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.
The emergence of digital-first technologies has entirely changed the way businesses operate. Presently, most of the businesses are staying ahead by expanding their workforce with additional outsourced professional teams that make them more tech-efficient and too with greater ROI.
Outsourcing has always been a strategic move by businesses for streamlining the business processes and reducing overhead costs. But in the last few years, the industry has seen a great rise in the outsourcing field.
It has become one of the most effective, proven models for profitable business operations. Outsourcing can help businesses perform tasks, handle operations, or provide services that require niche expertise, costly, difficult to manage, or distracting to your business.
What is Software Outsourcing?
Outsourcing is simply delegating your business operations to a third party vendor to add expertise in your business. The outsourcing helps businesses to focus on key business areas and free their in-house teams from additional tasks that require expertise.
Software Outsourcing is the practice of selecting a 3rd party service provider of software development services that is capable of managing all the tasks involved in a software development project. As far as global trends in Information Technology, software outsourcing is definitely at the top of the list.
So, are you planning to build a website or web application for your business, you may consider it done in-house or by outsourcing it to third-party providers.
But, before, taking any decision, consider the below cases as to when businesses choose to outsource software development.
The IT outsourcing market size will grow by$98 billion during 2020-2024. The market’s growth momentum will accelerate during the forecast period because of the steady increase in year-over-year growth.
When Should You Outsource Software development?
Many startups, enterprises, and CTOs are not sure if it is right for them to outsource their development. So, are you wondering if software development outsourcing is right for you or not. Read out the below points to understand if it is the right time for you to outsource.
When Your Budget Is Limited
Outsourcing software development can be a very effective way to cut down your overall cost of development. You save on the IT cost, the infrastructure cost, hardware cost, and many other costs when you start outsourcing.
When Your In-House Team Don't Have The Required Expertise
The next reason why you should probably choose to outsource your software development is if your local developers are not as skills as your project demands. You can always find the required skills in countries where IT talent is better and more qualified.
When Your Team Is Running At Full Capacity
You already have an in-house team of developers but they are too busy in other projects. This is the time you can definitely reach out to an outsourced software development company. You would not be exploiting your in-house team and they would be able to work in their full efficiency on the current project, maintaining quality.
Read also: A Complete Outsourcing Guide for Newbies
When You Are Not Able To Focus On Your Business
You need to have careful monitoring and management of any project if it is taken in-house. You need to ensure compliance, manage teams, check the code quality, and much more. With so much on your place, you might find it difficult to focus on your business growth. By availing the outsourcing software development services by an expert company, you can easily focus all your energy on things that need your special attention.
When You Want A Faster Delivery
As you work with experts that you’ve chosen from across the world, all you need to do is explain your product idea to them and they would get started with the development. Moreover, bringing in expert teams to work on your project would mean speeding up your development timelines.
If You Want To Add In The Latest Tech
The next factor that convinces most people to opt for software development is the requirement for technology. The latest technology is being added in the digital world and a new version of the latest frameworks or coding languages are being launched.
Finding a new developer each time you want to add this technology stack could be challenging, in terms of both time and money. By joining hands with a technology partner, you can be assured to add the latest tech stack in your software development.
Amid the COVID-19 crisis, the global market for IT Outsourcing estimated at US$342.9 Billion in the year 2020, is projected to reach a revised size of US$410.2 Billion by 2027, growing at a CAGR of 2.6% over the analysis period 2020-2027. Government, one of the segments analyzed in the report, is projected to grow at a 2.8% CAGR to reach US$139.5 Billion by the end of the analysis period.
Here Is Why Businesses Should Consider Outsourcing Software Development?
For every business, the factors involved in outsourcing a product or a process is different. There are numerous benefits to outsourcing software development. The main thing is what best fits your business requirements.
We spoke to a few entrepreneurs and project managers who chose to outsource their products or processes and given below are the top reasons that drove them to make this move.
Stay focused on Core Business Areas
Your time is valuable and so as the core businesses that highly need your attention. Let your professionals work best and not get distracted by involvement in complex IT decisions. Companies choose to outsource their IT processes so that they can continue focussing on their core business processes. It also improves concentration on strengthening other core processes.
By delegating IT services to third-party vendors, you can ensure your operational time and effort are directing towards pushing the core business of the organization. This , in turn, streamlines your business processes and helps to free up nd allocate more resources to other processees that help make the business tick.
