How to Outsource Web Development: Collaboration Details, Cost Factors, and a Checklist On Choosing a Perfect Vendor

Regardless of your location or business domain, having a web presence is non-negotiable in today’s interconnected world. This realization frequently evokes the question of how to skillfully and efficiently establish and uphold this presence. For many, the answer is to outsource web development.

Web development outsourcing has become a compelling alternative to in-house teams because of an optimal benefit-cost ratio of the former. In fact, an increasing number of companies contracted out their web engineering in 2023 — and the trend persists in 2024. As the IT outsourcing sector is projected to reach $701 billion by 2028, the shift towards outsourcing web development isn’t just a passing fad — it’s a strategic move for companies looking to speed up their growth and refine operational productivity.

As an outsourcing company with 20+ years of experience, *instinctools has collaborated with companies of all sizes to assist them with web and mobile app development. In this blog post, we share tips, hacks, and main considerations that will make outsourcing web development projects easier for your company.

What makes 60% of companies opt for outsourced web development?

3 in 5 organizations turn to outsourcing for software development and that alone is quite an endorsement for this business model. But let’s dive deeper and single out five core reasons for outsourcing web development as stated by our clients.

The urgency to innovate

Over time, outsourcing has evolved into a catalyst for innovation that gives companies access to niche skills and advanced technologies that may not be readily available in-house. Companies that outsource web development pick the brains of lead web engineers and deliver digital products faster, thanks to the added bandwidth. This agility, in turn, fosters a culture of continuous innovation and puts companies ahead of the competition.

The need to cut costs

In the face of economic turbulence and rising talent costs, companies lean toward outsourcing web development projects to reduce the cost of custom software development and innovation in general. According to Deloitte, over 60% of companies choose outsourcing because of its cost-saving potential.

Not only does this approach allow you to hire a web development team at an affordable cost, but it also eliminates expenses related to non-essential resources and infrastructure. 

Tech talent shortage

A large talent pool is usually cited among other core benefits of outsourcing web development services. The tech industry is moving towards more specialized skills, such as artificial intelligence and data science, which are quite expensive and hard to get on-site. This skill shortage can be outflanked by using outsourcing strategies.

Unlike in-house hiring and associated recruiting headaches, outsourcing reduces your time-to-hire and increases the odds of landing the right talent. Considering the growing concern around tech talent shortage, this might be a fine option to beat the talent crunch.

The need for scalability and flexibility

Usually, an outsourcing vendor has developer talent on tap, allowing companies to ramp up or down their teams without the financial commitment of hiring in-house employees. So once the busy stage of the project is over, you can easily scale down to a smaller team. It also means that your ideas aren’t limited by the number of employees you have on staff. 

Time to market is critical

In digital product development, “yesterday” is an ideal timeline. When outsourcing website development to a reliable outsourcing partner, you don’t start from scratch or spend much time on hiring and onboarding. Instead, you get your project off the ground within days or weeks, hooking into the capacity needed to speed the heavy lifting of software product development and beat your competitors to market.

In most cases, there is no one single reason why global companies farm out their engineering initiatives. It’s usually a whole suite of aspects that tip the scales towards outsourcing. At *instinctools, we have asked our clients what seemed to be the determining factor of outsourcing for them. In our case, 55% cited cost reduction along with an easily accessible and competent talent to have the most tangible effect on their operations. Over 25% singled out innovation speed, while the remaining 20% said that faster time-to-market has been the most beneficial for them.

Outsourced web development has many flavors: what engagement model should you go for?

To outsource web development successfully, the right engagement model with the tech partner is important. The engagement model defines project expectations such as the level of scalability, commitments, pricing, and other aspects. 

Team augmentation

IT staff augmentation allows you to extend your team temporarily by hiring developers to handle a specific part of the project. Depending on the project’s complexity, scale, and specific needs, you can involve as many individual professionals as you need.

You can bring in additional talent when you need to:

• Fill skill gaps fast and at a lower cost
• Tap into specialized tech expertise 
• Improve your web development process by adopting new practices
• Increase the productivity of the team when faced with a tight deadline.

