IT outsourcing is the practice of delegating IT functions and services to external service providers, allowing companies to focus on their core competencies. Being expected to reach a staggering $781 billion by 2030, the global IT outsourcing market continues to thrive due to numerous technology trends that have flooded the software development sector, coupled with a concerning scarcity of experienced developers in certain regions.
Dive into 10 compelling case studies that showcase the immense benefits and successful outcomes achieved through IT outsourcing. These real-world examples span diverse industries and highlight the strategies, best practices, and lessons learned.
Read more on the topic:
- 5 Key Trends for Outsourcing and the Shared Services Market in 2023
- Custom vs. Off-the-Shelf Software: Which Is the Right Solution for Your Enterprise?
- Best Regions to Source a Software Development Team
- How to Safely Migrate Your Software Projects to a Different Development Team
Here are some benefits that motivate enterprises to opt for IT outsourcing:
- Cost savings. Outsourcing eliminates expenses related to hiring, training, infrastructure setup, and ongoing operational costs.
- Access to specialized expertise. Custom software development providers often possess deep domain knowledge, technical skills, and experience in specific areas of IT. Enterprises can access cutting-edge technologies, best practices, and industry insights that may be otherwise challenging to acquire in-house.
- Scalability and flexibility. This approach eliminates the challenges of managing a fluctuating workforce and infrastructure internally, so companies can respond swiftly to changing business dynamics.
- Prioritize business activities. Outsourcing routine tasks, such as data processing, IT maintenance and support, allows organizations to redirect their efforts toward innovation, market expansion, and value creation. In other words, they can work on their competitive advantage and business growth.
- Accelerated time-to-market. Providers have a wealth of knowledge and efficient methods in their tool kit, allowing them to complete projects more quickly and efficiently.
- Risk mitigation. Reliable software development partners usually have strong security measures, plans for handling disasters, and systems in place to ensure compliance with regulations. This takes away the need for companies to build these capabilities from scratch.
- Global reach and market expansion. By engaging with specialists located in different regions, organizations can leverage diverse perspectives, cultural insights, and even local market knowledge.
All in all, there are numerous advantages to outsourcing development, even if your company has the resources to afford an in-house team of developers.
Without further delay, these companies have embraced the distributed development model, which helped them unlock new levels of productivity, creativity, and collaboration:
Now one of the leading platforms for software development and version control, GitHub made a strategic decision to outsource the development of its MVP. The CEO and co-founder of GitHub recognized the importance of finding a backend developer with extensive knowledge and expertise in Gits, a crucial aspect of their platform. They came across Scott Chacon, who possessed a rare understanding of Gits at that time. In response to the founders’ request, Chacon joined the GitHub team as a consultant on an outsourced basis.
Chacon’s involvement proved to be pivotal as he took on the responsibility of developing the backend of GitHub’s website. His understanding of Gits and his technical skills allowed him to build the robust foundation that became integral to the platform’s functionality.
Related material: 6 Secret Reasons Why Organizations Outsource Software Development
To conserve raised funds, Slack chose to outsource design and app development services right from the beginning. They hired a Canadian design team to assist in the development of their product, starting from the beta version, and this external team played a crucial role in refining and enhancing the user experience of Slack’s website and mobile app. They also took charge of redesigning the company’s logo and creating the visual elements that users interact with while using the messaging service.
Within just two weeks after its launch, Slack managed to acquire an impressive user base of 15,000 users. This early success propelled the company’s growth trajectory, leading to its eventual status as a startup unicorn in 2014 and attracting considerable investor attention.
Initially, Opera received financial support from its parent company, Telenor. However, when Opera transitioned into a separate entity, its available resources became more constrained. In order to efficiently manage its development process while considering the skills and capacity of developers, Opera went for remote software development services.
This outsourcing case study example can teach companies how to optimize limited resources. Opera could tap into a global talent pool, selecting developers with the required expertise and experience to contribute to its platform. And they only committed to in-house operations after determining the critical areas that required internal expertise.
In its early days, back in 2012, WhatsApp was a small organization with limited resources, comprising just 30 full-time employees and five part-timers. With only $250,000 raised in seed funding, the company couldn’t keep the costs reasonable while competing against established players in the market, particularly SMS technology.
To tackle this obstacle, WhatsApp opted to outsource the majority of its essential development work to an external partner. They understood the importance of finding web development experts who offered a combination of high quality and cost-effectiveness.
