Outsourcing Software Development Pros and Cons

What Is software development outsourcing?

Outsourcing software development is using a third party to perform all or part of a software development process. 

Why Outsource Software Development or software development outsourcing?

Outsourcing gives you more time to manage your project. It also increases quality. You can make sure experts in that field develop your software. It frees up your time and resources for other outsourcing projects and allows you to focus on what’s most important to you.

Outsourcing lets you work with the top programmers in their respective fields. For example, you’ll want a programmer who knows iOS programming if you’re looking for someone to develop an app for your company — and if you don’t have one on staff, it would be next to impossible for either of you to become an outsourcing expert in iOS programming overnight (1).

“With outsourcing, you’re not location-limited when searching for talent. Instead, you get access to tons of third-party vendors around the globe to handle your custom software development projects.”

– Time Doctor

If you outsource this task to contractors who specialize in that field, they can hire employees themselves that they know will do a great job. They can instruct those employees on what the developers need to do without learning to program themselves. This will save you much time finding the right person in-house and give you working software more quickly.

Things To Consider Before Outsourcing

You should be clear about what you want from your outsourcing software development project if you want to hire outsourcing companies. Here are some factors to consider:

• A sudden burst in demand for your business or product and a need to scale up quickly with developers
• You want to reach a global audience and need to translate your product into different languages
• You have an idea for a new product but don’t have the necessary skills for development.

Why Contract With a outsourcing software development Firm Instead of an Individual Freelancer?

When outsourcing software development, it can be tempting to hire an online outsourcing freelancer. After all, they’re cheap, they seem to be qualified, and they’re eager to work. But there are some significant differences between a professional outsourcing firm and an individual freelancer.

Firms have many advantages over individuals that make them the superior choice for outsourcing software development. First, there’s more accountability in hiring a firm. Individual freelancers can disappear when you need them to do something, but outsourcing firms have rules and contracts that protect you.

Individuals are often only motivated by money and can go when your project is complete, while outsourcing firms can stay around if they want a future business with you (2).

“At the first glance, freelancers may seem much cheaper than agencies, but they will require more of your time for their management. So, hiring an agency may be more saving in the long run.”

– LinkedIn

Outsourcing Firms also have the specialization and experience that an individual freelancer lacks. A large outsourcing firm may be able to handle a project in-house better than a smaller one because they have the manpower. It may also be because they have in-house specialists who can handle things cheaper than hiring individual freelancers for each part of the job.

How To Find the Right Software Team for Your Project

Finding the right outsourcing software development team to partner with can be a lengthy and arduous process but it can also be the key to success for any project. The most important step of the process is ensuring that you know what you need out of the partnership and what you’re looking for in a team. Learn how to find the right outsourcing software development team to partner with:

• Research your options
• Define your criteria for success
• Narrow it down
• Find the perfect fit.

What Qualities Should You Look for in Your Outsourced Team?

The three most important qualities to consider before hiring a software outsourcing company are experience, commitment and skill level. The first quality is important — and a better way to assess it is to see how long the outsourcing company has been in business. Hiring someone with experience doesn’t necessarily mean you’ll get better products, but it ensures that the company is more reliable and can complete your projects according to your requirements.

How Do You Manage a Remote Team Effectively?

As a manager, you will schedule projects, plan deadlines and hold them accountable. You should not micro-manage your outsourced team as you delegate tasks to them. Your outsourcing team will be more productive when they feel responsible for their work and know the deadline to complete each task.

How To Communicate With Your Software Development Team

The best way to talk to your outsourcing or outsourced software development team is to be as thorough and clear as possible. Avoid ambiguities and keep your instructions specific. If you are dealing with code that needs writing, ensure you maintain a shared document where all the code is written.

This will be invaluable in keeping track of any bugs or issues. If you have developers working on this code for a few days or weeks, it is better to let them continue rather than do frequent check-ins unless there are problems. Always remember that this person is not you and may have a different way of solving similar problems.

Let them do their job, and don’t micromanage them too much. They will come back with questions if they need something clarified.