Laura Lee Sparks-Owner of Legal Marketing Maven
“Most entrepreneurs have great talents but many times they think they can do it all. That can really stall the growth of the business. By outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income.”
Cost reduction is the biggest advantage of outsourcing. Businesses can save upto 30% on operating costs by outsourcing their software development. Lower operational and labor costs are among the primary reasons why companies choose to outsource.
Outsourcing can help your company convert your fixed cost to variable cost that would yield a significant saving. Software outsourcing results in greater economics of scale and makes it cheaper for a companies to outsource software development.
Rohan Bhansali -Co-founder and Director of Gozoop, India’s largest independent digital agency
“Cost savings is the main advantage that outsourcing brings in. Even if you find the IT guy with the desired qualification and knowledge, it is likely to cost you a large amount of money. Outsourcing comes to you as a boon. In addition to hiring a company that already specializes in IT infrastructure, it gives you the cost benefit, which is often a fraction of what you would pay a full-time employee.”
Competitive and Efficient
In a world of rapidly changing technology, outsourcing is a cost-effective solution that enables you to implement the right technologies right away, allowing you to go to market more quickly and stay competitive in your industry.
Outsourcing helps you develop high-quality and efficient products faster. With outsourced IT, your business can focus on truly important projects and meaningful business strategies that give you a competitive edge.
A software needs regular maintenance and support. An effective managed IT support provider will be able to respond to IT issues promptly, reducing downtime and disruption in your business operations.
Outsourcing software development means you are already paying your software team for maintenance.`
This positions your business to get more work done with fewer interruptions.
Benefits Of Re-engineering
Re-engineering focuses on external improvements in analytical measures of performance, such as cost, service, quality, and speed.
Outsourcing also enables companies to realize the benefits of re-engineering, revise, and upgrade the project as per the client's requirements. As nonessential internal functions are continually put on the back seat, systems become less productive and less efficient.
Therefore, by outsourcing a non-essential function to a competent provider, the organization can attain the benefits of reengineering as an outsourcing benefit.
78% of respondents in Deloitte’s survey say they feel positive about their outsourcing relationship with other companies.
With better IT support and fewer issues and downtime, business enterprises can assign their resources to more important projects and increase operational productivity by several folds. Software outsourcing boost up your development process speed and flexibility.
Expand And Gain Access To New Market Areas
Outsourcing enables a business to delve into new opportunities and fields of expansion. This can be done by taking the point of production or service delivery closer to their consumers.
In this way, an organization can gain access to new markets and establish a global presence ahead of its competitors.
“Progressive entrepreneurs realize the unstoppable power of outsourcing to handle aspects of their business that are essential but simply don’t make sense for them to deal with personally. Small business, augmented by a global pool of human capital, can compete directly with the biggest players in their space, and win.”
David Walsh Entrepreneur-Author of Source Control
Make capital funds available
Outsourcing assists companies to reduce the need to invest capital funds in non-essential functions. In return, capital funds are more available for more important processes.
This can save costs and provide a mandatory capital fund to the company that could be used in a way that it could get it’s a maximum possible benefit.
According to the IBM study, merely about 27% of companies outsource work to reduce costs, whereas 36% are innovators and 37% are growth-lovers. So, it’s good to use outsourcing as one of the tools to optimize business.
Every business investment carries a certain amount of risk. But with outsourcing, it can take over and manage this risk for you. Therefore, risk management becomes easier if you outsource your company. Not only can it help you minimize risk by sharing any associated risks, but it will also drastically reduce your burden.
.Mainly, the outsourcing company tends to have a high-quality team that has experience in software development. This allows you to have an extra layer of protection
Gain access to world-class capabilities
It enables the company to have access to the latest and the most advanced technology to date without investing in software implementation and customization processes including the best engineering practices.
By outsourcing diverse and talented individuals, will provide your company with a fresh mindset that helps your business stand up to the competition.
Putting it all Together
If you are looking to expand and remain competitive in the development industry, outsourcing is all you need. With outsourcing, every aspect of your IT requirement, you can increase business productivity, reduce IT expenses, deliver high-quality products /services, and generate high revenue.
You can even cut down your cost a bit if needed without compromising on the quality of your products and services by outsourcing your IT needs.