The main benefits of hiring web developers based on this engagement model include:

• Better project control — the vendor’s developers work as a part of your in-house team
• Cost savings — you just pay for what you require, excluding employee benefit expenses and such
• Faster project execution — you add additional capacity to your team and can accelerate the project delivery
• Talent agility — you can respond quickly to business needs, meaning scaling your team up and down, without the burden of in-house hiring

Dedicated team

Within this engagement model, you outsource web development services to a cross-functional team of skilled professionals who work exclusively on your project or set of projects. A dedicated team functions as a self-managed unit, responsible for maintaining and improving all the software development processes, from new member onboarding and knowledge sharing to delivery management.

Engaging a dedicated team in your project makes sense when:

• You need to delegate the implementation of a long-term project with frequent scope modifications
• You want your product to be developed end-to-end by an outside team
• If you are a startup and lack technological expertise in-house
• When software development isn’t included in your core business activities and you want to outsource the entire tech function
• You need to hire a multi-disciplinary development team at short notice

The dedicated team model brings the following benefits to your table:

• Consistent software delivery — the team is committed solely to your project and shares responsibility for project outcomes
• Seamless team integration — the team works closely with the client, allowing for day-to-day interactions and knowledge sharing
• Flexibility in project scope and timeline — the team easily adapts to changing requirements and priorities 
• Easy project management — you can stay as involved in product development as you want

Offshore development center

This collaboration model is radically different from the other two, as it enables companies to establish an entire setup in another country. An offshore development center (ODC) is usually located in a country that offers low labor costs and a diverse pool of skilled IT professionals. The offshore development center allows you to outsource the whole practice, construct and evolve it according to your product growth strategy. Any specific security procedures and personnel training can be implemented flexibly within this engagement model. 

Companies think of setting up an ODC in an offshore location when:

• They have special data security requirements
• The project is huge and the company needs a continuous loop of delivery 
• They want to expand their operations to another country and/or market

The most common benefits of ODCs include:

• Reduction of operational and innovation costs — organizations can significantly save on salaries and overhead expenses when transferring their operations to low-cost destinations.
• Focus on the core business needs — companies can keep their in-house teams busy with high-priority tasks.
• Full compliance with your requirements — your ODC team is fully aligned with your industry regulations and business processes.

Below, we’ve summed up the main data points about top outsourcing web development models.

Criteria	Team augmentation	Dedicated Team	ODC
Cost-efficiency	Medium	High	High
Control & oversight	High level of control	Medium level of control	Highest level of control
Scalability	High	High	High
Vendor’s responsibility	Low	Medium	High
Commitment/Duration	Short-run projects and select tasks	Medium and long-term	Long-term strategic projects
Project Management communication	On the client’s side	On the vendor’s side	Flexible, depending on the specific requirements
Cultural fit	Low	Medium	High

As you see, there is no definite answer when it comes to choosing the right engagement model. Everything comes down to your business goals and project specifics.

Let’s talk numbers: what factors influence the cost of outsourcing web development?

However much we’d like to deduce a hard-and-fast formula to calculate the costs of web app development , it’s difficult due to a large number of variables; however, we can follow some general guidelines. 

The web outsourcing team involved, project scope, location, and many other factors influence the costs. Below, our web development outsourcing company has listed the main cost drivers to give you a better grasp of what makes your outsource web development projects.

Project-related aspects

These are costs directly associated with your solution and with the effort it takes to implement it.

• The number and complexity of application features.

The more complex your web application is, the more hours it will take your web outsourcing team to build it. For example, you’ll spend less for outsourcing Shopify web app development services compared to a custom blockchain platform. The complexity of your project doesn’t boil down to the number of features and screens only. Unclear requirements and novelty of your idea also increase the development and testing effort required from the team.

• Requirements to software performance, availability, security, latency, and scalability.

Adapting your web application to meet predefined requirements, whether it’s security or scalability, means that your outsourcing provider has to employ additional expertise, infrastructure, or workforce to hit the mark.

• The complexity of the application logic and architecture 

Complex software architecture with highly interdependent components implies spending more time on planning, designing, implementing, and debugging the solution. The more technologically diverse your architecture is set to be, the more specialists you need to involve.

• The number and complexity of integrations with other software

The variety of data formats and communication protocols can make the integration of third-party services, legacy systems, and various data sources more resource-intensive, translating into additional costs. A custom, from-scratch integration is another expenditure item in your development.

• Cutting-edge technologies (machine learning, gen AI, AR/VR, and others)

If you want to integrate the latest and greatest tech into your application, be ready to cover related hardware, software, and labor costs.

