8 Software Development KPIs You Need to Track for Outsourcing Projects


8 Software Development KPIs You Need to Track for Outsourcing Projects

Written by:

AnnaContent Manager


Published on:

Read time:

13 min read



Imagine: you are starting a new development project, you chose the outsourcing company of your dream, and are excited about the results. But how do you make sure you get what you want?

Communication is certainly an important part of the development process, but another key to success is evaluation. Your ability to see the work and progress of the outsourcing partner ensures that you end up with the desired result. And by pinpointing the exact metrics and elements you want to evaluate, you avoid miscommunication and conflicts. That's where software development KPIs come into play.

Software development KPIs offer quantitative measures of performance, providing valuable insights into project progress and quality. Selecting the right software development KPIs enables you to effectively manage the software development process and ensure that your outsourcing partner is meeting expectations.

On the spot

There are many KPIs for software development, so let’s focus on those that are helpful in your outsourcing projects. These are the software development KPIs that we actually use in all of our projects:

Delivery Time: Often viewed as a version of the "Lead Time" metric, delivery time represents the period from when the project is assigned to SENLA until it's delivered.
Quality Metrics (Bug Rate, Test Coverage): These software development KPIs focus on the quality of the final product. Bug Rate is the count of defects found in the product. Test coverage measures the extent to which the code of a software is exercised by test cases.
Scope Changes: This software development KPI measures the frequency and degree of project scope changes. 
Change Failure Rate: This metric indicates the percentage of changes to development and production that lead to failures. 
Service Level Agreement (SLA) Compliance: This measures how well the outsourcing company is adhering to the agreed-upon service levels. 
Cost Variance: Is used to calculate the difference between the actual project cost and the budgeted cost. 
Project Milestones: This software development KPI involves tracking whether key project milestones are being met on time. 
Customer Satisfaction: It provides invaluable insights into the perceived value and effectiveness of the software, making it crucial for long-term project success.

Tracking these software development KPIs ensures the success of your outsourcing collaboration and gives you valuable insights for future projects. Curious to learn more about this topic? Read on!

The Role of Software Development KPIs

Key Performance Indicators (KPIs) are the lifeblood of the software development process, much like a compass guiding a ship through turbulent waters. They form an integral part of strategic planning and execution, ensuring teams consistently move towards achieving their objectives.

Software development KPIs provide a structured way to measure the success and efficiency of a project. They enable tracking and analyzing performance across different stages of the software development lifecycle, from requirement analysis to deployment and maintenance. They act as a quantifiable reflection of the development process, providing critical insights that enable data-driven decision-making.

One crucial aspect of using software development KPIs is ensuring accountability within the team. They serve as an objective record of individual and team performance, driving productivity, and fostering a sense of responsibility. When there's a quantifiable measure attached to performance, teams are incentivized to deliver their best, leading to improved productivity and quality of work.

However, the power of software development KPIs lies in their relevance and appropriateness to the specific context of a project. Picking the right KPIs is akin to choosing the correct measuring tools.

They should be Specific, honing in on particular aspects of the project. 
They need to be Measurable, providing quantifiable data that enables assessment. 
It's crucial for them to be Attainable, reflecting goals that are challenging yet achievable. 
Relevance is another important factor; the KPIs should align with the business objectives and the strategic vision of the project. 
Lastly, they should be Time-bound, and attached to a specific timeline for achieving the target.

When chosen correctly, software development KPIs can significantly enhance project outcomes, improve process efficiency, and lead to superior software products. Thus, they are not just performance indicators, but also powerful tools for driving growth and innovation in the software development process.

Maximize Your Project's Success

Uncover the essential KPIs for tracking and optimizing your software projects

Write to Us background-img

8 Essential Software Development KPIs Our Clients Track

Now we'll see how specific software development KPIs can help manage and enhance the software development process, leading to better quality products and more efficient operations.

1. Delivery Time

Picture shows a person with a calendar looking at a computer

Delivery time is a software development KPI that measures the time it takes for a task to be completed and delivered by a vendor. It is closely related to the lead time metric, which measures the time from task initiation to completion.

