Nearshoring | November 7, 2019

Outsourcing software development. Everything you need to know

Software development outsourcing is now a best practice in the technology industry. If the growth of your organization relies on software, and your office’s IT department is quite occupied, then you should definitely consider outsourcing the development of your software.

Outsourcing software development. Everything you need to know

Whether you are a new business, a startup, a medium-sized enterprise, or a large corporation seeking custom software development, there might arise a necessity to swiftly assemble a team for a project or hire a programmer to ensure the timely completion of the project. In this article, we will examine these aspects in-depth to help CEOs, CTOs, Project Managers, Delivery Managers, IT Managers, Technical Leaders, and other professionals. By the end of the article, you will understand why software outsourcing works well and what are the main benefits of software product development in an outsourcing model. 

Software development outsourcing services in 2023 

The revenue in the global IT markets, including software development outsourcing services, is expected to reach US$460.10 bn in 2023. Software development outsourcing is now a best practice in the technology industry.

The reason for this is that more and more companies across the planet are embracing software outsourcing due to the many benefits they get in return.  Some of the main reasons for the growth of software outsourcing are the cost-saving advantage it offers to companies and access to a larger talent pool. By outsourcing software development, companies can tap into a pool of highly skilled and experienced developers from around the world.

If the growth of your organization relies on software, and your office’s IT department is quite occupied, then you should definitely consider outsourcing the development of your software. Read on to learn about the benefits in detail. 

Why outsource software development projects?

Companies decide to take advantage of the outsourcing model for several reasons. Some need more focus on their core business, and others need quick access to IT talents when project deadlines are pressing. Often, reducing and controlling operating costs is an important decision factor for outsourcing. Below we have compiled the most essential benefits of software development outsourcing. 

The software development process itself is complex and in a broader context requires the involvement of many more people. No matter what stage you are at, software development outsourcing companies can support you in your chosen area. 

Benefits of software development outsourcing model

By outsourcing software development, companies boost focus on essential processes. This result is achieved easily given the fact that organization leaders will not have to overwhelm their in-house employees with tasks that do not match their skill level. As a result, it enables them to instead, focus their energy on more strategic objectives in alignment with the company’s goals. In turn, this streamlines all organizational processes and assists in the freeing up and allocation of relevant resources to actions that make the company run effectively.

Access to global talent is yet another reason that businesses all over the world continue to embrace outsourcing IT. Given that companies get exposed to skilled labor from various parts of the planet, outsourcing helps organizations to expand their technical horizon and capability quickly. This results in better competitiveness.

Free your in-house resources for other purposes with an outsourcing partner

When a company outsources software development, it eases the pressure on in-house resources. In turn, this enables CEOs, or any other professional for that matter, to delegate the resources of their company to other essential tasks.   

By outsourcing IT development, companies can simply hire scalable teams for time-consuming tasks, especially during their peak period, to balance their workload and improve overall efficiency.

Outsourcing teams are more focused on the assigned tasks hence they are obligated to deliver specific results. Since they work for you on a project basis, their main goal is to complete the assigned task efficiently and within the agreed-upon timeframe. On the other hand, in-house development teams might be involved in multiple projects simultaneously or have other responsibilities within your organization. While they may still prioritize the assigned task, they might have to divide their attention and resources among various tasks or projects. In this scenario, outsourcing eliminates potential distractions related to internal activities. Outsourcing team compared to your in-house development team will be more focused on the assigned task. And meanwhile, your teams pursue their own activities. 

Maximize the use of external resources in software engineering

Each company has its fair share of time-consuming activities. So, to cope effectively, businesses are forced to match processes and operations that are not suited to each other, or worse still, find new workers.  By outsourcing the development of software, businesses take full advantage of the resources available to outsourcing providers. This way, companies can leverage the power of relevant resources even if they do not have access to the same on their own.

Software outsourcing companies vs. risk-sharing

Outsourcing software enables companies to share operations and components, thus helping in the mitigation of risk. In turn, this ensures that a business reaps maximum benefits, which helps it to attain long-term viability. 

Risk management in software development is an important part of collaboration. There are software development companies that provide services in an end-to-end model. This means that they take full responsibility for the product and do not run away from the risks associated with potential obstacles.  

Reduce and control costs with an outsourcing provider 

According to a Deloitte report, 59% of companies use outsourcing to cut costs. Understandably, when a company outsources, it will take advantage of the difference in wages between developing and developed countries. Apart from that, outsourcing enables firms to save on worker salaries and benefits. But even with that said, the use of outsourcing to save costs is losing importance yearly in favor of the other many advantages of the same.

Read also:

Offshore vs nearshore. Types of software development outsourcing

When choosing a service provider location, consider whether an offshoring or nearshoring model will be more affordable for you. In the offshore development model, European companies hire development teams in India or the Philippines, for example. Nearshoring means working with teams “next door”. Some of the most popular software development destinations for European companies are, for example, Poland, Romania, the Czech Republic, and Hungary.

Multisourcing model means working with multiple third-party providers (e.g., both those in close proximity and offshoring partners. It has the advantage of avoiding vendor lock-in and over-reliance on a single provider. However, it comes with challenges in terms of vendor management, that can call for extra time and sometimes (if conducted unskillfully) may complicate the collaboration process.  

nearshore 2023.05.25 social


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The best software outsourcing destinations

When deciding on a vendor, it is worth balancing quality, proximity, and price. The seniority of the vendor’s teams, their availability, domain knowledge, and the personal traits of the developers will also be important. All these factors must be taken into account before signing a contract with a potential software development services provider. 

The most important thing is to decide what model you want to start working with. Familiarize yourself in advance with the advantages of offshoring and nearshoring. Some countries boast about low prices compared to others. Remember, however, that you also need to consider aspects of culture, communication, proximity to the provider, and their ability to scale in your day-to-day work. Now you see that choosing a location is not enough.

Why hire an outsourced development team

Hire the entire team to gain a set of competencies necessary for product development. Dedicated teams can be enriched with competencies that allow for business analysis, testing or DevOps practices. It is hard to gather such a group of people with the right seniority on your own.

You may wonder what to expect from the outsourced software development team. Well, development teams are often composed/adjusted to the needs of a specific project. It is advantageous to cooperate in a model in which the company providing the services gives you the option to scale the teams so that the cost of maintaining them does not burden your budget unnecessarily. It’s also good if the team includes a Tech Lead / Team Lead. This guarantees that people working together will have a strong link that binds them together and someone to turn to with questions. If a software development project is to be run using an Agile approach (e.g., Scrum), vendors provide complete Scrum Teams consisting of software developers and a Scrum Master. 

Find out more: Outsourcing in the Agile model

Outsourcing software project – summary

If you develop software solutions and need quick access to IT competencies or maybe you are considering hiring a software developer, it is worth taking advantage of the outsourcing model.  Software outsourcing services do not have to mean comprising quality. Often it is quite the opposite. Many companies that use outsourcing services admit that the external team has brought added value, knowledge of state-of-the-art technologies, and experience gathered in projects with other clients. Vendors can flexibly adapt to your development needs and even become your IT partner over time. 

You are now aware of the benefits of outsourcing your company stands to reap with software outsourcing. No matter what, it remains an excellent option for achieving digital growth through innovation while maximizing profit and reducing risk at the same time. 

Contact me on LinkedIn

Business Development Manager with ten years of sales experience on international markets. At JCommerce, she is responsible for the development of the company's services in the Benelux countries and in France. In her private life, she loves reading (Scandinavian crime novels and professional literature about sales and negotiations), travelling and cooking.

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