Last updated on 11th November 2021.
For all those who are planning to outsource, we have put together a Software Development Outsourcing Guide. This is an all-encompassing guide that will tell you everything you need to know about your costs, calculations, savings, and tips to save more for a successful outsourcing relationship. Now you can also Download Outsourcing Costs Guide and read it on the go!
As businesses are now revolutionized with the latest digital trends, the idea of outsourcing has also reached a pinnacle.
For over two decades, India has emerged as the favorite outsourcing destination for companies planning to migrate their business processes outside.
As we all know, India is a hub of tech companies and businesses across the globe. It leads to the myriad advantages of outsourcing to India, cost benefits and vast IT talent pool are just two!
Be it product engineering, delivering digital experiences, or digital transformation, Indian IT companies have been excelling at delivering unmatched services.
A recent survey revealed that 80% of firms in Europe and the US choose India over any other country for their outsourcing requirement.
Although other countries like China, Ireland, and Mexico are giving tough competition to India, still, the country remains to be the most preferred outsourcing destination.
If you are also planning to outsource software development to India this article covers everything you might want to know about outsourcing to India. So, let's get started.
According to the Indian Brand Equity Foundation (IBEF) the Indian software and IT industry will successfully achieve a target revenue of $350 Billion by the financial year 2025.
Checklist To Find The Right Outsourcing Partner In India
Making an outsourcing decision is challenging for any business type as it involves a lot of risks. A smart and industry expert Indian outsourcing partner will help you deliver fast and accurate results to your business. Also, we have a compiled list of the top 10 software outsourcing companies to help you take the right decision before choosing the right outsourcing provider.
So, whether you are choosing your outsourcing partner, technology partner, or technical co-founder, this checklist will help you make a wise decision.
1. Defining Requirements
The first step to follow when you’re planning to outsource your software development is to understand your business requirements. This will help you identify the right outsourcing vendor for your project. So, first, evaluate the nature of your business and understand the software requirements of your software development process.
Knowing these parameters can help you give your outsourcing partner a clear picture of what are your future goals and how you want to achieve them.
2. Do adequate Market Research
The next step is to conduct market research and identify the outsourcing partners who can meet your business requirements. Look at the various forums and platforms that provide you with short intros of possible outsourcing partners.
When searching for multiple options, it’s fine to not get the perfect fit. However, if you find any suitable match, it’s best to use them as filters.
The cheapest options are not always correct as it pretends to see. The average pay of a good outsourced developer is as high as $2200-$2600 per month when you add infrastructure costs and overheads, at the very least.
So, if you’re hiring less than these values, it’s possible that the project will never be delivered or will fail in the future. So, make the investment in the project smartly.
4. Evaluate Their Team Of Professionals
It is extremely important to see whether your team can communicate in the same language as your in-house team. This enables smoother communication and ensures that a lot of loopholes are eliminated from your process.
Talk to the team leader and manager and look at the credentials and the experience of the team members to get an idea of their level of expertise. After all, you want a team that is cross-functional, dynamic, and flexible.
5. Check Their Past Performance
Your business needs the best outsourcing partner that should deliver the best results. Customer feedback and market reputation can tell you a lot about your IT outsourcing partners.
Check their past performance and evaluate the projects they’ve delivered to their previous clients. Get the testimonials from their past clients; you will get to know what their reputation is like.
6. Assess Their Development Process
Before joining hands with an outsourcing vendor first think about— How does your outsourcing partner go about the process of software development? Today, almost all companies have started to claim that they follow the Agile way of software development. However, not all companies have the experience and knowledge of doing it.
7. Choose Those Who Communicate Well
Communication is key. And if you’re going to outsource requirements, choose a partner who is easy to communicate with. Several factors are involved in establishing a clear communication channel. Different time zones and cultures may vary, or they could simply take a long time to respond to emails.
5 Things To Consider When Outsourcing
Here are some factors that you can consider while making an outsourcing decision. Considering the below 5 things before going for outsourcing can ensure high profits, and increased customer satisfaction.
1. Will Outsourcing be Cost-Efficient To Your Organization?
Outsourcing helps businesses increase revenues while reducing overhead costs. The cost involved in hiring development teams, purchasing IT resources, and office space could be difficult to handle financially. However, outsourcing is the only option left with us.
On the contrary, if outsourcing doesn’t perform well, this could result in high costs as compared to the in-house processes. Thus, you need to analyze first how much you are investing in hiring an outsourced team. After all, outsourcing should be a profitable decision.
