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6 Secret Reasons Why Organizations Outsource Software Development

by Alexandra Plevako

Given all the hype about outsourcing these days, you have likely wondered what benefits it could have for your organization. The answer can be found in global services outsourcing market facts and figures. Let’s have a look at some of the statistics.

Statista reports that the outsourcing market amounted to $92.5 million globally in 2019, predicting significant market growth by the end of 2020. For instance, in the US IT outsourcing industry, the market size has reached $132.9 billion, and is due to expand by 1.6% during the forecast period. Markets in other geographic regions are expanding too. Market researchers predict 0.6% growth in Japan and 1.9% in Canada from 2020 to 2027. The German IT outsourcing market is growing at 1.2% and more yearly.

It’s also worth noting that, unlike other business areas, the outsourcing industry’s growth is not affected by the COVID-19 crisis. By 2027, the global outsourcing industry is predicted to reach $410.2 billion

The IT outsourcing industry has been gaining momentum over the last five years and keeps on thriving due to the many perks that outsourcing provides. The main driver for market expansion is the myriad of outsourcing benefits that allow companies to cut overall software development costs, including some taxes. That advantage has made information technology outsourcing opportunities immensely attractive and has resulted in $66.5 billion generated by the industry sector in 2019. 

Encouraging market statistics aren’t the only reason to consider harnessing outsourcing opportunities. Learning all the key pros and cons will enable you to better grasp how software development outsourcing can work for your business.

Outsourcing for your business: top 6 gains

  • Significant reduction in development costs
  • Access to robust expertise and best practices
  • An opportunity to share risks and increase efficiency
  • Access to innovative approaches and the newest tech
  • 24/7 workflow
  • Focus on business-specific tasks

Pros of outsourcing your software development

If you have chosen a reliable partner among numerous outsourcing companies, you can now delegate different tasks to tech-savvy experts with extensive technology expertise and proven development approaches to tailoring solutions. But what are the exact gains you can get from outsourcing? 

Lower costs

Cost-saving opportunities are the most obvious benefit of outsourcing. You will find that development and operational costs vary across regions. If you opt for outsourcing services in the Asia-Pacific region or Eastern Europe, you can expect to save about 30% of your expenses

But to exclude additional costs for time and resources spent, you need to outsource tasks to a provider with experience in your business niche. You will save on expenses and gain more time to focus on high-value work for your clients. 

Access to a large pool of talent

By tapping into the IT outsourcing industry, you may gain access to skills and knowledge that your in-house staff may not possess. You may find people who attend regular training to improve their skills. You will have the advantage of flexibility by being able to find talent from around the globe. 

You can turn to a reputable outsourcing company able to gather a dedicated team for your project so that you can be sure you pick high-caliber specialists.

Access to innovative approaches and the newest tech

Another advantage of outsourcing is the access to innovative technologies you may gain. By keeping pace with nascent technologies, your company can exploit the best tools and methods to deliver sought-after solutions.  

If you run a startup and are looking for specialists to implement the latest technology or carry out a brand-new idea, outsourcing to a tech-savvy team is your best choice. And if you focus on cutting-edge robotic process automation solutions and have a project in mind, Intetics specialists would be happy to provide you with an outsourced team of experts who are fully qualified to work with the latest automation technologies and deliver outstanding results.

Sharing risks

Partnering with an outsourcing provider allows you to share risks and responsibilities for the results. Your tasks will include setting the initial requirements explicitly, defining the scope of work, and preparing a robust agreement. And your vendor will be responsible for hand-picking development specialists, offering the right technology stack, and managing the work. While project results will still depend on both you and your provider, both parties may focus on a smaller portion of tasks and complete them with maximum efficiency.

24/7 workflow

When you outsource software development, you get the advantage of a different time zone. You can have your remote team working outside of office hours. For example, you may have a head office in the US and an outsourcing team in Eastern Europe. In this case, you would have people working on your project round-the-clock. Likewise, you may hire an expert team to deliver your services to clients located in a different time zone to yours.

Focus on business-specific tasks

A reliable outsourcing provider may help you save time and effort by taking over a great deal of your work. Outsourced managers and engineering teams will be responsible for handling project development tasks. And you will focus on your core business and long-term perspectives, deal with tasks critical for your business operations, and dedicate more time to solving capacity issues. This approach can save you time and money, exclude unnecessary hassles, and boost the overall productivity of your in-house staff.

Possible cons of software development outsourcing 

Do not be misled by the many benefits of outsourcing: there are still pitfalls that you need to avoid. Think carefully before outsourcing your tasks to third parties. Let’s consider the main cons of outsourcing.

Less control

You have to trust other people to do your development work for you. An outsourced team does not work on-site, which makes it challenging to maintain a high level of control. They may never see your full product or they could be unaware of technical challenges and specifics of your business. All too often, a tech-savvy team will make assumptions about your business and start working on your project while giving no thought to your business needs. It is essential to make sure that the team is committed to your project and is passionate about what they do.

Communication difficulties

Your remote team’s time zone may give you an advantage but also cause difficulties at the same time. On the one hand, the remote team can work outside of business hours. On the other hand, the time lag may become the most important drawback. You need to establish strong communication with the team to maintain an adequate level of control. But because of the time difference, you will have to thoroughly plan and adjust communications via messages, emails, and calls, taking into account both your business hours and those of your outsourcing partner. If time zone alignment fails, your remote team might keep working longer than necessary, which increases the costs, or be unable to deliver the results in due time.

Security risks

While outsourcing software development processes, you may put at risk the security and privacy of your or your client’s data. When you pass crucial data and any other project details to your outsourcing partner, security breaches might become an unfortunate outcome. These risks can be multiplied by the differences in tools, operating systems, or languages used for software development. 

Do your best to plan your outsourcing process carefully, automate as many operations as possible, and have a reliable system to minimize the risk of confidential information leaks. Also, discuss security standards with your outsourced software development team and get them to sign a contract agreeing to protect your data to avoid reputational and financial losses.

Additional costs

Lower pay rates of remote teams are one of the main benefits of outsourcing. But factors impacting total pricing might not be so straightforward. Depending on what job you outsource and what team you hire, the price of all the work you will have to pay for might be higher by 10 percent or more than the total development rates. 

You might overlook costs associated with minor processes, such as investigating the IT outsourcing industry, choosing the right vendor, handing work over to the remote team, possible delays, ongoing management and talent search, and more. Pay attention to all hidden costs before starting the development of your project in cooperation with remote experts.

Final word

Lots of businesses worldwide choose to outsource software development, and the market is growing constantly. IT outsourcing industry research shows that hiring remote staff provides undeniable benefits like saving businesses huge amounts of money and giving companies a competitive edge. However, there are also potential drawbacks you have to consider before you outsource your project. Now that you know the key pros and cons, you can make up your mind if outsourcing software product development is a good choice for your business.