices to succeed.

Factors to consider when selecting an outsourced software development model

These factors influence the choice of an outsourcing model:

Budget constraints

Budget is often a primary factor in choosing an outsourcing model. Offshore software development outsourcing typically offers the most cost-effective solution due to lower labor costs in certain regions, making it attractive for companies with tight budgets. While nearshore and onshore outsourced development teams are generally more expensive, they might be selected for projects where higher initial costs are justified by benefits like seamless communication, cultural alignment, or regulatory considerations. A hybrid model can strategically balance costs by distributing tasks between low-cost and high-value regions.

Time zone differences

Time zone differences impact real-time communication and collaboration between an external team and internal team. For businesses needing close coordination and quick response times, onshore and nearshore software outsourcing models offer more synchronous working hours, avoiding delays. Offshore outsourced development can lead to productivity gains when used strategically, allowing for a 24-hour work cycle. However, it might require extra effort in coordinating meetings and providing clear communication across time zones. Hybrid outsourced software development models can help mitigate time zone challenges by situating specific project components in aligned locations for time-sensitive demands.

Cultural compatibility

Cultural differences can affect communication styles, business practices, and outsourced software development team dynamics. Onshore and nearshore models generally provide higher cultural compatibility, facilitating smoother interactions and reducing misunderstandings between hiring and outsourced development teams. Offshoring might present challenges in aligning diverse cultural perspectives, requiring cross-cultural training and experience in managing diverse teams. Hybrid models can be tailored to use culturally compatible integrated teams for critical, client-facing aspects of a project while using offshore teams where direct interaction is minimal.

Project scope

The project's scope — including complexity, duration, and required expertise — plays a critical role in deciding on a software development outsourcing model. Larger, more complex projects may benefit from a hybrid model that leverages different strengths from multiple locations, providing access to diverse skills and resources. Simpler projects or those requiring highly specialized skills may be well-suited to offshore or nearshore options, depending on the required expertise and desired balance between cost and convenience. Onshore outsourced teams might be ideal for projects demanding high levels of coordination and oversight within the same regulatory framework.

Defining project scope and requirements

When collaborating with a reliable outsourcing partner, it's important to focus on the unique product proposition and the goals you need to achieve. While the detailed scope of work is important, the outsourcing partner should propose a thoughtful breakdown of features to be developed. From our perspective of custom software development services providers, project scope planning works most effectively through these steps:

Step 1. Ideation

This is the initial interaction with the client, where everyone discusses the main idea, monetization model, key features, and possible implementation based on the client's budget constraints and project needs.

Step 2. Defining functionality

Next, the app idea is split into functions from a user behavior perspective. For example, a sign-up function might be formulated as follows:

• I can view onboarding screens
• I can register with email
• I can log in with email
• I can reset password via email code

Step 3. Time and cost estimation

We then estimate the time required for design and development of each feature and calculate the total development time. Most outsourcing software development companies work with a time and materials approach, so time estimation allows for cost estimation.

Step 4. Mind map

Once the outsourced development team and client agree on the features, it's important to outline the logic within the application to refine the final result. The mind map visually represents user actions and their sequence within the future app.

Step 5. Second estimation

After completing the mind map and finalizing the UI/UX design with all desired features, it's time to reassess the product development scope and clarify costs and time.

By following such thorough planning, it's easier to keep track of outsourced development progress and expected outcomes.

Selecting an outsourcing partner

Choosing the right outsourced development team significantly impacts both the quality of the output and the overall efficiency of your operations. Here are some key criteria to consider when selecting a reliable outsourcing company.

Proven track record. Look for outsourcing companies with a history of successfully completed projects in your industry. Check references, read case studies, and solicit feedback from previous clients to gauge reliability and effectiveness of the outsourced software development team. Platforms like Goodfirms, Designrush, Clutch, and UpWork provide client feedback, while portfolios can be found on Dribbble and Behance.

Technical expertise. Check if the outsourced development team has the necessary technical skills and knowledge for your specific project requirements. Evaluate their outsourced team's qualifications, certifications, and their ability to use the latest technologies and methodologies.

Cultural fit. Cultural alignment between your company and the outsourcing partner is critical for seamless collaboration. Ensure their company values, communication style, and work ethic align with yours to have better understanding and teamwork.

Building trust with outsourcing partners as an extension of your team

Establishing a trustworthy relationship with your outsourcing partner is essential to treat them as an extension of your team. Here are some strategies to build and maintain trust:

Open communication. Foster an environment of open and honest communication. Regular updates, meetings, and feedback sessions should be routine to keep all stakeholders informed and involved. If a vendor doesn't offer regular updates and demos, it's better to be cautious about their work.