Lead time in software development encompasses the total time from a feature's request to its delivery, including all stages like ideation, development, testing, and deployment. In contrast, delivery time focuses specifically on the time taken from when the development team starts working on a task until its delivery to the end-user, covering mainly the execution phase such as coding, testing, and deployment.

By focusing specifically on the delivery aspect, this metric provides insights into the efficiency and speed of the development process.

A shorter delivery time indicates that the task was completed and delivered quickly, which suggests an organized and efficient development process. It implies that the vendor was able to complete the task promptly and deliver it to the requester in a timely manner. This efficiency will have several positive effects on the overall workflow and project success.

One significant advantage of shorter delivery times is the ability to launch products faster. When tasks are completed and delivered quickly, it speeds up the overall development process, allowing for faster product launches. This can be crucial in highly competitive markets where being the first to market can give a significant advantage.

Additionally, shorter delivery times contribute to increased market responsiveness. By delivering tasks quickly, vendors can help their Clients swiftly respond to market demands and address any immediate needs or changes. This agility can help you stay ahead of your competitors and better meet customer expectations.

Monitoring and delivery time as a software development KPI can benefit you in various ways. It helps identify bottlenecks or inefficiencies in the development process that may be causing delays. By streamlining and optimizing these areas, delivery times can be reduced, leading to increased productivity and customer satisfaction.

2. Quality Metrics (Bug Rate, Test Coverage)

Picture shows a person with a thumb up

These KPIs focus on evaluating the quality of the final product and the effectiveness of the testing process.

The Bug Rate measures the number of defects found in the product. A high bug rate suggests that there may be problems in the development process that need to be addressed.

Test Coverage, on the other hand, assesses the extent of testing performed on the software. It measures the percentage of total functions or lines of code that have been tested. High coverage indicates that a thorough QA process has been implemented, reducing the chances of unnoticed bugs or issues.

By tracking these software development KPIs, you can identify potential areas of improvement in their development and testing practices to enhance the quality of their final products. 

3. Scope Change Index

picture shows a growth graph

SCI is calculated by tracking the number and impact of scope changes throughout the duration of the project. The SCI can be measured on a scale of 0-100, with higher values indicating a higher frequency and significance of scope changes.

By monitoring the SCI, you can identify any patterns or trends in scope changes and take necessary actions to minimize their impact. This may involve conducting a thorough analysis of altering requirements, implementing more effective communication and collaboration strategies, or reassessing the project's overall feasibility.

A high SCI may indicate a need for better project planning, stakeholder engagement, or risk management processes. It can also highlight the need for more clearly defined project objectives and requirements, as well as stricter change control procedures.

Ultimately, keeping the SCI in check is essential for maintaining project efficiency, meeting deadlines, and delivering a high-quality end product. 

4. Change Failure Rate

CFR is a measure of the proportion of changes made to a production system that result in failures or issues.
A high CFR indicates a higher likelihood of problems occurring when changes are made to the system. This can be a sign of potential issues in the development process, such as insufficient testing procedures.

Regularly tracking CFR is important as it allows teams to identify patterns and trends in change failures. By doing so, they can address underlying issues promptly and make improvements to the stability and reliability of the product.

These may include, for instance, enhancing quality assurance practices. It will help reduce the number of failures and increase the success rate of changes made to the production system.

Ultimately, the goal is to improve the product's stability, minimize downtime, and ensure a smooth and efficient deployment of changes to production.

5. Service Level Agreement (SLA) Compliance

picture shows a handshake and a contract

This measures how well our company is adhering to the agreed-upon service levels. Typically expressed as a percentage, it helps assess the reliability of your partner and ensures that the quality of service agreed upon is being delivered and continuously upheld.

If you want to know how to design a fail-proof agreement, check out this article about essential clauses of an outsourcing contract.

6. Cost Variance

Picture shows a person looking at stacks of money

The cost variance KPI is a quantitative measure that allows you to evaluate the financial performance of a project. It compares the actual costs to the budgeted costs of outsourcing, providing insights into how effectively the project is being managed from a financial perspective.

A positive variance means that the actual costs are lower than the budgeted ones, indicating that the project is under budget. This could be due to cost-saving measures, efficient resource allocation, or effective negotiation when conducting the agreement. It portrays good cost control and can be seen as a positive outcome.