Therefore, they turned to Eastern Europe, a renowned outsourcing hub known for its talented IT professionals, to meet their requirements. Just two years after its outsourcing decision, the company achieved an important milestone when it was acquired by Facebook for a staggering $19 billion.
Skype, founded in 2003 by two entrepreneurs from Sweden and Denmark, outsourced its development work to three professional developers from Estonia. Working together, the founders and the Estonian developers successfully created the widely recognized and beloved communication platform known today.
One of the Estonian developers played a crucial role in introducing the concept of cost-effective voice calls through a P2P protocol. Additionally, Skype’s innovative features, such as video chat, instant messaging, and file transmission, have made it an indispensable tool for individuals and businesses alike.
The success of Skype was evident just two years after its inception when it was acquired by eBay for $2.5 billion in 2005. This marked a significant milestone for the company. Subsequently, in 2011, Microsoft acquired Skype for an even more substantial amount, reaching $8.5 billion.
An email marketing tool often requires extensive database-related expertise, which implies specific hands-on experience vital for project success. That’s what a global market leader in the segment faced. Besides the team’s skill set, they looked for a cost-effective solution to develop an email marketing tool. Outsourcing the task to Intetics allowed them to achieve both goals: source expertise and reduce the costs.
Besides technical support, the development team also served as a professional services provider, offering custom implementations, resulting in a stable and efficient platform capable of handling the delivery of 5 million emails per month.
During the 1990s, Jack Ma, the founder of Alibaba, faced major challenges due to limited resources and the complexities of operating in China’s restricted internet environment. The scarcity of Chinese specialists in e-commerce development added another layer of complication. With a modest initial investment of $20,000, Jack Ma recognized the need to look abroad for the website development of his startup.
Alibaba began seeking partners and outsourced various projects to overseas professionals, particularly in the United States. This move paid off in remarkable ways. Alibaba’s growth trajectory soared to unprecedented heights, culminating in a historic achievement in 2014 — the company secured its place in the annals of business history by executing the largest IPO ever witnessed.
Google is known for its vast in-house workforce of over 178,000 employees, but it still finds itself facing monumental workloads that require additional support. Therefore, the company leverages the power of outsourcing by tapping into the global talent pool and partnering with contractors. One prominent example is Google’s AdWords project, a cornerstone of the company’s revenue generation in 2017. To ensure the seamless functioning of this robust service, Google has enlisted the expertise of more than 1,000 outsourced representatives hailing from over 60 countries.
In fact, the reliance on outsourcing has grown to such an extent that, as reported by Bloomberg, the number of Google’s contractors exceeded its direct employees for the first time in 2018. The significance becomes even more evident when we consider the magnitude of AdWords, a tool that captures the attention of marketers worldwide by reaching over 90% of internet users.
In the realm of financial technology, Wise stands out as a company that embraces the power of independent workers within its core team. To build their remote team, Wise has established a presence in Estonia and Ukraine, where they seek out technicians known for their quick technical reflexes and impressive skill sets.
When it comes to hiring product engineers, Wise goes above and beyond to find exceptional individuals. They have developed a rigorous evaluation process that consists of multiple stages. Prospective engineers are required to complete a take-home test, followed by technical interviews with experienced engineers. Additional technical interviews and a product interview with a manager and engineer may also be conducted. Lastly, candidates can showcase their abilities in a final interview with the Vice President of Engineering or a co-founder. These thorough interview and evaluation phases serve to identify top-notch talent.
One of the key obstacles faced by the health portal was finding the right experienced software vendor to bring their vision to life. Previous attempts to develop the system had failed due to skill shortages and limitations of previous vendors. Therefore, the Health Portal sourced expertise by hiring the Intetics Remote In-Sourcing® Team, which took on the responsibility of designing and implementing 100% of the Client’s products, ensuring that the system was built to their exact specifications and requirements.
The newly developed system now serves a user base of 5,000,000 people on an annual basis, with this number continuing to grow. By entrusting the technical aspects to the Remote In-Sourcing® Team, the Client was able to shift their focus and concentrate on their core medical business.
These ten successful outsourcing case studies have employed different forms of IT outsourcing, yet they all arrived at the same resounding conclusion: opting for custom software development in partnership with a reliable engineering partner or hiring remote talented engineers, can enhance business’s efficiency and optimize costs.
Whether you find yourself in the early stages of a startup or operating as a well-established multinational enterprise, embracing this approach may yield tremendous benefits. If these success stories have inspired you to consider tech partnership, Intetics is eager to deploy its expertise to make an impact in your industry together. Reach out today!