Transparency and honesty. Be transparent about your goals, expectations, and potential challenges. Encourage your outsourcing partner to do the same to build a strong foundation for mutual trust. From the vendor's side, it's vital they allow you access to internal workspaces related to your project. You should be able to see progress in the project management tool and track design developments, for example, in Figma.

Inclusive decision-making. Involve your outsourcing partner in decision-making processes. A team experienced in hundreds of development projects might bring valuable insights to your pilot projects. You don't have to rely solely on your vision.

Recognition and appreciation. Acknowledge and appreciate the efforts of your outsourcing team. Celebrating milestones and expressing gratitude can strengthen the relationship and motivation.

By selecting an outsourcing partner based on these criteria and building a collaborative relationship, you can create a productive partnership that improves your business operations.

Building an effective outsourced development team

Creating a well-rounded and effective development team is crucial to the success of outsourcing projects, particularly in the context of a pilot project. A well-compiled outsourcing team not only covers the technical aspects but also encapsulates design and management to provide high-quality outputs. Here's a usual dedicated software development team composition for an outsourced project.

UI/UX design team

The UI/UX design team, led by an art director, shapes the user experience and interface design. Their focus on aesthetics, functionality, and user-centric design makes the final product not only technically sound but also visually engaging and user-friendly. The art director oversees the creative process, guiding alignment with client objectives and contemporary design trends.

Development team

A successful software development team often consists of specialized roles to cover various aspects of the technology stack:

Mobile developers

A mobile outsourced developer specializes in building applications for mobile platforms, providing compatibility, performance, and a seamless user experience on devices.

Frontend developers

This software development team focuses on the client-side of the application, working closely with UI/UX designers to bring visual elements to life, ensuring responsiveness and interactivity.

Backend developers

A backend software engineer is responsible for the server-side logic, database management, and application architecture. A backend software developer is responsible for the application's robustness, scalability, and security.

DevOps engineer

The DevOps engineer combines technical expertise with the vision of a software architect. They automate software development and deployment processes, manage infrastructure, and oversee continuous integration and delivery. By applying their technical skills to the overall system architecture, the DevOps services boost efficiency and reduce time to market, fostering smooth collaboration and high-quality software delivery.

Team lead

The team lead is usually a skilled developer who oversees the technical direction and guides the development team for it to adhere to best practices and meet project standards. The lead improves communication between developers and other stakeholders, making sure technical goals align with broader project objectives.

Project manager

The project manager is pivotal in orchestrating the pilot project. With them managing timelines, resources, and stakeholder expectations, the project progresses smoothly and stays aligned with the client's vision. Their role involves coordinating between the design, development, and management teams to keep everything on track.

Best methodologies for the development process and scaling up

When managing a software development project, especially one involving pilot initiatives and outsourced teams, selecting the right methodologies for software scalability and project management is crucial. These methodologies guide the project from inception to execution and influence its progress and adaptability.

Software scalability strategies

Scalability keeps applications efficient and adaptable as demand grows. Here are some strategic approaches to outsourcing software development for pilot projects:

Microservice architecture. This approach involves breaking down applications into a suite of independent services, each responsible for a specific function. These services can be scaled individually, allowing for greater flexibility and easier updates. For pilot projects, microservices support rapid scaling and iteration, accommodating shifts in project direction without affecting the entire system.

Cloud technologies. Cloud platforms like AWS, Azure, or Google Cloud offer flexibility in resource allocation. They allow applications to scale up or down based on real-time demand, without requiring substantial upfront investment in physical infrastructure. For pilot projects, outsourcing software development with cloud services provides cost-effectiveness and operational agility.

Automated deployment. Tools like Kubernetes manage containerized applications, facilitating seamless scalability. Automated deployment processes mean scaling can be done efficiently and reliably, with minimal manual intervention. This automation is crucial for dynamically growing projects and maintaining continuous delivery pipelines.

Ronas IT dedicated development team is well-versed with all necessary tools for cloud and microservice development, as well as automated deployment of pilot projects. You can check our Tech radar profile — see the DevOps tab.

Project management methodologies

Selecting the right project management methodology depends on the project's complexity, scope clarity, and requirement stability. Both traditional and modern methodologies can be effective, based on the project needs. It's best to choose a dedicated team that is flexible, as they can adapt to your pilot project's unique needs. If your project has strictly defined development phases, using methodologies like Agile might not be necessary. However, if you want the flexibility to make changes as you go, a team experienced in Agile would be more suitable.