• The need to migrate data from legacy software

The data you need to migrate can be poorly formatted or incomplete, making your development team clean and process it first. Also, larger datasets require more time to migrate, especially if developers have to write complicated scripts to migrate them.

• Regulatory compliance requirements 

If your application falls under some kind of regulation such as HIPAA, PCI DSS, GDPR, and others, your project development process must include the implementation of specific data security safeguards, running network and security audits, and other measures that incur additional costs.

• The uniqueness and complexity of UI design

More sophisticated, fully custom web app design calls for considerable effort from designers and developers, while OS-provided elements trim the development cost. Also, the more screens, platforms, and devices your app is intended to cover, the greater your total is.

Development-related aspects

It may seem like development and testing expenses are the only cost drivers that shape the web development total. However, some less obvious factors can also lift the costs.

• The team involved 

Outsourcing your web project to a cross-functional development team with specialized skills will cost you more than augmenting your in-house team with a solo developer. Projects with a large number of stakeholders require more support roles to improve communication, which also makes your initiative more expensive. 

• The development approach

Some web development companies rely on low-code development platforms or ready-built components to reduce development costs. Conversely, fully custom solutions will cost you a pretty penny.

• The location of the outsourcing web development company 

Where the development team is based geographically can considerably impact the cost. For example, an outsourcing web development company located in North America has far higher rates than one positioned in Eastern Europe or Asia. Hold onto this thought — we’ll dwell upon that later.

Three types of pricing models: which one to choose?

Choosing a suitable pricing model is akin to choosing a pricing plan for any digital tool: strike the right balance between dollars paid and outcomes you get. Opting for a plan that doesn’t align with your project scope, duration, and specific business needs can lead to wasted resources, missed opportunities, and unnecessary expenses. 

Let us make this choice easier for you.

Fixed Price

A fixed price contract means that the client and the software development company agree on a fixed price for the custom software development project before it begins. The price is calculated based on the scope of work, requirements, and deliverables agreed upon by both parties.

Advantages of the fixed price contracts include:

• Predictability — you know the exact cost of the project upfront and can plan your budget accordingly. 
• Fixed deadline — this model implies certainty in requirements and final deliverables, making it easy to estimate the timeline for the project. 

Cons of the fixed price model include:

• No flexibility — once defined, product requirements cannot be changed so no modifications are allowed during the development process.
• Less client involvement — although it may be considered an advantage, less involvement sometimes leads to miscommunication and unmet expectations.

Here’s when it makes sense to engage in this type of contract:

• When you have a small-scale, one-off project such as an MVP or a PoC. 
• When your project requirements are rock-solid and unlikely to change.
• When your web development project budget is limited and/or you’re pressed for time.

Time & Material

This pricing model provides web development services on an ongoing basis, whereby the client pays the vendor for hours spent on the project and reimburses pre-approved expenses. The T&M contract is based on a general scope and time estimates that can evolve.

Advantages of the Time & Material contracts include:

• Flexibility — you can change the scope based on the project dynamics.
• Faster time to market — this model allows you to get into app development right away and deliver the product to potential end users faster.
• Reduced risk of scope creep — you are well aware of the final deliverables and can fine-tune them at each development stage.
• Scalability — you can scale your team up or down on demand.

Cons of the Time & Material price model include:

• The risk of going over budget — lack of budget predictability can make it difficult to plan your resources. 
• Undefined deadline — as the scope is subject to change, you can’t predict an exact release date.

Choose the Time & Material pricing model when:

• You have a complex project with dynamic requirements. 
• You expect your project to be long-term and ever-evolving.
• You want to have more control over what is being developed.

Dedicated team

In the dedicated team model, an outsource web development company charges you monthly based on the team size. The total cost is made up of the members’ rates and the vendor’s fee. Unlike all other pricing models, this option allows you to bring in an entire, cross-functional team to handle your project, including a project manager, business analysts, QA specialists, and others.

Advantages of working under this arrangement include:

• Reduced cost of development — having an outsourced dedicated team to work on your project is less expensive than hiring an entire development team in-house.
• Flexibility and scalability — you can easily add or remove team members to adjust workloads and adapt to changing needs.
• Project knowledge retention — your development team dives deep into the project to study its unique needs and can use this knowledge to introduce new releases.
• Clear pricing — you know the rates of each team member.

Cons of the fixed price model include:

• Requires a long-term commitment — the model is not suitable for short-run projects.

