Software development outsourcing costs: what are the factors?
Based on accumulated experience completing various software projects in the past years, TP&P Technology - Leading Software Development Company in Vietnam explains the factors involved in the cost of software development and how outsourcing can help reduce development costs effectively.
Software Development Costs
Factors that play important roles in software development costs:
- Project size, and scope;
- Features development
- UI/UX design
- Integrations requirement
- Data migration
Project scope define the overall requirements in which your software is developed. Generally speaking, project that is of enterprise or large size usually costs more to develop than smaller sized project.
However, project scope and size as well as complexity can evolve and grow bigger as changes in particular business requirements might occur during development, bringing development costs higher.
Technologies requirements: implementation of emerging technologies such as AI, Blockchain, Data Science may also drive development costs higher, due to specialized expertise that is in higher demand, in comparison to other popular technologies
Features
The number of features and its complexity for development is one of the critical factor which directly drives development costs. The rule of thumb is the more features, the higher the costs.
An mobile application development project which requires a wide range of functionalities usually indicates the need of complex software architecture which also makes development costs higher.
UI/UX design complexity
UI/UX design costs is often based on the extent of features which need to be depicted as well as its complexity. For instance, complex animation for transitions and custom design of screen and layout etc.
Another factor contributes to development cost is the complexities in the tools and technologies for design (e.g. 3D model)
Integrations requirements
Depends on particular business requirements, software applications created for business may need to be integrated with other 3rd party softwares:
- Integration with business applications such as CRM, ERP, Accounting, and Marketing, etc.
- Third-party services integration, for example, email, payment, and file sharing
- Integration with Blockchain, Machine Learning solutions development (e.g. chatbot), etc.
Data migration
Data migration could be a very long complex process as data in the existing system might not be compatible with the new one. The process will include data cleansing and re-format so that data can be fit in the new system. Additionally, test and custom scripts for migration may be needed. Ultimately, this affects overall development costs.
Development Time
Software development cost estimation is usually calculated based on the hourly rate of each role needed in the project, multiply by the development time required. Here is where offshore software outsourcing shines as the hourly rates in offshore countries are usually lower than on-shore.
Other Administrative Costs in Software Development Project
Moreover, with offshore software outsourcing many other administrative and HR related costs can be minimized effectively, as follow:
- No hiring/recruitment costs
- No training and workplace as well as equipment/tools costs.
- No benefit with minimal pay roll tax costs
