12 Reasons Why Companies Outsource Software Development
Do you want to develop a solution at a moderate cost and in a short time? Or be sure of the developers’ expertise, avoiding the hiring and training hustle? Consider outsourcing software development.
Startups, small and medium companies, and even industry giants like Slack, GitHub, and IKEA turn to vendors at different stages of their life cycles. This way, companies reduce cost and time-to-market, drive innovation, and focus on core functions. Statistics also prove the growing popularity of this business practice — valued at $526.6 billion in 2021, the IT outsourcing market is expected to reach $682.3 billion by 2027.
How can your business benefit from outsourcing? It allows you to speed up time-to-market, strengthen your team with niche expertise, focus on strategic business goals, etc. Read this article to figure out all the advantages, pros and cons of popular outsourcing models, case studies of large companies, and how to find a reliable development team.
Despite all the benefits of outsourcing, unverified freelancers can disappear, fail a deadline, or do a project poorly when software providers often delay hiring or overestimate the experts’ capabilities. But you won’t have to worry about that when working with GetTrusted.
GetTrusted is a platform that assists you in finding the perfect IT outsourcing partner and ensures the quality of their work. We only work with experienced vendors, conducting in-depth interviews and checking case studies. Whatever niche you work in and your time zone is, we will provide you with a trustworthy development team. But before that, let’s discuss the basic outsourcing concepts.
What is Outsourcing Software Development?
Software engineering outsourcing refers to the on-demand hiring of external companies or individuals to handle the solution development, maintenance, and support. Instead of relying solely on an in-house team, organizations delegate specific tasks or projects to external service providers, often located in different countries or regions.
Companies choose outsourcing in various cases, for example, when they:
- Lack of in-house expertise or resources for a specific project;
- Want to focus on core business functions;
- Have tight deadlines or complex products.
Outsourcing Software Development Pros and Cons (Due to Its Models)
Outsourcing software development comes in several models. Each of them has its characteristics and level of involvement. Working with vendors across all three models, GetTrusted will help you choose the one that suits you best.
In this model, you hire an outsourcing vendor to complete a specific software development project from start to finish. You provide the detailed requirements to receive the completed result with limited involvement.
- Well-suited for one-time or short-term projects with defined requirements.
- Clear scope, timeline, and cost estimation.
- The vendor is responsible for analysis, design, building, testing, and deployment.
- Reduced management overhead.
- Potential cost savings compared to maintaining an in-house team.
- Less flexibility for making adjustments once the project has started.
- Higher risk of misalignment between your expectations and the final deliverable.
The dedicated model means hiring an outsourced team that works full-time exclusively on your project. In this case, you can have more control over management, make changes, and collaborate closely throughout development.
- High level of control and involvement.
- Flexibility to scale the team up or down based on project requirements.
- Collaboration and communication are typically more effective.
- Ability to leverage specific expertise and domain knowledge.
- Long-term relationship building with the dedicated team.
- Higher management overhead.
- Longer-term commitment compared to project-based outsourcing.
- Cost may be higher than other models due to the exclusive allocation of resources.
Staff augmentation is a model where outsourcing developers join your in-house team to strengthen it. In this case, you retain control over the project management and assign specific tasks to the new specialists.
- Ability to quickly scale the development capacity by adding extra specialists to the in-house team.
- More control over the project management and task settings.
- A cost-effective solution as you pay for new experts only.
- Seamless integration with the existing team and processes.
- Flexibility to leverage specialized skills not available in-house.
- Increased responsibility for managing the augmented team.
- Potential challenges in coordinating work across different locations and time zones.
- Communication and cultural differences may arise.
- Dependency on the outsourced team’s availability and productivity.
Why Outsource Software Development? Three Real-World Cases
Large-scale companies often outsource software development. Let’s look at the most interesting cases.
In 2012, Slack founder Stewart Butterfield had a brilliant idea but no expertise for its implementation. So, he partnered with MetaLab specialists to develop the app from scratch, using a rough prototype. The company also outsourced the creation of the logo and website design. Today, Slack has 18 million daily active users, and 156,000 companies use the app.
And as we can see now, the strategy of focusing on core activities was very successful. There is no need to waste time hiring an internal team or training yourself because someone else can implement your idea.
Before GitHub became a community of 94 million developers, the fledgling company needed help developing the site. By outsourcing the talented Scott Chacon, GitHub got a powerful backend with over 413 million open-source contributions today.
What lesson can we learn from GitHub’s story? Engage the best specialists to implement the core functionality with high quality and ensure the reliability of your platform even in scaling conditions.
The Swedish furniture giant IKEA continues to gain momentum; in 2022, their retail sales reached €44.6 billion. Today, the company has focused on the Home Smart segment, partnering with Xiaomi, Sonos, and other technology vendors.
