11 Steps to Choose a Software Development Company in 2023

July 27, 2023
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If you are concerned about hiring another software development company, don’t dwell on it. It’s an industry norm! Almost every other company is following this practice.

Large organizations rely on other software firms to work on their technical projects. They do so to share the burden, accelerate time-to-market for a product or project, and solely focus on core competencies. Similarly, mid-level and small businesses try finding software development partners. Many hire development companies to mitigate risks and access new technologies while staying cost-effective.

The sole purpose behind outsourcing software development, for many, is to access expertise and specialization. But choosing the right partner for development is tricky and challenging. For this, you must learn how to choose a software development company.

And if you are new to this, the 11 steps we are highlighting will make it easier for you to screen your partner. These will help you foster a good bond for the next project and deliver stellar results.

There’s a reason why selecting an IT partner feels like walking on thin ice – it can go wrong very quickly. The right company will start sharing your corporate objectives whereas with the wrong one, things can go south. Not to mention the valuable time you’ll lose while bleeding money.

With every passing year, the world is spending more on enterprise software development. In 2022, around $783 billion dollars were spent globally as per Statista. Considering the previous year, this was a 7.1 percent growth and we can expect the trend to grow continuously.

software development company statistics

And $33.7 billion is the amount spent on mobile apps by global consumers. Astonishingly, the one sector that’s showing a spike is Progressive Web Apps (PWA).

Note: There are over 23,000 custom software development companies on claiming to be the pro. Of course, not all are equal and not all are fit for every job.

This means you must make the right call to avoid future inconveniences. But selecting a custom software development partner can be tricky as it’s a slippery slope. So, how can one make the right choice?

The answer is simple: don’t fly bling. Instead, follow the guidelines and predefined steps set out by industry experts. So, delve into the details to learn how to choose a software development company.

Step 1: Define Your Project Requirements

You cannot get what you haven’t worked for. The same is the case when it comes to custom software development. Without setting requirements, an organization cannot choose the right IT partner for itself and its needs

Importance of Clearly Defining Project Goals, Scope, and Budget

Certainly, the significance of clearly defining project goals, scope, and budget cannot be overstated. It forms the bedrock of triumphant project execution. By precisely outlining the objectives, establishing work boundaries, and sensibly allocating resources, you can lay the groundwork for consistency and accountability.

A well-crafted project framework leads to efficient planning, seamless communication, and meticulous progress tracking. It averts ambiguity, curtails the risks of scope creep, and safeguards adherence to budgetary constraints. So, you must be careful during this pivotal phase to forge a path to success.

An ideal way to define your requirements is to think about the end user.

Also, consider the finances and timeframe before starting the development phase. Decide the technology stack as well as development tasks to set a clear timeline.

Tips for Assessing the Specific Requirements of Your Software Project:

  • What type of software do you wish to develop (e.g. desktop/mobile/web app)?
  • Do you need a new team or require additional help or an extension?
  • What development experience or skills do you have?
  • What development skills or technology stack will you require?
  • Is it a specific skill set or tech stack that you will need?
  • How much can you afford to spend?
  • What are your time limitations?
  • Do you need the resources for the short-term or long-term?

By finding answers to these questions, you can clarify your custom software development needs. This is a practice that can help you save time and resources in the long run.

We hope you’ve got the idea now, right?

All you need is to search for a development company that can meet your needs. Of course, you should look for expertise but also ensure it does the exact type of work that you require. This can be mobile (iOS or Android) development, web development, etc.

Step 2: Determine Your Budget

Setting a realistic budget for your software development project is crucial for its success. For this, you must research market rates and get multiple quotes. To avoid overcharging, consider your project timeline and then prioritize features.

Don’t forget to do a quality versus cost analysis and always account for contingencies. This way you’ll be able to get the best development value for your money.

Factors to consider when estimating the cost of software development services

While estimating the cost of software development services, several factors come into play. Below are some key influencers:

  • Project complexity
  • Functionalities and scope
  • Technology stack
  • Development time
  • Team size and expertise
  • Testing and quality assurance
  • Maintenance and support
  • Geographic location
  • Consider different pricing models

Read the detailed guide on custom software development costs

Step 3: Assess the Company's Expertise and Experience

Expertise and experience can tell you a lot about your prospective software development partner. So, once you have shortlisted the best custom development companies, take a look at their portfolio.

Most companies display their development projects on their websites and proudly share in quote templates. In case they haven’t, ask them to share their previous work similar to yours.

“Note: Reviews and testimonials available on companies’ own websites are often completely made up.”

Instead of trusting the reviews, you should test the software. If it’s a mobile application, directly download it from Play Store or App Store and review it. While you are at it, don’t forget to take a look at the app ratings. Assess their work as a common user and try to rate it. 

Also, search the company on LinkedIn and see how well-connected they are on the platform. You should also focus on reviews published on Clutch or Yelp as they are hard to fake.

Step 4: Consider the Company's Technology Stack

A good custom software development company usually has expertise in fewer technologies. If you encounter one that claims to be the jack of all trades, it’s a red signal. Of course, an enterprise-level company has expertise in multiple tech stacks, but there aren’t many.

A quick way to spot such incompetent companies is to look for technology logos. The one that has too many logos listed cannot have an expert custom development team. There’s no way that a team of a dozen developers can master .Net, Node.js, PHP, or RoR at the same time.

So, you should choose a software company that has expertise in only one particular tech stack.

For instance, if you are looking for a React partner, choose one that solely does development with React. Ask them to provide samples and you’ll know that they know their way around React.