2. What kind of technology and resources are needed when outsourcing?
The IT resources and technology play a key role in achieving efficiency and fast completion of tasks. The technology and resources used are to be considered before when you choose to outsource.
You need to ask the outsourcing provider about the tools and technologies they are going to use for your project. These will help you to select the best outsourcing provider for seamless handling of your business processes.
Outsourcing is often quite a risky and challenging option. If core business practices are outsourced the risk is huge, as you have less control over what is a key element of your organization, which can have harmful results.
On the other hand, outsourcing development projects offer businesses an opportunity to research their market and work closely with a third party to innovate and generate the highest quality results possible.
4. Is Team integration necessary?
Seamless Communication between outsourced and in-house teams plays a key role when developing a software product ready to market. The time zone, cultural environment, and the language of the teams are the factors that need to be considered first before managing and outsourcing development teams.
Your outsourcing provider should understand well your requirements so that there are no delays in the completion of your project.
5. Meeting deadlines can be one way.
Delivering projects on time is as important as the costs of outsourcing. For example, if a provider fails to meet the deadlines, it can lead to major breaches.
If you find that the provider has few quality control measures or does not have any backup plan should they miss a deadline, it is better not to hire them in the first place.
According to the 2019 Global Services Location Index from A.T. Kearney, India is ranked first in outsourcing attractiveness. A recent NASSCOM study depicted that many Indian-origin software development companies have a foothold in more than 50 nations and regularly work with Fortune 500 clients.
Indian IT companies recruit 4.14 million professionals at present. The rate per hour varies from $20 to $35 there, but more prominent companies may charge higher prices.
List out some reasons why India is considered the top software outsourcing destination:
- India has the largest professional and technical pool of talent throughout the globe.
- India provides highly versatile pricing options.
- It’s a hub for high-quality services without compromise.
- The infrastructure and technology part of India is the best.
- India provides the largest outsourcing market with different outsourcing models that businesses can choose from. Also, it provides a specific collection of features that meet business requirements.
Thus, finding the right and perfect software outsourcing partner in India is not very difficult if you know how to evaluate your business requirements well.
“Digitalization and globalization are rapidly evolving customer expectations and demand a shift in how leaders responsible for logistics approach outsourcing strategy,” says Courtney Rogerson, Senior Principal Analyst, Gartner.
Outsourcing Success Stories You've Never Heard Of
Top popular brands won’t be on the list of top fortune companies if they don’t practice outsourcing. Let’s continue this topic and explore some great success stories of big brands.
Before WhatsApp was purchased by Facebook for $19 billion, it was a small enterprise with a total of 5 part-time employees and 30 full-time employees working. The development part was done by the Russian developers with a low budget.
However, as the company scaled, some of the Russian developers were relocated to Mountain View, California.
To keep operational costs down, the team decided to outsource development in Russia for a fraction of cost. As the business grew, some of the Russian developers migrated to the US.
If they didn’t make this outsourcing decision, the most popular chat app might not have made big profits.
When Slack was first started, it was an internal team collaboration tool that was used by a small team. However, the company hired the design firm MetaLab to rework on the company’s logo, website, and app.
In July 2017, Slack outsource logo creation, website design, web and mobile applications to Metalab and earned a $250 million investment for a total valuation of $5 billion.
The company earned around $221 million last year and had over $900 million in cash. Presently, Slack has around three million paying customers and about eight million users overall.
Today, the company is valued at about $10 billion.
Alibaba is the popular E-commerce portal where you can purchase any kind of product you want.
Years back, Alibaba.com started as a small Internet company, and today it has developed into one of the world’s biggest global E-commerce websites.
The founder of Alibaba, Jack Ma outsourced the web development to a U.S. company in its initial days. Due to the shortage of development talent in his country, the founder of Alibaba decided to hire web developers from the U.S.
Google is a perfect example of performing excellent business operations and outsourcing. It’s difficult to find a single person who doesn't know about Google and Google products.
Google outsources everything from virtual assistant work, IT domain, software development, and many more. They also outsource email support for Adwords. It is considered a top-grossing product.
During a reduction in the economy when the demand for products and services is at the lowest level and cost is skyrocketing, outsourcing acts like a savior to all the businesses floating amidst.
Also, the pandemic has changed the way people looked at outsourcing. IT outsourcing was shaken up after the pandemic.
Today, as most businesses look for cost-effective solutions to run business operations with effectiveness and maximize the performance of an organization.
So, if you are also planning to outsource your IT operations, India is a leading destination for getting such services. Classic Informatics, is one of the leading IT companies that has been offering customer-centric development services along with standardized services to suit the needs of all clients.