Outsourcing Software Development to India? Read This Complete Guide

India is one of the largest IT hubs in the world. If you are thinking of outsourcing software development to India, you have come to the right place. Being a leading software development company across the globe, we know the ins and outs of the industry.

And hence, throughout this post, we will be sharing everything that you need to know before outsourcing your project in India. If that sounds exciting, let’s get going.

Overview of Outsourcing Market

Since the internet has become widely accessible, outsourcing has become the new normal. Primarily because it’s cost-effective and helps businesses focus on their core competencies. And there are a list of outsourcing software development companies.

In 2019, the global outsourcing market amounted to 92.5 billion U.S. dollars — reports Statista. Nonetheless, it’s also estimated by Statista that over one trillion US dollars will be spent on IT services worldwide in 2021 alone — that’s a staggering 5.5% increase from the previous year. That’s not all. According to fortunly.com, the global IT outsourcing market is expected to grow by $98 billion by 2024.

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The outsourcing industry is growing in leaps and bounds. In fact, a good number of companies have started relying on outsourcing rather than hiring dedicated resources. That’s because creating an in-house team is really a daunting job. Nevertheless, the cost of maintaining the dedicated resources outweighs its benefits significantly.

Today, India stands tall among the top 10 best countries for outsourcing business. Let’s understand what makes it stand out.

Why Do Companies Outsource to India?

When you think about outsourcing software development, India is certainly the first country that comes to your mind. That’s because India hosts a few of the most prominent IT companies, offering a full range of IT services, be it automation or digital transformation. But there’s more. Here are the top 5 reasons why companies have been outsourcing software development to India.

  1. India is Home to The Largest Talent Pool in The World

    As of now, India’s IT workforce has over 4.36 million employees. And by 2023, India will become the largest pool of software developers in the world, according to c-sharpcorner.com.

    Starting from building IoT-powered smart systems to creating intelligent software with AI & ML, developers in India will help you break through your most intricate digital challenges. Developers in India are well-trained and highly experienced to handle demanding IT projects seamlessly.

    Last but not least. Because India is the second-largest English-speaking country in the world, according to bbc.com, so communication will be effortless than other outsourcing countries in the world.

  2. The Rates are Comparatively Low

    Cost is the primary reason why companies choose to outsource. And when it comes to India, the rates are comparatively lower than other parts of the world like the US, and Europe. For instance, the average hourly rate for custom software development in India is about $25 to $30 against $60 to $70 in Europe, according to youteam.io, a leading U.K.-based marketplace for offshore talent.

    Moreover, the flexible hiring models offered by Indian software/product development companies are again a bonus. They allow you to choose whichever model works best for you. This way you can significantly cut costs while hiring the best talent.

  3. The Quality Standards are High

    Indian companies adhere to high-quality standards and are capable enough to deliver complex IT projects effortlessly. In fact, the world’s top CMM Level 5 companies are based in India. That’s not all, India is also home to most of the ISO-9000 certified companies.

    Thus, when you’re hiring a top-rated software development agency from India, you can be assured that the end result will be beyond par. Thanks to the widely accessible talented pool of experienced professionals. No wonder why tech giants like TCS, Infosys, Wipro, Tech Mahindra decided to settle in India.

  4. It’s Highly Competent Market

    India hosts hundreds of thousands of IT companies. When it comes to software development services, the market is highly competent. This means you get ample of options to choose from. You can compare everything from price and quality to workforce competence, and 24×7 availability to pick the company tailored to your business needs.

    The new IT companies emerging every day push the limits of innovation by taking things several notches above ordinary. Thus, you can get advanced digital solutions aggressively priced that will help you thrive in today’s rapidly disrupting economy.

  5. Lenient Government Policies

    The stable and lenient government policies contribute significantly to India’s favorability for software outsourcing. To encourage and support its IT sector, the Indian government is offering significant tax benefits to the companies.

    Not only, but the government is actively working to make India digitally strong and stable through various initiatives like Digital India and Make in India.

    Ultimately, this will fuel the growth of IT companies and enable them to function seamlessly while delivering better services all around.

    With all the above advantages, India is definitely a reliable country for outsourcing all your technical requirements. But how do you get started? There are a few things you should keep in mind. Let’s dive deeper.

How to Outsource Software Development in India?

how to outsource software development to india

The success of your project is greatly determined by how you outsource it to the company. Here are three simple steps to make the process seamless and efficient.

