It is easier than ever to find outsourcing software development companies, with even the big players depending on third-party specialists to improve their operations. IT outsourcing will see enormous growth because of the surging demand for software across all sectors.
Specifically, by 2029, we anticipate a remarkable 8.48% annual growth rate, which would drive the market volume to a staggering $812.70 billion!
And it doesn’t stop there—the IT and software outsourcing market is projected to hit a jaw-dropping $1.06 trillion by 2030, which is impressive growth for this sector. Indeed, as many as 64% of global IT leaders have outsourced their software development needs at present.
While this can be a game changer when it comes to cost savings and staying competitive, there are pros and cons that one should consider before taking the plunge.
So, is outsourcing the right move for you?
To assist you with making a wise choice, let us consider the good and bad parts of outsourcing software development.
What is software outsourcing?
Software outsourcing is a practice that involves hiring outsiders to handle your software development and maintenance requirements. It’s an effective means for businesses to reduce costs, improve productivity, and tap into specialized talents and resources.
Outsourcing encompasses all aspects of custom development, long-term support, extensive testing or seamless integration.
You can give out the entire software development process or, alternatively, only some parts of it. Additionally, many outsourcing deals take advantage of cloud computing, which makes it possible for you to access powerful applications and services from any part of the globe.
Pros of Outsourcing Software Development
It is true that there are many benefits to outsourcing but the following are the best ones:
Cut Costs
Like the IT department, outsourcing your software development might seem counterintuitive, but it may turn out to be more cost-effective than relying on your in-house team.
Here’s why: By outsourcing, you avoid incurring additional expenses relating to employee benefits such as insurance and paid leave. Instead, you pay for the actual work done at the rates and expertise of the outsourced firm.
Moreover, you are spared from hiring costs and time spent orienting new staff. For this reason, it is a money-saving strategy as well as a time-saving one.
As a result of these savings, funds can be ploughed back into your business and its software, leading to improved quality and better performance.
Time Saving
When you are a startup owner, it is easy to lose focus on the main product idea during the process of software development. A software application is only one part of the puzzle and it is necessary to concentrate your efforts on refining and perfecting the product.
But when you outsource that very thing, time is freed up for you so that you can properly focus on business operations as opposed to being carried away by technicalities.
A reliable developer will handle everything from design, programming, launching and support. Therefore, while your software partner handles the technical side, you should be able to grow your business.
Access to Expertise
When it comes to outsourcing web development, think about going global. One of the most significant benefits of outsourcing is being able to leverage a global talent pool. You are no longer restricted by geography because you can now connect with highly qualified developers from anywhere in the world.
This worldwide network is not only about bridging gaps; it is also about introducing diverse viewpoints and niche expertise into your project, which may otherwise be difficult to obtain locally.
Moreover, choosing developers situated in regions with lower living costs might help in saving money while accessing top-level competence.
Scalability and flexibility
In software development, where agility is often the name of the game, a firm must be able to scale up and down quickly in response to market demands. Outsourcing is an effective way out of this predicament, enabling firms to adjust their development efforts according to market forces, project complexity or new technologies.
Outsourcing offers flexibility that can seamlessly increase resources for accelerated projects or decrease them to cut costs.
Additionally, reputable outsourcing providers can deliver scalable solutions that allow you to change your development capacity without having to go through the challenges and time waste associated with hiring or reducing internal teams.
Focus on your core business goal
Outsourcing enables you to concentrate on your core business rather than being distracted by hectic tasks. It is particularly helpful if you are not a software development company, but it holds value even for IT firms.
Software development is often only a means to an end and not an end in itself. If you spend too much time developing it, then it could be detrimental to your main goals and objectives.
By outsourcing these tasks to a professional external company, you give your team the opportunity to focus on their major business objectives.
Cons of outsourcing software development:
Despite the numerous benefits of software development outsourcing, there are some downsides associated with this approach. Rapidly hiring a contractor can lead to several potential pitfalls:
Communication and Language Barriers:
There was an opinion a decade ago that Asian programmers from some countries do not have quality software, despite their lower rates. However, increased competition has seen most of these professionals improve their skills but at the same time, their charges are high.
It is getting tougher to find the best value for money. Moreover, there is hardly any assurance of proficiency in English, which is very important for clear communication between client and contractor.
Fortunately! We have come a long way with technology. To choose a perfect partner, you can overcome these communication hurdles by using AI-powered project management tools, advanced video conferencing apps, real-time transcription, and improved translation services.
However, one has to remember that choosing the right provider requires effort, while establishing strong communication and collaboration processes is paramount.
Hidden Costs
While outsourcing may be cheap, one must be wary of hidden costs. There are instances where an offshore company can make offers that appear to be too good for words and this is a pointer to substandard services.
These suppliers might come up with enticing initial estimates but may omit other possible costs. This non-disclosure often results in unexpected expenditures as you proceed with the project, thereby straining your budget.
To avoid this pitfall, be thorough right from the beginning when evaluating software development companies. Carefully review any contract you receive, paying close attention to the fine print to ensure there are no hidden costs lurking in the details.
Losing Control of the Project
It is difficult to give up your business fully, and therefore, it might be hard to let go of some aspects of the company into other people’s hands. When it comes to losing control over the product development process entirely, however, this anxiety is completely valid.
There could be a real gap between you and your vendor when this happens. It is therefore important that a comprehensive due diligence process be put in place during vendor selection.
Ensure that you find a partner whom you trust to handle the project in line with its vision and quality standards.
Time Zone Challenges
Time zones can pose a problem for employers based in Western countries. Sometimes organizing work schedules with contractors from faraway places can be difficult if there is an 8-hour difference in time zones or more.
This has made many Asian nations unsuitable as outsourcing options as they are located too far apart from each other for easy coordination of activities across different time zones.
Security Threats
Security is a major concern when outsourcing. Data breaches, financial information leakage, and unauthorized access to sensitive data are among the actual risks. These issues can make businesses hesitant to work with third-party companies.
While outsourcing, ensure that your partner has implemented strict security measures for the sake of your data. Look out for an organization that practices agreements like NDAs and general agreements that protect your information.
The choice of a reputable firm is vital, as it is one of the most significant stages in software development outsourcing. Be sure to find a partner who ensures your safety rights and treats your data with care.
How to Outsource Your Software Development Project Like a Pro
Outsourcing your software development? There are some smooth ways of doing it. First and foremost, define your goals and deadlines with the outsourcing team in detail. Set milestones together and check in regularly to see if you’re on track.
Designate someone from your company to keep close ties with the outsourcing team. While it may be tempting to delegate everything and then forget about it, being involved would be instrumental in achieving targets as well as avoiding surprises.
Be flexible. Set clear expectations, but be ready for bumps along the way. Challenges are normal, so stay patient and supportive.
It is wise to have some extra time incorporated into your deadlines so that you can deal with any unpredictable delays. If the reasons behind the failure to meet deadlines persist, it might be time to consider a new team.