Waterfall. A linear and straightforward methodology, Waterfall is ideal for projects with well-defined, stable requirements and a clear scope. Its stage-by-stage progression means each phase is completed before the next begins, making it suitable for projects where predictability and thorough documentation are necessary.

Spiral model. This approach combines iterative refinement with risk management, suitable for complex projects with high levels of uncertainty. The Spiral Model emphasizes frequent evaluations and adjustments, ideal for pilot projects where ongoing learning and adaptation are expected.

Agile and Scrum. Agile methodologies, with Scrum as a prominent framework, focus on flexibility, collaboration, and customer feedback. In general, any Agile methodology allows for iterative progress through short cycles or sprints, enabling rapid adjustments to evolving project needs. Scrum provides structure with defined roles, events, and artifacts, facilitating effective teamwork and transparency.

Scrumban. For projects requiring flexibility and the ability to respond to changing requirements, Scrumban combines elements of Scrum and Kanban. It retains the iterative nature of Scrum while incorporating Kanban's visualization and flow management, offering a hybrid approach for dynamic project environments. Scrumban is particularly effective for pilot projects that may start with an uncertain scope but need structured processes for continual improvement and delivery. That's the approach we usually implement for pilot projects at Ronas IT dedicated team.

Whether the focus is on technical scalability or adaptive project management, choosing the appropriate methodologies supports project growth and adaptability.

Key strategies for building pilot projects with outsourced teams

Let's recap the essential steps in developing a pilot project with an outsourced team:

Define objectives and metrics

Set clear goals and success metrics to guide project alignment and evaluate performance.

Assemble the right team

Assemble a diverse team with the necessary skills, including UI/UX designers, developers, and a project manager.

Select the appropriate outsourcing model

Choose based on factors like budget, time zone, and cultural fit. Consider hybrid models for complex projects.

Adopt an agile methodology

Review the frameworks your outsourced partner uses to maintain flexibility and responsiveness to changes.

Implement scalable technologies

Use microservices architecture and cloud platforms to provide flexibility and support future growth.

Support effective communication

Maintain regular updates and establish clear channels for collaboration using your preferred project management tool, conferencing tool, and messaging app.

Build trust and collaboration:

Treat the external team as part of your internal team, encouraging involvement and recognizing contributions.

Plan for risk management

Identify and mitigate risks early, including cultural differences and scope changes.

Focus on iterative testing

Engage users for feedback, and iterate frequently to refine the product before scaling.

Evaluate and iterate

Continuously assess project outcomes, using insights to improve future development phases.

Cost management in outsourced development

Before concluding, let's discuss a sensitive aspect of running a pilot project with an outsourced team: managing costs effectively. Building a pilot project requires careful investment to avoid overspending and to preserve resources for long-term growth and scalability.

Factors influencing a development cost

Understanding the variables affecting a development cost is key to efficient budget management:

Complexity of the app or software

The application's complexity directly impacts development time and cost. Complex features require specialized expertise and longer development cycles, which can increase expenses. Clearly defining the minimum requirements for the pilot's success can help manage costs.

Hourly rates by region

Labor costs vary significantly by location. For instance, developers from Eastern Europe might charge around $40-$55 per hour, whereas rates in North America and Western Europe tend to be higher. Choosing a region that offers a balance of cost-effectiveness and quality is essential.

Strategies to reduce costs

To optimize resource allocation and maintain quality, consider implementing these cost-reduction strategies:

Cross-platform development

Using cross-platform development frameworks like React Native allows your team to write code once and deploy it across multiple platforms, such as iOS and Android. This approach minimizes duplication of effort, reduces development time, and ultimately lowers costs while maintaining consistent functionality across devices.

Prioritize features

Focus on developing core features that provide the most value to users in the pilot phase. Additional features can be added after initial validation, aligning future investments with real user feedback and market demands.

Outsource non-core activities

Delegate tasks that are not directly tied to your core capabilities or strategic goals to the outsourced team, freeing up internal resources for critical operations and reducing overall costs.

To sum up

Running a pilot project with an outsourced team requires careful planning, communication, and strategic decision-making. By defining clear objectives and metrics, assembling the right team, and selecting the appropriate outsourcing model, businesses can set a strong foundation for their pilot projects. Using agile methodology and scalable technologies supports adaptability and future growth, while effective communication and trust-building with your outsourced development team create a harmonious partnership.

If you're looking for an outsourcing partner to develop your project, we're here to help. Fill out the form below to start your development journey with Ronas IT.