Here’s when the dedicated team pricing model is your safe bet:

• When you want your long-term web project to be delivered end-to-end 
• When talent retention on the project is of great importance 
• When you’re at the beginning of an innovative project with an unexplored scope that can benefit from the ability to experiment.

	Fixed Price	Time & Material	Dedicated team
Project size	Small	Medium and large	Large
Project duration	Short	Average or long-term	Long-term
Requirements	Defined	Evolving	Evolving
Flexibility	Little	High	High
Project budget and timeline	Fixed	Flexible	Flexible
Client’s level of involvement	Little	Significant	High
Payment	Single price for the entire scope of work	Hourly+Materials	Labor costs + Fee

Cut down risks, dial up value: best practices of web development outsourcing

You can always recognize experienced web developers by the way they approach the development process. Web development teams worth their salt have calibrated project management and quality management frameworks that they incorporate into the development process to reduce development costs by 1.5-2 times, speed up the process, and ensure high quality of the final product as well as meet clients’ expectations. 

Here’s what qualifies as the best practices for outsourcing web development.

Comprehensive delivery

Full-scale web development encompasses a lot of activities aimed at bringing your software to the market, including discovery, design, development, and others. Your development team needs to find an optimal way to link all activities into the same chain and unite each team member around a common goal, while also effectively tackling product development challenges.  

The only way to do that is by putting a trusted delivery model in place that would serve as a  guide for the entire software development lifecycle and facilitate collaboration. At *instinctools, the delivery model is anchored in the principles of DAD (Disciplined Agile Delivery) and PMBoK. Thanks to this model, our teams can effectively share project knowledge, reduce development risks, and deliver on the client’s requirements.

Web application delivery process at *instinctools

Compulsory discovery phase for projects with vague requirements

You know what stands behind 64% of software defects? Superficial discovery activities. The success of your web product and web development outsourcing in general hugely relies on proper planning and preparation — and that’s why a thorough discovery phase makes all the difference. 

During the discovery phase, your outsource web development company can validate your idea with valuable market and target audience data, refine project scope, prepare solution architecture, and document software requirements specifications. This lays the groundwork for future development and prevents you from investing in unnecessary features.

Commitment to code quality

Readable, easily maintainable, highly efficient — that’s the type of code your web apps need to live a long and prosperous life. A decent outsourcing web development company should have a quality management framework in place and a set of guidelines to standardize code production.

Your vendor should be also well aware of industry-specific coding standards, have a code review system, and know how to proactively manage technical debt. The DevOps methodology and CI/CD should become regular practices for your vendor if you want a high-quality product.

Intellectual property protection

The risks associated with IP theft are intrinsic to outsourcing projects that include proprietary data and code (most projects). To safeguard your intellectual property, you should establish a confidential relationship between your company and the vendor by signing a non-disclosure agreement. Make sure your tech partner has data access controls and encryption to safeguard your sensitive data.

Security and compliance

If you’re building an application for a heavily regulated market such as healthcare or banking, compliance with HIPAA, MDR, GDPR, PCI DSS, and other regulatory requirements should be baked into the development process from the get-go.

Post-implementation maintenance and support

Web development doesn’t end the moment the solution is pushed out into production. To maximize the value of your software and put it up for long-term growth, you should perform regular upkeep and continuously refine the solution based on user and stakeholder feedback. Therefore, post-release maintenance and support should be part of the vendor’s commitment to your company.

There’s no place like….five best countries to outsource web development

The cost of web development depends not only on your team’s skills and seniority, but on where your outsourcing partner is located as well. Onshore outsourcing is contracting the tasks to someone outside your company but within your country at, give or take, the same cost. Nearshore outsourcing web development provides capacity nearby and can save up to 30% in development labor costs depending on your location. Offshore outsourcing is considered to be the most cost-effective solution, as you outsource the development to a low-cost country, yet it’s furthest away, which introduces greater cultural and communication risks.

While geographical proximity is important in some cases (e.g. need for on-site visits), mature processes, expertise, cultural alignment, cost reduction, and security are more critical factors to justify your choice. With that said, let’s take a look at the best places to outsource web development.

Poland

Rate: $40 to $99

Pros: 

• High concentration of affordable talent
• Belongs to the Central European time zone
• High cultural and business affinity with Western Europe 
• EU-level protection of intellectual property
• Strong R&D market

Cons:

• Poland has quite high living standards so it might cost you more to build a web app here compared to low-cost locations.