  1. Pick a Reliable Technical Partner

    It all starts with your partner. You want to ensure they’re reliable and technically sound. Here are a few ways you can decide whether they are trustworthy or not:

    • Client Testimonials – See their client testimonials, and if possible connect with them to learn more about their experience.
    • Work Portfolio – Examine their work portfolio. Have they worked on a similar project before? This way, you can get an idea about the quality of work you expect.
    • Customer Support – Ask them about their support terms. Will they be accessible when something breaks during your peak hours? Getting a few things cleared will help you keep conflicts at bay.

    Your partner plays the most important role in how your project turns out. Thus, make sure they’re reliable enough and expert at what they do.

  2. Choose a Sustainable Pricing Model

    After deciding your technical partner, the second most important thing is to determine a sustainable pricing model. A few of the most common hiring models include:

    • Fixed Price Model – If you’ve specific and well-defined requirements, then this model will work best for you. Here, you only pay a fixed sum of money for the entire project.
    • Pay As You Go – This model brings more flexibility as here you pay based on the hours of work done. This model can be ideal for you if you want to make minimal changes to your existing product/software.
    • Dedicated Team Model – If you have a huge project, you should go with this model. Here, you hire the entire team of professionals you need to build your software. You pay fixed monthly salaries to the resources you hire.

    For deciding a pricing model, you’ll have to assess your own business goals meticulously. If needed, you can also consult your outsourcing partner regarding this, and they’ll guide you through.

  3. Set Clear Expectations

    Setting up clear expectations initially will make the project flow seamless and help you avoid any disputes whatsoever. Here are a few tips that will help:

    • Be Upfront About Your Requirements – Convey clearly what exactly you want from the project. Whether it’s more revenue or overcoming a specific business challenge.
    • Keep it Mutual – Understand what your technical partner can deliver, their limitations or obligations, and then set terms for working.
    • Get The Written Commitment – Once you both are on mutual terms, create an agreement or bond describing the project’s scope, terms of service, and final delivery.

    The lack of clearly set boundaries is often the source of conflicts. However, getting this settled beforehand will allow you to foster a lasting relationship with your technology partner.

    Now that you’re well-versed with the process of outsourcing, it’s time to find a perfect software outsourcing partner for your business. Let’s learn more about it.

How to Find the Best Software Development Company?

Choosing the right technology partner for your software development company is just like selecting the school for your kid. Because it will significantly determine the success of your project. Here are a few tips that will help you pick a software development company that consistently delivers.

  1. Choose Committed & Competent Agency

    You want a reliable technology partner. You want someone who’s absolutely committed to delivering the best software solutions for your business. Going with low-priced outsourcing companies in India will cost you more in the long run. That’s because most of them neither have the relevant experience nor technically sound resources required to build robust software.

    This doesn’t mean you should go with the most expensive software development agency. Try to find a balance and then choose the one that’s not the cheapest but affordable and technically adept. Choosing a reliable partner may not be that easy, but it will be rewarding in the longer run.

  2. Evaluate Company Culture & Ethics

    You don’t want to do business with a company which is dishonest. Your technology partner must strictly adhere to at least a few basic business ethics. Things like paying their employees on time, being honest with the client, and using customer’s data responsibly.

    You will get a brief idea about the company’s values via their about page. Additionally, you can also check their Glassdoor profile. This way, you will know if employees working there are happy or not. The last thing you want is a demoralized, underpaid, unhappy programmer working on your project.

    You can go a step further and check a company’s LinkedIn page. There, you will be able to see how frequently they organize employee engagement activities and skill enhancement workshops for their workforce. Lastly, don’t forget to check their data usage policy to understand how they will be using your data.

    With all that ticked off, you can be assured that the company will deliver results.

  3. Ensure They Understand Your Business

    It’s extremely vital that your technology partner understands your business. The challenges you face, your obligations, and business model. Because if the development company is not well-versed with your industry, they may not be able to deliver maximum value.

    Ask them whether they have worked for a similar company previously. If so, check their work. It will give you an idea about what they can deliver. Moreover, they will be able to contribute more ideas to your vision if they have extensive experience of working in your business niche.

  4. Conduct Comprehensive Research

    Gather information about the company from all the sources you possibly can. Look at platforms that aren’t very obvious. Platforms like Quora, Yahoo Answers, StackExchange can provide you with unbiased feedback about your technology partner.