On the other hand, a negative variance suggests that the actual costs are higher than the budgeted ones, indicating that the project is over budget. This may be due to unexpected expenses, inefficient processes, or scope creep. It highlights potential inefficiencies or issues in cost control that need to be addressed.

By monitoring cost variances throughout the project's lifecycle, you can identify areas where costs are veering off track and take corrective actions to bring them back within the planned budget. It helps in maintaining financial stability, meeting project objectives, and ensuring stakeholders' satisfaction.

The cost variance KPI enables you to track and manage costs effectively, ensuring that the project does not exceed the allocated budget.

7. Project Milestones

picture shows a route and a business person looking at it

This software development KPI is typically referred to as "Milestone Compliance" or "Milestone Achievement". It measures how successfully a project meets predetermined milestones within the established timeline. By monitoring this KPI, you can assess the progress and performance of a project, ensuring that key deliverables are being completed on time.

Tracking milestone compliance allows you to identify potential bottlenecks or obstacles that may be impeding the progress. It provides insights into the efficiency and effectiveness of teams and processes involved. Any delays or missed milestones serve as indicators that corrective measures must be taken to mitigate risks and maintain the overall project timeline.

Additionally, milestone compliance is crucial for stakeholders and decision-makers as it provides transparency and accountability. It helps them assess whether the project is on track and whether adjustments are required to ensure timely completion.

To monitor this software development KPI, our Clients typically create a milestone schedule that outlines key deliverables and their respective deadlines. Project management tools and software can be used to facilitate and automate this process.

Ultimately, keeping a close eye on milestone compliance is vital for successful project management, as it allows for proactive decision-making, timely adjustments, and the identification of potential risks and issues before they escalate.

8. Customer Satisfaction

Gathering and analyzing feedback from stakeholders and users can reveal how well the software meets the business requirements and user needs. This information can be collected through various methods such as surveys, interviews, or user testing.

The insights gained will help identify any gaps between the software's performance and the desired goals. This will uncover the areas for improvements, allowing our Clients to make informed decisions enhancing the software, and address any issues raised by stakeholders and users.

Additionally, this software development KPI provides a subjective measure of the perceived value and effectiveness of the software.

Understanding the perceived value and effectiveness of the software is crucial for long-term project success. It helps you determine whether the technological investment is justified and if it’s contributing to the overall success of the business. It also helps you prioritize future development efforts and allocate resources effectively.

Track Your Software Development Team Smartly

KPIs serve as invaluable tools in measuring performance, identifying potential issues, and ensuring quality. They allow for effective management of outsourced software development, helping to align expectations and deliver superior results.
Monitoring the right software development KPIs can significantly enhance the success of your software development projects.

At SENLA, we discuss software development KPIs with our Сlients before the start to make sure we are on the same page. So, if you want to establish an effective software development strategy with relevant software development KPIs - reach out to us, and let’s create it together!


We understand the value of communication

We understand the power of communication and are committed to listening to our clients, being open to suggestions, and responding to concerns. You can read more about our communication principles in this article.

Reduced bureaucracy

By collaborating with us, you eliminate the need for a cumbersome hiring and onboarding process, alleviating significant stress on yourself, your in-house team, and your resources.

Incredible talent for any kind of request

With 700+ technical experts on our team, you have the flexibility to select the ones that align best with your specific needs.

Frequently Asked Questions

If we have our own software development KPIs that we typically use, would you be able to work with them?

Of course! SENLA's teams are extremely flexible and our only goal is to deliver the best result for your company. We are ready to mold our software development process to your requirements if needed.

How do we start cooperation?

First is an introductory call with our BD team to clarify the project needs. Upon your request we sign an NDA. After the evaluation, we offer a preliminary solution (CV, timelines, etc.). If everything is OK, our staff can get to work in as little as 5-10 business days, depending on the engagement model that you choose.

I am not happy with my current vendor. Can you overtake the development?

If you are not satisfied with your existing partnership, you can transition the work to us. We will gladly take the ball and run with it, bringing our attitude to guarantee your satisfaction.

Request an offer

More than seven hundred technical experts are ready to work

Contact info

Help me with:optional