Managing Outsourced Software Development: A Step-by-step Guide

Project management has become a critical skill for organizations worldwide. The demand for this specialized expertise is skyrocketing, with a projected need for 25 million new project managers (PMs) globally by 2030. 

Despite this growing demand, a staggering 91% of organizations face project management challenges. A recent study by Smartsheet found that 65% of employees take on project management duties either because no one else steps into the PM role, dedicated professionals leave the company, or there is a temporary need to cover for others. Furthermore, 45% step into this role at their supervisors’ request. These statistics highlight the often ad-hoc nature of project management in many companies, underscoring the need for more structured approaches.

At Neontri, we recognize that managing outsourced software development requires a strategic approach that’s why we created a 3PM model. It balances technical expertise, open communication, and smooth collaboration. By addressing the common pitfalls in project management, we help organizations navigate the complexities of software development outsourcing, ensuring desired outcomes.

We’ve created this article to share our insights and help businesses overcome these challenges. Drawing from our extensive experience in IT outsourcing services, we’ve compiled a list of essential steps that can significantly improve project management. Let’s explore these key strategies that can transform your approach to managing outsourced development projects.

Step #1: Organize workflow

Workflow organization is the backbone of successful outsourced project management. It involves structuring tasks, establishing clear procedures, defining roles and responsibilities, and implementing the right tools to ensure smooth team collaboration. 

Effective workflow management is anchored in a clear vision and purpose. Harvard Business Review argues that a compelling project vision provides a road map for decision-making and creates a sense of shared purpose among the employees, leading to healthy team dynamics. However, this process involves a thorough understanding of a company’s business objectives, project expectations, and the specific skills and expertise required. With these foundational elements in place, organizations can then focus on implementing specific practices and strategies to create optimal workflow within their dedicated team. 

Let’s examine some practices that form the building blocks of a well-organized and efficient project management system.

Determine key milestones

To manage your project effectively, set project milestones using the SMART technique. SMART stands for specific, measurable, achievable, relevant, and time-bound. This approach enables you to clearly define what needs to be done, establish concrete criteria for measuring progress, set clear deadlines, and ensure every milestone is realistic given resources and constraints and aligns with overall project goals. 

For example, instead of a vague description like “Develop user interface,” create a SMART milestone such as “Complete responsive design for the main dashboard, implementing five key features including login, profile settings, notifications, data visualization, and user activity log by September 30th.”

To make your project more manageable:

1. Divide the milestones further into smaller, actionable tasks.
2. Engage business analysts and tech leads to discuss high-level business needs, define large functionality pieces (epics), and calculate completion effort.
3. Split epics into individual features, identify task dependencies, and consider resource availability for more straightforward estimation and planning.

Align the processes

When working with an outsourced development team, it is important to ensure seamless integration of the external specialists. Start by explaining your workflows and best practices to them, including your tech stack, programming tools and processes, post-production environment, coding best practices, design patterns, and internal documentation. 

Always describe your software development process in detail, assuming there may be differences in work styles between your in-house and remote teams. Be hands-on and actively participate in project development, staying conversant with current progress and ensuring the outsourcing team uses the tools and methodologies you have agreed upon. A detached approach can lead to misunderstandings and communication gaps that may delay project delivery. 

Set a reasonable timeframe

Effective time management in enterprise software development is about striking a balance between pushing for productivity and allowing for flexibility. While it’s essential to maintain some pressure to drive results, imposing short timeframes for completion is unwise, as this often brings about subpar or incomplete products. Instead, allocate sufficient time and resources for both planned tasks and unforeseen challenges. It’s better to have extra time and not need it than to fall short when unexpected issues arise.

The best approach to ensuring the project runs according to schedule is organizing work into time-limited sprints. This way, you can plan how much work (measured in man-hours or story points) each development unit can accomplish within a particular time frame.

Before each sprint begins, the team estimates the highest-priority tasks on the backlog, stopping when they reach the maximum number of story points they can realistically complete. The first estimation will inevitably include numerous assumptions, which is why good PMs consistently compare the team’s actual progress against previous estimates.

Step #2: Establish clear communication 

Effective communication is a cornerstone for managing outsourced software development. It serves as the vital link between the in-house team and the outsourcing partner. Establishing clear, consistent, and multi-faceted communication channels is essential for maintaining transparency, building trust, and ensuring project success. 

The goal is to create an environment where team members feel comfortable sharing ideas, asking questions, and providing feedback, regardless of their physical location. To achieve this, PMs should set up reliable communication channels that facilitate seamless updates, navigate hurdles, and identify potential risks early on. The best approach is to use a combination of digital tools such as Slack, Skype, and Zoom, allowing asynchronous communication and quick exchange of ideas. 

Regular check-ins are a critical component of consistent communication. Daily catch-up calls, typically lasting 15-20 minutes, can provide much-needed transparency and connection. These brief sessions allow teams to discuss the day’s central development focus, boost morale, and identify potential obstacles.

Sprint reviews at the end of each iteration provide an excellent opportunity to demonstrate completed features and gather feedback from key stakeholders. These reviews not only showcase progress but also help maintain alignment with the project’s objectives and vision.

To foster deeper connections and team synergy, face-to-face meetings should be organized when possible, ideally once or twice a year. These offline interactions offer invaluable opportunities to strengthen interpersonal relationships, reinforce shared objectives, and even engage in team-building activities. Such meetings can significantly enhance mutual understanding and appreciation among team members, regardless of location.

