Today with the fast-moving world, every business outsources some or other task to other companies to make their things easier. It would be not wrong to say that outsourcing is the new way of doing easy business in today’s time. The IT outsourcing market is a $617.69 billion market. The numbers are big obviously. Among them, India, Europe, and Southeast Asia are considered outsourcing hubs because software developers are easily available in large numbers in these places.
Research shows that over 27% of small businesses depend on outsourcing for their customer service. Over 57% of businesses outsource to reduce cost, while 51% do to access new skills and expertise.
This data shows outsourcing is in high-demand and evergreen business solutions. But before you move forward, it's important to learn about risks included in outsourcing, where to choose, when to choose and many other doubts to make the best choice of the software development outsourcing company.
This is why we have written this article to guide you with the right knowledge. Read the blog till the end!
Software development outsourcing is a process where a suitable business or companies hire any third-party or outside development team to handle a specific part of software building or complete part depending on the requirement.
The best part of outsourcing is you can access the best expertise and skills across the world to meet any of your complex software requirements. Plus it helps to save overall software development costs and get things done professionally using advanced technologies.
There are many examples of outsourcing i.e. web development, mobile app development, software maintenance, integrating complex technologies such as AI, ML, and more.
Choosing an outsource software development company that has a proven record of successful projects, and is skilled in using advanced technologies is important for the success of business. This impacts your business in every way, the execution, budget planning, timely delivery, high-quality output, and more.
To help you with this, make sure you go through the below checklist, doesn't matter whether it's a short-term or long-term collab!
If you really want to decide right, then start by checking the company’s previous works and clients' testimonials. This will give you an idea about the industries, and technologies they have worked.
Check their fluency and expertise in using the tools, frameworks, and technologies needed for your project. Also, discuss which development approach aligns with your project and their expertise in that.
Having smooth communication is important to understand the project status and stay updated with real-time updates. Hence prioritise a company that is transparent and available for open communication. Ask the company about their communication methods or tools companies use for communication.
If the project is long-term and going to expand in the future, check the companies that have affordable and flexible pricing plans. Also, check if they have enough resources to scale the software up and down for future needs.
Outsourcing can be beneficial and the best choice for the business if you choose a company that aligns with your goals and budgets. Below are some of the top benefits.
You can connect with great professionals from any corner of the world. Hence no matter how complex your software is, you can confidently say yes to your client's requirements by accessing expertise across the globe. This will boost your reputation and image when you do great projects and collaborate with top clients.
You can find many options when you outsource work. With outsourcing, you can balance quality work and budget both rather than hiring the in-house employee with salary and other perks. Because you only pay for what you outsource. You can hire a developer on an hourly, monthly, or temporary contract basis, just for developing specific parts of software, maintenance, updates, or any other help.
Working with professionals in different time zones is a plus because it helps in completing projects faster as outsourcing teams can work during the hours when you are not operating. The in-house team works during office hours and the outsourcing team works during their hours. This way, the development cycle is 24/7 and the software can be delivered quickly.
You don't need to micromanage everything like you handle the employees at the office. Here every individual works dedicately according to their roles and responsibilities. Hence you can focus on the bigger picture without worrying about other tasks.
You can focus on core business functions while experienced developers take care of your software needs. This helps to improve overall productivity and drives overall business growth.
You don't need to stress if any new requirements come up in software because you can easily access a diverse team of developers, designers, and testers with varied skills and perspectives. This saves time looking for other experts, hiring, training, onboarding, time, and other expenses.
Every coin has two sides. Hence outsourcing also has pros and cons. Let's explore some risks associated with outsourcing software development.
If you are working with an outsourcing company from different timezones, countries or regions then sometimes it may cause communication gaps, misunderstandings, and delays. But this can be fixed by using suitable communication tools like Slack, Trello, etc to check real-time updates.
Inconsistent quality or delays in project delivery are common risks. But with the right outsource software development partner, you can trust for quality work. Just make sure to clear expectations and every minor detail at the first meeting.