Common Mistakes When Outsourcing

Many mistakes can be made at multiple points in the process of outsourcing software development. These include:

• Lack of requirements. Before looking for a outsourcing development team, ensure you know what you want them to build. Without clear requirements, you risk getting an inferior product that does not fit your needs or budget.
• Mismatched expectations. It is important to understand what your goals are before selecting a outsourcing development team. If your expectations do not align with what they can offer, you may end up disappointed or frustrated when they complete the project.
• Management issues. If you’re new to outsourcing development, chances are you don’t have much experience managing outsourcing remote teams. This can lead to several issues, including miscommunication and missed deadlines.

Hiring a Bad Development Firm

If outsourcing software development to a third party, ensure that the team is qualified for the job. Here are some reasons why you might end up with a bad development firm:

1. The firm is not a leader in its field. The firm may be fine, but it may not be at the forefront of its industry, therefore, not be as capable as other outsourcing firms that have been around longer. It may also have gotten complacent because of its reputation and not keeping up with its industry over the years.
2. The firm will use cost-cutting measures that compromise its quality. For example, the firm can hire developers without the right qualifications, fail to give them proper training or supervision or give them too little time to do their work. This is a proper software developer job description they should be using.
3. The firm will cut corners on your project by using inferior technology or materials. For example, they may use low-grade components or tools that don’t meet industry standards and could fail unexpectedly in production environments or cause problems.

Pros of Outsourcing Software Development

Outsourcing Software Development has many benefits. These include:

Save You Money

You don’t have to pay for the physical space for a development team — you can work with an outsourcing firm with low overhead costs. In addition, you don’t have to pay for equipment or the utilities used by the employees at your headquarters. Finally, you can funnel the money you save into research and development (R&D) and marketing efforts, which can help your company grow and ultimately save you even more money in the long run.

Focus on Your Business

Outsourced software development lets you focus on your business. You can leave the software development and maintenance tasks on a 24×7 basis to the professionals while you concentrate on the daily tasks of your business.

Better Operational Efficiency

Outsourcing can help you take your company to the next level and move your business forward. But, more than that, it can also help you become more efficient in your day-to-day operations.

When you outsource your software development, you’re outsourcing all of your development work, including those tasks that are not directly related to new software.

This means you’re saving money on all your operational costs and increasing operational efficiency. This can give you more time for other aspects of running your business.

Higher Return on Investment

Outsourcing enables organizations to achieve a higher return on investment because outsourcing is not only a cost-saving endeavor but also facilitates a more efficient allocation of resources.

Companies that can effectively manage their internal and external processes are more likely to implement strategies that will increase the overall value of their firm. By outsourcing, firms can focus on the core competencies. This allows each firm to allocate resources and maximize its profitability.

Reduce Staff Turnover

If you or your company has been in business for a while, you know the high turnover rates (3).

“In the 2021 Bureau of Labor Statistics report, the overall turnover rate is 57.3 % “

– Apollo Technical

Staff turnover is an issue that costs businesses billions of dollars yearly, and every company wants to reduce its staff turnover as much as possible. An outsourced software development company can help companies by offering experienced developers.

Scale Your Business Faster

You’ll need more employees and expand your infrastructure to support them if your business rapidly grows. This can be difficult and time-consuming. By hiring a outsourcing company overseas to create software programs, you can spend less time managing internal operations and more time expanding your business.

The right outsourcing partner can help you automate repetitive, time-consuming tasks so that you can focus on marketing, sales and other aspects of business growth.

Global Talent Pool

When building new software for your business or existing product, multiple factors contribute to success beyond development skills. Access to a global talent pool lets you tap into subject matter experts (SMEs) who can provide additional value.

SMEs can guide how your product fits within its target market, compares to similar products or its position with its competition.

They can also help establish processes around your new product so that it will be better positioned for growth once launched and you start scaling up your operations.

Cons of Outsourcing Software Development

Some Outsourcing Software Development has its cons. These include:

Different Work Ethics

You’re not just getting the final product when you outsourcing hire a software development firm. You’re also getting a unique culture and a different work ethic that comes with it. And you may have to go through some trial and error to figure out how to work with that culture and get the most out of it. You can do this by ensuring there is proper training before a developer starts the job.

Cultural Gaps

Cultural gaps between the client and a software development team can make it difficult to work together, especially when they are located on opposite sides of the world. It’s not uncommon for these gaps to cause communication problems, misunderstandings and even complete project failure.

No Control Over Quality

The main drawback of outsourcing software development is the loss of control over the quality of the final product. When you outsource software development, you are turning over all aspects of your project to someone else. This includes design, development and testing.