To complement these regular check-ins, implement periodic high-level reviews. Quarterly or half-yearly business reviews provide opportunities to discuss long-term objectives, ensure budget alignment, and address any necessary strategic changes. They offer a broader perspective on the project’s progress and allow for course corrections if needed, ensuring that the project remains aligned with evolving business requirements and market conditions.

#3 Focus on quality control

Quality assurance and control are crucial for ensuring consistency in work and expectations. This approach enables the delivery of high-quality software, builds trust with clients, and fosters a culture of excellence within the development team. Here are some practices for maintaining quality control in software development outsourcing:

Set quality standards 

Project managers can set a robust framework for maintaining high quality in the development process by creating detailed documentation on coding standards, quality assurance practices, and deployment processes. 

Another thing is determining the “definition of done“ for each project phase or deliverable. It should clearly outline the criteria that must be met for a task or feature to be considered complete, ensuring all team members have a shared understanding of quality expectations. By setting these standards upfront, both in-house and outsourced teams can align their efforts and work towards consistent, high-quality outputs.

Implement code review processes

A well-structured code review process should include both peer programming and formal reviews. This practice improves code quality by catching errors early and promotes collaboration between in-house and outsourced engineers. Consider using tools like GitHub or GitLab to facilitate smooth code review processes, allowing for inline comments and version tracking.

Conduct regular testing

Implement a comprehensive testing strategy that encompasses unit testing, integration testing, and user acceptance testing. This will allow you to catch and address issues early, preventing them from escalating into larger problems later in the development cycle.

Establish metrics tracking and reporting

Define and monitor key quality metrics throughout the development process. These could include defect density, code coverage, sprint burndown, and customer satisfaction scores. Regular reporting on these metrics helps identify trends, highlight areas for improvement, and demonstrate the value of quality control efforts to stakeholders. Use visualization tools to present these metrics in an easily digestible format, facilitating data-driven decision-making.

Step #4: Performance monitoring

The implementation of robust performance monitoring mechanisms ensures that the project stays aligned with business objectives, upholds quality standards, and meets deadlines. By consistently tracking progress, PMs can identify potential issues early on, allowing for timely intervention and support. This proactive approach not only prevents setbacks but also fosters continuous improvement in the outsourced development process.

To effectively implement these strategies, consider the following actionable steps:

Define key performance indicators

Key Performance Indicators (KPIs) are critical metrics that provide tangible insights into project progress and team performance. When working with a software outsourcing company, focus on comprehensive KPIs such as project velocity, code quality, bug reports, and developer productivity. These indicators offer measurable data points that allow objective assessment of the project’s health and trajectory. By defining and tracking these KPIs, organizations can effectively monitor progress, identify areas for improvement, and make data-driven decisions throughout the project lifecycle. 

Establish regular feedback loops

Implement continuous feedback mechanisms at all stages of the project. This includes daily stand-ups to discuss pressing issues, weekly calls to assess new features, and sprint retrospectives for team members to share challenges in a blameless environment. Encourage open communication and ensure that feedback is captured from both in-house employees and their outsourced counterparts, regardless of the size of their contribution. 

Regularly sharing specific, actionable, and relevant feedback drives the development team’s growth. When addressing areas for improvement, it’s good to provide clear examples and suggest ways to enhance performance. Offering additional resources, training, or guidance when needed demonstrates a commitment to the team’s success. It helps overcome any challenges arising from cultural differences or communication barriers.

When talking to software engineers, PMs should balance criticism with recognition of good work and progress to maintain a positive working environment. Research shows that professionals who feel recognized are 2.7 times more likely to be highly engaged, and 37% say more appreciation would motivate them to produce better work. Additionally, employee recognition improves both retention and recruitment efforts, with respectively 68% and 56% of HR professionals claiming so.

Conduct in-house team reviews

Gather regular feedback about the external team’s performance from your in-house development unit. Organize review meetings where the internal team can discuss their experiences working with the outsourced team. Focus on aspects such as the quality of work delivered, adherence to project timelines, collaboration effectiveness, and any unique challenges faced. 

Neontri: Setting new standards in outsourced project management

Over the past decade, Neontri has established itself as a reliable partner in nearshore development. With a deep understanding of the challenges inherent in outsourced software projects, our team has developed robust strategies to ensure seamless collaboration, maintain high-quality standards, and deliver exceptional results. 

Neontri’s expertise in project management is condensed in our innovative 3PM model. It is a comprehensive approach to outsourced software development that leverages the combined strengths of three key roles: Project Manager, People Manager, and Partnership Manager. This model is built on the cooperation between core team members, ensuring that each outsourced software development project achieves high-level management, talent care, and client satisfaction. 

The 3PM model’s effectiveness is based on several fundamental principles:

• Chain of trust. The three managers work closely together, forming a strong bond of trust that extends to the client and the nearshore team.
• Integrated approach. Project management, talent care, and client satisfaction are treated as interconnected elements, ensuring a holistic approach to outsourced software development.
• Frequent communication. The proximity of nearshore teams allows for regular, precise, and nuanced communication, leading to well-informed strategies.
• Adaptability. The model promotes a highly adaptable IT governance framework, allowing quick adjustments to changing project requirements or client needs.
• Strategic alignment. By combining the perspectives of project execution, talent management, and client relations, the 3PM model ensures that outsourcing efforts are always aligned with the client’s business objectives.

Take the next step towards efficient, high-quality software development by partnering with an experienced outsourcing team. Contact Neontri today to explore how our innovative 3PM model and tailored solutions can address your specific project needs and help you achieve your digital transformation goals.