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How to start a software outsourcing company? Useful Tips To Consider

Kane William by Kane William
October 8, 2024
Reading Time: 5 mins read
software outsourcing company

OUTSOURCING / Blue board concept (Click for more)

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In the dynamic world of business, the demand for specialized services, particularly in software development, is skyrocketing. This surge has opened up a realm of opportunities for entrepreneurs keen on delving into the software outsourcing industry. 

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In this comprehensive guide, we’ll navigate you through the essentials of starting your own software outsourcing company. From understanding the industry’s landscape to implementing effective operational strategies, we aim to equip you with the knowledge and tools needed to launch and successfully manage your venture in this competitive yet rewarding field.

How to start a software outsourcing company?

Identifying the Right Niche for Your BPO Business

The initial step in establishing a BPO company involves pinpointing the specific business area you want to specialize in.

Identifying a niche allows you to determine:

  • The specific sector within the BPO industry you’ll operate.
  • The range of services your BPO company will provide.
  • The client demographic you’ll target.

For instance, if you decide to offer call center services to small retail businesses, your sector becomes retail, your service is call center operations, and your target clients are small retail companies.

As your business gains momentum, consider two expansion routes:

Horizontal BPO Expansion:

This involves offering your BPO services across various industries. For example, providing technical support to different sectors such as IT, finance, retail, and marketing. Here, your service remains the same, but you diversify your industry targets.

Vertical BPO Expansion:

This focuses on providing industry-specific BPO services. For instance, in the healthcare industry, you could specialize in medical coding and billing. In this model, you maintain your industry focus but broaden the range of services within that industry.

Create a New Business Strategy

The subsequent step involves formulating a business strategy for your enterprise.

Before running your own one, you can check out the standard business model from early start ups on the website: softwareoutsourcing.com. Your strategy should be thorough and backed by detailed research. It’s essential to delve into the complexities of your chosen market segment and observe your competitors’ actions.

Your business strategy should aim to:

  • Chart a long-term course for your company.
  • Establish precise budgets, goals, and benchmarks.
  • Define the structure of your business.
  • Provide clarity to lenders and investors about your business concept.
  • Regularly revising and updating your plan is crucial to maintain its relevance. This practice ensures your business remains flexible and responsive to any shifts in the market environment.

Complete the Necessary Documentation

After finalizing your business plan, the next step is managing the essential documentation required for establishing a company. This process varies from country to country, so you need to understand the specifics for your location.

Take, for instance, setting up a BPO business in Bangalore, Chennai, or elsewhere in India. Here’s what you need to do to register your business:

  • In India, companies must register under the Companies Act 2013, which outlines the duties and operations of businesses within the nation. Additionally, you should register with the National Association of Software and Services Companies (NASSCOM) to gain recognition as an authorized BPO provider in India.
  • For businesses like call centers or those providing telemarketing and IT services in India, it’s mandatory to be registered as a Private Limited Company. Moreover, obtaining the Other Service Provider (OSP) license from the Department of Telecommunications (DOT) is crucial.
  • After acquiring the OSP license, depending on the nature of your BPO services, you might also need to register for the Goods and Services Tax (GST).

Accelerate Growth

The field of software development is ever-evolving and unpredictable. Sometimes, plans don’t pan out as expected, necessitating an increase in workforce to adhere to deadlines. There are also instances where the tech team might face a lull in workload, leaving some developers without assignments. This is where the power of outsourcing shines.

When the need arises to swiftly expand or downsize your team for cost adjustments, outsourcing offers remarkable flexibility. It allows businesses to adapt their workforce size quickly in line with their operational demands.

Concentrate on Primary Business Functions

Technology plays a crucial role in organizations, but it’s essential to remember its purpose as a facilitator, enabling businesses to concentrate on their main objectives. For instance, automating mundane tasks frees up employee time for more significant pursuits. Outsourcing the creation of an e-commerce platform allows a company to reallocate resources and time towards strategic matters, enhancing sales and marketing efforts, or refining products and services.

Minimize Expenditure

The 2022 Deloitte survey highlights cost reduction as a key factor for outsourcing. Software development in the US incurs significantly higher expenses compared to other parts of the world. Outsourcing presents an excellent chance to access affordable talent globally. Engaging vendors from regions like Latin America, for instance, enables businesses to employ proficient staff at considerably lower salaries and labor costs than in the US, where the demand for skilled professionals is more acute.

Prevent Workforce Burnout

Overburdening your team in any project, including software development, often leads to adverse outcomes. Employee burnout is escalating in the US, with around 77% of tech employees experiencing it in their current roles. Factors contributing to this include excessive workload, high-stress levels at work, and the frustration of lacking essential tools to meet objectives. 

Outsourcing offers a solution to alleviate burnout by distributing tasks more evenly between internal and external teams. Moreover, outsourced teams consist of seasoned professionals adept in various development methodologies and accustomed to working under tight deadlines.

Conclusion

In conclusion, how to start a software outsourcing company requires thorough market analysis, assembling a talented team, and employing robust management practices. Success in this venture hinges on understanding client needs, staying abreast of technological advancements, and maintaining high-quality service standards. By focusing on these core aspects, entrepreneurs can establish a prosperous and competitive software outsourcing business in the ever-evolving tech landscape.

Kane William

Tags: software outsourcing company
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