Have you tried signing him up for basic obedience? You'll have the perfect opportunity to build his confidence and teach him proper behavior outside. Keeping a dog inside secluded will not help him get better. I have a pup who has been extremely fearful since he was 1 year old. He is now 3, and is much much better around people. He does well in stores most of the time.
__________________ Littlest JakJak 
We miss you Kaji 
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