Global IT spending reached $4.2 Trillion USD in 2021, says a report by Statista of which, over 12% was only spent on enterprise software. That’s a vast amount of money!

The importance of software and technology has never been so crucial for global economic development as it is today. In the upcoming time, it is only going to be more and more salient. The increasing demand has also soared the investments that companies make into software development.

With the increasing investments, companies are searching out effective and innovative ways to optimise software development costs. However, while chasing cost reduction, a lot of companies compromise quality as well.

Thus, in this article, our aim is to walk you through how software development cost is estimated and what are the proven ways to reduce software development costs without compromising on quality.

Before getting into the cost reduction, let’s first have a brief understanding of how cost estimations are done for software development projects.

Below mentioned are the major cost components in any software development project:

1. Scope of the project and complexity - This one is a no-brainer, the more the complexity and larger the scope, the higher the cost goes for the software development.

2. Technology and methodology used - The platform and methodology used to build software are highly influential in determining the overall cost of the project. Depending on the demand & advancements, it can drive costs higher and lower.

3. UI Design & UX - Softwares need interfaces to be used by users. Engaging design and excellent user experience are vital to get the users returning to use the software. Designing a customised interface over picking up standard available templates will drive the cost up. Contrary, picking up templates might not deliver the best user experience.

4. 3rd party subscription & integrations - To get the software built quickly and widely compatible, you need API integrations and prebuilt 3rd party resources. These things also add up to the cost estimations of overall software development.

5. Human Resources - Finally, the largest piece of the cost pie for a software development project is human resources. The developers, QAs, project leads, and everybody working on the project add up to the final cost.

These are the five major components influencing the cost estimations for any software development project. Now that you understand what goes behind in the software development cost estimation, let’s look at some tips that can help you reduce costs for software development projects without compromising on quality.

1. Outsource software development

   Outsourcing software development is a perfect way to eliminate all the cost overheads like building IT infrastructure, accommodating the development team, recruitment expenses, and more.

   Outsourcing to the right custom software solution provider can result in better results than building an in-house team and that too with a lesser expense. If you are considering outsourcing your next software development project, then do check out what MSBC Group has to offer you.

2. Build a MVP first and test

   In the over-enthusiasm toward building something new, a lot of business owners repeat the mistake of developing impractical software costing them a lot of money in iterating.

   A better way to approach software development is to build an MVP first, let the potential users test it and receive feedback. The next step is to build the final software after incorporating the feedback received from testing MVP.

3. Plan and finalise the final objectives and outcomes

   You should have a clear idea of the final objectives and outcomes of the software development project even before getting the first line of code written.

   The ‘We will figure out on the way’ approach can lead you to bleed money without taking you anywhere but the successful completion of the software development project.

4. Study and choose the right methodology

   The software can be developed in multiple ways, which are called ‘methodology’. Every methodology has its pros and cons. You have to opt for the methodology that suits best for your project.

   Selecting the inappropriate software development methodology can cause chaos along the way. Thus educate yourself about different methodologies and take an informed decision.

5. Implement regular testing throughout the project timeline

   Going in the wrong direction hurts more than being stagnant. Testing at regular intervals is a must to keep a check on everything done to date.

   If the testing is not done regularly then at the final test time there will be a lot of blunders that will come to light and no one will know when they occurred. This will result in prolonged timeline and cost overheads.

Practising these 5 tips while outsourcing any software development project will ensure the best possible cost reduction for the project while not letting you compromise the quality at any point in time.