IKEA’s top management quickly realized that the Internet of Things is a complex ecosystem, so there is no point in figuring it out independently and making typical rookie mistakes. Instead, sometimes it is better to join forces with other market players to capture new segments. Time will show if IKEA succeeds in this.
12 Key Reasons to Outsource Software Development
Two years ago, cost reduction was the main reason for outsourcing for 70% of companies. Today, the situation has changed, considering the focus on core business (57%), access to talent (56%), a faster time to market and improved quality outcomes (55%), and innovation (47%) are coming to the fore.
At GetTrusted, we partner only with efficient vendors to help you speed up time-to-market and gain a competitive edge through innovative technology.
We have prepared a list of 12 benefits of outsourcing software development:
1. Cost-Saving Solution
Avoid the expenses associated with recruitment, hiring, and training in-house teams, setting up infrastructure, hardware and software licenses, and employee benefits. As a bonus, you get access to skilled professionals in regions with lower labor costs, saving your initial investment.
2. Scalability in Mind
With access to a global talent pool, you can quickly scale your development team up or down based on project requirements and market demands. Also, outsourcing vendors often have established processes and infrastructure to handle increased workloads efficiently.
3. Reduced Risks
Do you want to be more satisfied with new specialists? Professional outsourcing firms have experience managing and delivering projects. It means reduced risks of delays, errors, and budget overruns. Seasoned partners use thorough testing and code reviews to minimize the risk of issues.
4. Business-Focused Solutions
Focus on your core competencies and strategic goals while leaving software development to specialized professionals. Outsourcing partners can align their efforts with your business objectives, delivering solutions tailored to specific industry needs and customer requirements. This way, you enhance efficiency and maintain a competitive edge.
5. Quick Time-to-Market
While your outsourcing company efficiently allocates resources, streamlines workflows, and meets project deadlines, you prioritize core activities and strategic initiatives. Leverage the expertise of dedicated development teams to speed up development cycles and shorten time-to-market.
6. Niche Expertise
Developers with niche expertise and a progressive technology stack rarely work in-house (or do it for a very high fee). Attract such specialists with flexible remote conditions and exciting projects, allowing them to bring valuable insights and best practices. As a result, you can create innovative solutions that will revolutionize your industry. With GetTrusted, you can be sure to get niche specialists as we select highly specialized vendors.
7. Access to Best Practices
Outsourcing partners often have a wealth of industry knowledge and experience working with various clients and projects. Benefit from their insights, best practices, and domain expertise, ensuring the software development aligns with essential standards and trends.
8. Worldwide Talent
By outsourcing, you are not limited to the local talent pool and can select from a diverse range of expertise and capabilities worldwide. It helps you find specialized skills within your budget and leverage the knowledge and experience of professionals from different cultural backgrounds. For example, GetTrusted partners with outsourcing companies from the US, Germany, Poland, and Ukraine outsourcing companies.
9. Managed Team
Feel you need more effective communication and coordination? Outsourcing software development allows you to work with a dedicated and managed team. Such partners take care of the engineering team’s recruitment, onboarding, and management, facilitating a smooth development process.
10. 24/7 Development and Support
Outsourcing to offshore locations can provide the advantage of round-the-clock development and support services. You can ensure progress by leveraging time zone differences even when your in-house team is not actively working. This way, you complete the project faster and improve customer support.
11. Increased Innovation
Collaborating with outsourcing partners from different cultural backgrounds and with versatile expertise can spark creativity and bring fresh perspectives to your product. This diverse collaboration fosters innovation, encourages out-of-the-box thinking, and enhances the overall quality and uniqueness of the solution.
12. Enhanced Compliance and Security
At least three out of four executives use third-party vendors to support the cybersecurity function. Outsourcing companies are often well-versed in compliance regulations and security practices. They implement robust security measures, adhere to industry standards, and ensure data protection.
How to Outsource Software Development? Crucial Things to Consider
The Deloitte Global Outsourcing Survey 2022 reported the most crucial aspects companies value in a service provider. They include transparency (54%), trustworthiness (41%), understanding of their business (40%), proven results/outcomes (36%), and clear and frequent communication (33%).
Let’s take a look at all the things worth your attention in order:
Clearly define your project requirements, including functionality, features, timelines, and expected outcomes. Evaluate your budget and conduct a cost analysis to determine the financial feasibility of outsourcing.
Proper technical specifications help reduce development costs, minimizing misunderstandings and reducing the chances of rework. GetTrusted helps you create the project TS if you don’t have one and estimates its approximate deadline and cost within 48 hours.