    If you don’t find relevant questions, ask one. People are friendly enough to provide you with all the information you need. Additionally, you can also connect with a company’s ex-employees to know about their culture and competence.

  5. Talk with the Specialists — Not Sales Reps

    When you inquire about software development services, salespeople will be your very first touchpoint. Because they may miss out on the meticulous technical details, it’s recommended that you talk with the technology experts.

    Thus, before hiring a company, schedule a few meetings with the tech experts and ask them about their approach towards fulfilling your requirements. If you’re not very tech-savvy, get a freelance developer to talk on behalf of you and understand their methodology.

    If you keep in mind the above-mentioned tips, you will be able to hire an agency that will transform your idea into a clickable reality.

    Now that you have chosen a reliable software development company, it’s time to evaluate costs. Let’s learn more about it.

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How Much Does It Cost to Outsource Software Development in India?

India is certainly one of the most affordable countries for outsourcing software development services. Here, you can get the perfect value proposition for every business project. Let’s quickly overlook how various outsourcing software development companies price their services.

The average hourly rates of a medium-sized offshore software development agency in India could range from $18 to $40. The total cost of a software project depends on several factors, viz. the size of the project, its complexity, and functions.

If you are seeking to develop custom software tailored to your business needs, feel free to schedule a consulting call with our experts. Our experts will help you determine the exact cost of your project.

Despite India being the brightest country for outsourcing your software development project and web development project, you must be aware of a few challenges associated with it. Let’s learn more about it.

Outsourcing to India Pros and Cons

There are both advantages and disadvantages of outsourcing to software development companies in India. Before outsourcing to India, you must be aware of the potential benefits and drawbacks associated with it. Let’s look at the brighter and darker side of outsourcing to India.

Friendly & Committed People
In India, you will find people are very friendly and hard-working. They’d do everything it takes to build a lasting relationship with you and deliver more value than they originally promised.
The Time Difference Challenge
The massive time difference between IST, EST, MST, and PST makes communication a little difficult. This may influence the overall coordination. However, with today’s project management software, this challenge can be easily defeated.
Faster Project Deliveries
Because the resources are in abundance, the time to market for software is significantly less than in other parts of the world.
Unevenly Distributed Pricing
Here, you will see the pricing is very unevenly distributed. For instance, you’ll find a professional agency charging about $25 per hour and on the other extreme, you will also find freelancers charging $60 per hour. Even a few less experienced agencies tend to charge higher than market leaders.
Top-notch IT Infrastructure
India is one of the fastest developing nations. Its rapidly evolving economy has enabled it to build IT-infrastructure at an exponential pace. Basic amenities like the internet, electronic accessories have become widely accessible.
Self-proclaimed Professionals
In India, you’ll find a lot of people who learn through online courses and start providing professional services. Because they are not experienced enough, hiring them may leave you nowhere. Hence, before hiring anyone, check their credentials.

Now that we’ve covered ins and outs of outsourcing to India, it’s time that we answer a few of the most commonly asked questions by our readers. Let’s get going.

Frequently Asked Questions

Why do firms outsource project work?

While there are several reasons why firms outsource project work, the most common reason is to achieve efficiency. Outsourcing enables companies to focus on their core competencies, thereby improving their overall efficiency.

How many jobs are outsourced to India?

85% of American companies have outsourced jobs to India — study reports. Thanks to its massive infrastructure and a giant pool of technically sound resources.

Is outsourcing to India good or bad?

While there are quite a few challenges when it comes to outsourcing to India; the advantages outweigh the disadvantages significantly.


Outsourcing software development is certainly a big decision. You must carefully consider all the aspects before allowing someone to steer your business. We hope this guide will help you hire a perfect software development agency.

If you’re looking for a reliable technology partner, you’ve come to the right place. Being a leading software development company, we have been offering custom development services to the world’s leading brands.

Share with us your requirements through our contact us form and we will help you create a sound software tailored to your business needs.

Author Bio
Bhaval Patel
Bhaval Patel
Designation: Director (Operations)

Bhaval Patel is the Director (Operations) at Space-O Technologies. He has over 20 years of experience in business management and sales. He has expertise in taxi booking app solutions and on-demand applications. Under his guidance, Space-O has developed 50+ Uber-like taxi apps on both iOS and Android platforms.