Ranked third among the countries with the best programmers in the world (who also speak fluent English), Poland is an attractive outsourcing destination known for its startup activity, stable economy, and innovation strength (41st in the Global Innovation Index). The country is a leading IT outsourcing center in CEE, whose IT outsourcing market is projected to reach $1.8 billion by 2028.

The Philippines

Rate: $28 to $55

Pros: 

• Low-cost software development 
• Reliable infrastructure and technologies
• Established software outsourcing market

Cons:

• Cultural differences and communication barriers can impact the collaboration.

The Land of the Morning Sun is a notable market for software outsourcing with a projected volume of $1,140 million by 2028. In terms of developer talent, the Philippines is ranked 46th. Global businesses outsource web development to the Philippines mainly because of low hourly rates.

Brazil

Rate: $30 to $55

Pros: 

• Reasonable cost of software development 
• A great focus on tech education
• An impressive pool of software developers 

Cons:

• A complex tax structure that increases the costs of development

Web development projects outsourcing companies located in Brazil offer foreign businesses a chance to tap into a diverse talent pool at an affordable rate. The country ranks 49th in the Global Innovation Index and has a rapidly developing IT outsourcing market with an estimated volume of $9.82 billion by 2028. But you should be ready to pay additional taxes for hiring developers from Brazil.

China

Rate: $25 to $45

Pros: 

• A solid pool of software developers
• Supportive government policies
• Great startup culture

Cons:

• Different IPR laws
• Language and culture barriers 

China is the world’s second-largest economy — and the local IT outsourcing market keeps pace with a projected volume of $41.60 billion by 2028. The country is an innovation leader and its immense labor pool has made it a hub for software outsourcing. However, the Chinese legal system differs from most Western countries so it may be hard to navigate the local market.

India

Rate: $20 to $40

Pros: 

• Favorable government policies
• Lower labor and infrastructure costs
• Emerging R&D center

Cons:

• Cultural misalignment
• Challenges with communication and project management

The country’s enormous talent pool and low costs have made outsourcing to India increasingly popular in recent years. As a leading tech hub in Southern Asia, India has a mature tech infrastructure and an impressive IT outsourcing market volume of over $10 billion. But low development costs may come at a price here: quality standards and work culture differ greatly from those in Western countries.

The key to unlocking your project success is choosing a reliable outsourcing web development company

The success of your outsourcing rests on a strong partnership, so choosing the right outsourcing partner can be a make-or-break decision. Here are five things you should consider when looking for the right tech partner abroad.  

Optimal size for partnership

“Small enough to care and big enough to scale” is still sage advice. If you want to outsource software development successfully, choose a tech partner with enough resources to handle your product growth. But make sure you’re not just another line item and your partner can provide personalized attention and tailored solutions for your unique project needs. 

A fair balance between cost and quality

In web development outsourcing, it’s not just merely about who provides the cheapest service. Lower costs may indicate a compromise on quality or a lack of specialized expertise. Therefore, seek out companies that provide reasonably priced services and demonstrate a clear understanding of the value they bring to your project.

Specialized technical expertise

Be wary of companies that claim to excel in every technology or service area. Instead, look for a tech partner with proven expertise in the technologies and solutions relevant to your project. Ideally, your outsourcing vendor should be also well-versed in your domain.

Credibility and transparency

Don’t be shy to do a thorough background check to verify your partner’s credibility. A trusted software vendor sports a credible online presence backed up with a professional website, authentic testimonials, and a portfolio that showcases their expertise and past successes. You should also look for a partner that prioritizes transparency in communication, especially regarding pricing, experience, business processes, and software development flow.

Product development experience

If your goal is to build a digital product that delivers value to any market, you will need a tech partner with hands-on expertise in growing products from an idea to a product market fit. It means that your tech partner should cover the entire product development lifecycle, including market research, user testing, user-centric design, and iterative improvements. 

An experienced outsourcer in product development can not only execute the product but also advise you on an optimal business strategy and revenue generation model.

Web development outsourcing made easy with *instinctools

Web development outsourcing can get your project underway with minimal disruption to the core company’s functions. Significant cost reduction, faster time to market, and innovation agility make outsourcing a rewarding experience, if done right.

Partnering with *instinctools allows you to tap into 20+ years of tech experience and leverage it for your web development project. From definition and design to development and testing, we pitch in when you don’t have the capacity or expertise in-house.