Step 5: Evaluate the Company's Development Process

If you don’t know how to choose a software development company, evaluate their development process. To evaluate a company's development process effectively:

  • Evaluate their communication and collaboration
  • Determine their Agile methodologies
  • Consider their project management approach
  • Focus on quality assurance and testing
  • Ask about scalability and future support
good development methodology

“Tip: Agile methodologies offer transparency while daily standups improve communication and quality of services.”

waterfall project management

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Step 6: Review the Company's Team and Resources

Resource estimation is crucial for the selection of a custom software development company. Without proper resources or a skilled team, they cannot meet the deadlines. Hiring an unskilled team means you’ll only be burning money even if you are paying low.

On the other hand, hiring a large software development company has its own demerits. They often have too many clients onboard and your project may not get the attention it needs. You may be communicating with a senior resource but in truth, junior developers will be working on it.

“Ideally, your IT partner should treat you as a VIC (very important customer). “

Choosing a development company of a similar size is the right approach. You’ll know their company dynamics and they’ll have the right resource assigned to your project.

Step 7: Check for Previous Client Reviews and References

Reading reviews from previous clients is important when choosing a software development company. This provides insights into the quality of work delivered by the software development company.  When you check references, you get to assess whether the company is consistently meeting client expectations.

Other reasons include:

Checking Credibility and Reputation

Reviews and references serve as evidence of a company's credibility and reputation. They offer an unbiased perspective on the company's performance and client satisfaction. By considering the experiences of previous clients, you can gauge the company's trustworthiness and reliability.

Assessment of Project Management Process

 Client reviews often shed light on a software development company's project management skills and communication practices. You get to understand how the company handles deadlines, collaboration, and communication. This can further help you determine if they are capable of effectively managing your project

More importantly, whether they’ll keep you informed throughout the development process.

Evaluating Technical Expertise

References can give you an idea of a software development company's technical expertise. They may highlight the company's proficiency in specific technologies, programming languages, or domains. So, you’ll know whether the company has the required skills and experience to handle your project effectively.

Doing Risk Assessment

Previous client reviews often help in identifying potential risks associated with working with a particular company. Hence, reviews serve as warning signs, alerting you to issues such as missed deadlines. You can learn about their weaknesses such as poor code quality, inadequate support, or unprofessional behavior.

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Step 8: Assess the Company's Communication and Support

Another key quality to consider is their communication channels and routine. 

You should evaluate the clarity in communication, project management tools, and meeting frequency. Also, assess their willingness to address concerns or questions when they communicate with clients.

Since you are learning how to choose a software development company, acquire knowledge about communication tools as well. There are specific communication channels for specific purposes.

For File Sharing: You should prefer Notion or Google Drive as these tools can easily store important documents. Above all, you can quickly share them and open them on multiple devices if necessary.

For One-to-One Communication:  Skype, Zoom, and Google Meet are ideal tools as they are easy to set up. You can join meetings and make calls using a desktop, laptop, or smartphone from anywhere at any time.

For Online Chats: You can use Slack, Skype, or Mattermost as these are all multifunctional tools that come with tons of integrations.

For Project and Bug Management: Utilize Jira, Trello, or Asana, Trello to streamline the workflow and maintain transparency. These tools can help you keep track of all the issues until they are resolved while the team will remain focused on the right priorities.

Step 9: Consider the Company's Location and Cultural Fit

When hiring a custom software development company, considering their location and cultural fit is important. Proximity and time zone compatibility can significantly impact communication and collaboration.

Working with a software development company in a similar time zone has its benefits. You will have:

  • Real-time communication
  • Quick response times
  • Smoother collaboration
  • Language and cultural similarities

Above all, choosing a regional company means they’ll have a comprehensive understanding of the legal landscape. This will ensure compliance with relevant laws and regulations.

On the bright side, a company located in another region can offer better rates. In fact, you may get the same quality of work at half the price.

Tip: Hiring a software development company in Pakistan or India is cost-effective. You can expect a quick turnaround while having expert resources working on your project.

Step 10: Review the Company's Security and Confidentiality Measures

In this digital era, the security and confidentiality of a company matters the most. You surely won’t want other companies looking into your data. At the same time, you won’t want to get dragged into an intellectual property lawsuit.

Take a look at the below image to learn what components you should address in your contract.

evaluate the company development process

Additionally, pay attention to the following protocols and measurements:

SSL Certificates: Utilizing secure SSL certificates allows you to authenticate your outsourced developers. This ensures their identity and maintains a secure connection.

Server access: To restrict data access, only designated employees should have server access. And that too for necessary maintenance tasks, such as updating the application and the database.

Data access: When working on your project, you should share only an anonymized version of your database. Don’t offer developers complete access to the entire dataset. This will provide you with control over which data can be accessed.

API access: In the case of an API being developed, ask your partner to connect to the pre-built, secure software component. Treat it as a sealed entity so they won’t have access to the sensitive portions of the code.

Non-Compete Agreement (NCA): An NCA prevents the contracted company from divulging its ideas or innovations to competitors. The purpose is to ensure that the agency or developer cannot form a partnership with a potential competitor.

Non-Disclosure Agreement (NDA): An NDA safeguards your trade secrets and confidential information pertaining to your business.

Step 11: Request Proposals and Make a Final Decision

The last step in choosing a custom software development company is getting a quotation. Once you have shortlisted the best companies, ask them to offer proposals.

Consider the following, before making a final decision:

  • Your budget
  • Turnaround time
  • Development expertise
  • Reporting and communication
  • Legal & security measures


Knowing how to choose a software development company involves careful consideration of various factors. You should conduct thorough research, check previous client reviews, and evaluate their location and company culture. Additionally, assessing technical expertise and project management capabilities can help you make an informed decision. And don’t forget to consider their commitment to confidentiality through legal agreements like NDAs and NCAs.

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