Confidentiality and Data Protection

When you need to outsource software development to a specialized team, there are reasons why you should require the developers to sign a confidentiality agreement. If you are an individual or an organization with proprietary information, you must protect that information from unauthorized access.

Therefore, you need to understand what it takes for your staff or outsourcing third-party developers to keep your information confidential when they work on your software development project.

Frequently Asked Questions About Outsourcing Software Development Pros and Cons

What can be outsourced?

Software development is a broad field. It includes writing code for a mobile app or developing the next generation of software packages used by doctors in an operating room. Keep in mind the umbrella of software development is large. They’re many types of software development like back-end, database, and quality assurance to name a few. 

This makes it difficult to define what you can outsource and what to do in-house. Outsourced teams can perform some parts of software development and some parts by in-house teams (4). 

“With the advent of high-speed gloval communications, outsourcing is now a mainstream option. Even in-house developers no longer work on company’s premises due to the pandemic.”

– Scalefocus

Why do companies outsource?

Some companies outsource software development to other companies. This can be for several reasons:

• Lower costs
• Faster development time with more experienced developers
• Better completion rate of projects
• Language and culture are not a factor in the development process.

How to start outsourcing software development effectively?

If you are considering outsourcing your software development project, it is important to understand the following. These include:

• Start by defining what you need the software to do
• Do some research on potential candidates and check their portfolios
• Find a candidate or two that looks good and reach out to them
• Make sure you have a contract in place before starting the project
• Set realistic expectations for the timeframe and cost of the project.

How does outsourcing work?

Outsourcing software development involves a company that employs programmers and other professionals to provide software development services (https://sonatafy.com/software-development-services/). You outsource the software development to a third party, usually, a vendor considered a service provider. The vendors provide services, such as software engineering, programming, testing and maintenance.

Outsourcing vs Offshoring vs Nearshoring?

Outsourcing is when you put your company’s needs in the hands of another company and have them complete the work for you.

Offshoring is outsourcing outside your own country. It’s a popular strategy for business and manufacturing because the labor costs are cheaper in low-wage countries.

Nearshoring is similar to offshoring, but instead of sending the work to countries that are far away, nearshoring involves sending it to countries that are close enough to be just about as cheap as going cross-country.

What are the benefits of outsourcing?

Outsourcing software development is often a cost-efficient way to build products and services. Here are some benefits of outsourcing software development:

• Higher quality in less time
• Shorter development cycles
• Easier updates and maintenance
• Flexibility and scalability.

How is outsourcing different from contracting?

Outsourcing refers to a company bringing a vendor to provide full-time or part-time services. The vendor is brought into the client’s facility and may be given an office as part of their package. They can work directly with your employees, using your equipment, and supplies, etc.

Contracting refers to a company being brought in for a short-term engagement — generally less than six months — to help with specific projects or tasks. These vendors are not given access to the client’s equipment and they are not expected (or allowed) to become fully integrated into operations.

Conclusion

With software development outsourcing, evaluate numerous benefits and drawbacks when deciding on your project. Ultimately, it comes down to weighing these factors against each other to arrive at a decision considered best for your particular situation.

References:

1. With outsourcing, you’re not location-limited when searching for talent. Instead, you get access to tons of third-party vendors around the globe to handle your custom software development projects. – Time Doctor Quote
   https://www.timedoctor.com/blog/outsourcing-software-development/
2. At the first glance, freelancers may seem much cheaper than agencies, but they will require more of your time for their management. So, hiring an agency may be more saving in the long run. – LinkedIn Quote
   https://www.linkedin.com/pulse/hiring-freelancer-vs-agency-software-development-startup-andrew-burak/?trk=pulse-article
3. In the 2021 Bureau of Labor Statistics report, the overall turnover rate is 57.3 % –Apollo Technical Quote
   https://www.apollotechnical.com/employee-retention-statistics/#:~:text=Statistics%20on%20employee%20retention,looking%20at%20only%20high%2Dperformers.
4. With the advent of high-speed gloval communications, outsourcing is now a mainstream option. Even in-house developers no longer work on company’s premises due to the pandemic. – Scalefocus Quote
   https://www.scalefocus.com/blog/in-house-vs-outsourcing-software-development-pros-cons