Carefully select the outsourcing vendor based on their expertise, experience, portfolio, client reviews, and reputation. Evaluate their technical capabilities, cultural compatibility, and ability to meet your project requirements.
GetTrusted pays special attention to cultural, language, and time zone matches, guaranteeing comfortable cooperation. We work with reliable companies and select those in your specific niche for a project.
Communication and Collaboration
Ensure effective channels and processes for communication between your team and the outsource programmers. Consider time zone differences and language proficiency to avoid potential misunderstandings.
If your project is large or complex, GetTrusted provides you with specialists for technical supervision. They ensure smooth communication and code audit during all stages of product development.
Intellectual Property Protection
Clearly define ownership rights to the developed software and any related intellectual property in the outsourcing contract. Include Non-Disclosure Agreement (NDA) and specify the security measures to protect sensitive information.
We work only with trustworthy companies and always make sure your rights as the product owner are protected.
Quality Assurance and Testing
Discuss the quality assurance and testing processes followed by the outsourcing vendor. Check for robust testing procedures, including functional, performance, security, and user acceptance testing.
GetTrusted provides escrow services, guaranteeing the high quality of the final product. Our experts will carefully check the result and its compliance with the requirements.
Project Management and Reporting
Clarify the project management approach, methodologies, and reporting mechanisms of your future partner. Make sure they provide regular progress updates, maintain transparency, and adhere to agreed-upon timelines and milestones.
We at GetTrusted check the vendor’s compliance with management and development standards during team selection and product creation. You’ll get regular reporting in any format convenient for you.
Seek legal advice and carefully review the outsourcing contract. It must cover essential aspects such as project scope, deliverables, timelines, payment terms, termination clauses, and dispute resolution mechanisms. Identify risk mitigation strategies and include them too.
GetTrusted is your guarantor. We check that the contract contains all the important points and considers your interests.
Where to Find Outsourcing Software Development Companies?
There are several ways to find a vendor for your outsourcing software development projects:
- Explore online platforms specializing in listing outsourcing companies. Clutch, GoodFirms, Upwork, and Freelancer provide comprehensive CVs, client reviews, ratings, and portfolios, so you can easily evaluate their expertise and suitability for your project.
- Seek recommendations from colleagues, friends, or industry professionals who have experience with outsourcing software development. Personal referrals can provide valuable insights and help you find reliable and trustworthy outsourcing partners.
- Attend software development conferences, trade shows, and industry events. It’s a great opportunity to meet potential outsourcing partners in person, discuss your project requirements, and evaluate their capabilities.
- Conduct online searches using relevant keywords such as “outsourcing software development,” “software development companies,” or “offshore software development.” Then, explore the websites, case studies, and testimonials to gather information about their services, expertise, and client feedback.
- Utilize social media platforms like LinkedIn, Twitter, and Facebook to search for software development companies. Join relevant professional groups and communities to connect with professionals and discuss business opportunities.
- Consider engaging consultancy firms specializing in software outsourcing. GetTrusted can provide expert guidance and recommendations and assist in connecting you with a suitable partner based on your specific requirements.
How GetTrusted Can Help You?
Do you know that 50% of executives consider talent acquisition a critical internal challenge in achieving their strategic goals? Of course, we are talking about experienced and reliable developers who will bring extra value, not additional chores. How to protect yourself and find such specialists? GetTrusted is the solution.
GetTrusted is a company that not only helps you find the right vendor in your niche but also controls the quality of their work. Partnering with us, you get:
- No commission — you pay nothing for finding the right IT company and our support of the development process.
- Escrow service — we act as a guarantor of compliance with the contract terms. Your money will be credited to their account only after our quality check.
- Verified vendors — we do not work with freelancer outsourcing developers and carefully check companies on legal, technical, and other issues.
- Catalog of companies — in addition to the personal selection of a proven vendor, you can choose any company from the catalog and ask us to act as a guarantor.
- Technical assistance — if you do not have a technical task, our specialists will help you to create it and lower development costs in the future.
What do outsourcing software development projects with GetTrusted look like?
1. You tell us what project you want to do.
2. We get in touch and discuss the project scope, deadline, budget, and other development aspects in detail.
3. After 48 hours, we give a rough project estimate regarding the timeline and budget.
4. If everything suits you, we recommend the top 3 verified companies in this niche that match your technical, cultural, and time zone requirements and comply with the standards.
5. You choose the most appropriate vendors. We set up calls with them.
6. You sign a contract and make an advance payment. Project work finally begins!
7. We hold your money until we verify all conditions are met.
8. You receive the finished product according to the deadline and budget, opening up new opportunities for your business.
Does our work approach appeal to you? Do you want to implement a project with minimal risks and maximum output? Contact GetTrusted to discuss your idea and find a reliable outsourcing company with guaranteed product quality.