As there are so many outsourcing companies available today, choosing the perfect one for the business is a big task. Most of them have contracts and take half payments in advance, if you choose the wrong one, you might end up compromising on some factors.
You will obviously need to share some or other sensitive details with the external team to get the project completed smoothly. This can be risky if you are working with them for the first time. Opt for vendors with strong data protection practices, NDAs, and secure infrastructure to safeguard your information and intellectual property.
Identify potential risks early and address them with proactive measures like regular progress reviews, clear contracts, and robust communication protocols. This helps minimize disruptions and ensures project success.
Protecting sensitive data is crucial when outsourcing. Use encryption, restricted access, and cybersecurity measures. Plus half the problem is already solved when you work with a trusted vendor who ensures the safety of your data.
Even if you have already decided the pricings, outsourcing includes unanticipated costs like extra features or extended timelines. To avoid surprises, discuss all costs upfront, and always agree on realistic budgets.
You can run your business stress-free and happily, if you make the right choice of an outsourcing model. There are mainly four types of outsourcing models, they are.
Onshore outsourcing means working with companies within your country. This model eliminates time zone or language barriers, ensuring seamless communication and quicker problem-solving. It’s ideal for businesses that prioritize easy collaboration over cost savings.
Nearshore outsourcing means partnering with companies in nearby countries. This model balances cost and convenience, as similar time zones and cultural familiarity make communication smoother while offering slightly lower costs compared to onshore options.
Offshore outsourcing involves collaborating with companies in distant countries. It’s a popular choice for businesses who want to save software development cost and access to a global talent pool. This may involve time zone differences and other cultural gaps but the right skill match and good communication tools can bridge the gap.
In this model, you can combine multiple outsourcing strategies as per your software requirement convenience. Like you can divide the employees between the onshore and offshore teams where the onshore team works for high-performing technical tasks while offshore teams can manage non-technical and other time-consuming tasks at affordable prices.
This way, you can smartly execute the hybrid model to get the right mix of quality, cost, and efficiency.
Location choice matters most because this will decide how your entire project flow will be carried out. Below are some well-researched locations that you should consider for software development outsourcing.
The USA is already dominating the outsourcing market and it has the best software developers. They use advanced technologies, tools and coding methods for the best results. Companies here excel in innovation and project execution. However, outsourcing to the USA is expensive, average hourly rates are between $75-$150. It is suitable for businesses requiring premium quality and complex projects.
India has the best IT hubs in Hyderabad, Pune, Bangalore, and other regions. It is known as the top destination for outsourcing with reliable rates. So, the company with any budget can easily find the best developers under their budget. You can hire developers in India at a $20-$40 hourly rate to fulfill your mobile, web, and custom software needs.
Eastern Europe has over 1.3 million software developers and is the best choice for those who want to balance quality and money both. It is suitable for companies with medium budgets and is fine with working with Western clients. The average hourly rate starts from $30-$60.
Latin America is one of the most suitable places for businesses from North America because of the time convenience and quality services. The hourly rates of software development companies in this region range from $25 to $50, which makes them a very cost-effective option.
In the end, the price of the project will be calculated based on the efforts, complexity, and the location you choose.
Depending on the small and large outsourcing companies, it has its own plus and minus points. Read the section below to get more ideas.
Small companies usually have limited staff and resources. But they can work on a lower budget and accomplish your project if your software needs are simple to moderate like developing suitable features or functionality of the software, small companies can be a suitable choice. They also give personalized attention and are flexible to adapt in case of any change.
Large companies have well-qualified experts and access to various latest tools and technologies hence they are the best choice if you have complex software needs. Below are some of the good points of working with large outsourcing companies.
Hope by reading the above blog, you have got a complete idea of how outsourcing can help your business. Outsourcing can work as your operational partner which will never disappoint you when a high-paying client with complex requirements comes up. If you really want to improve productivity and have scalable and better results, then reach us at Maneksoft to learn how we can help you.
We have over 11+ years of experience and served over 500+ clients worldwide. Whether you are a startup or an enterprise, bring your prepared software development checklist to us and we will assist you with what's missing.