Outsourcing Software Development: Here’s Everything You Should Know About It
Many software companies find it difficult to retain a skilled and updated workforce at all times.
And why is this? A workforce that adapts itself to the market fluctuations and develops its skills accordingly comes at a hefty price.
That cost is paid by the employer in the form of human resource management, continual training, cultural development, and more.
Thankfully, there’s an easy and effective way to address this problem: You can outsource some of your work to the people who have both experience and expertise in it.
In case you’re not well aware of outsourcing software development, here’s everything you need to know about it.
Outsourcing: What It Is?
Outsourcing means to obtain the services of an external company to get a specific task done for you.
The practice allows you to concentrate better on your business fundamentals.
When a company lacks the capacity of doing a certain piece of work, the external help it gets through outsourcing enables it to easily manage the troublesome parts.
In the software domain, outsourcing enables a company to temporarily hire software development services from an external party.
Why You Might Want To Outsource Software Development?
Outsourcing software development:
- Saves you time
- Saves you the hassle of recruitment
- Gives you a better cost control
- Allows you to focus on your core areas
- Increases the efficiency of your workforce
- Gives you access to all the latest technologies
- Gives you access to professionals skilled in every niche
- Diversifies your portfolio
- Allows you to upscale or downscale your business, as per your needs
To give you a better idea of why you might consider outsourcing IT services, here’s a detailed insight into how outsourcing can help your business.
1. Cost-Efficient & Time-Saving
Most software firms operate by outsourcing because it saves them a considerable amount of both time and money. According to research conducted by Deloitte, nearly 59% of software development companies outsource their services to minimize their expenses.
And that makes perfect sense!
You will have to spend more money if, instead of outsourcing, you hire programmers for a short duration. Likewise, training the already-present workforce to the new standards will consume a large sum of capital and time.
So, by outsourcing, you don’t just save your money, but also your time – that can then be utilized in other profitable ways.
Outsourcing increases your working capability without having you to waste any time and effort in the recruitment process.
2. Increased In-House Efficiency & Greater Emphasis On Core Operations
Outsourcing facilitates productivity without tarnishing the quality of products. Through outsourcing, you have the opportunity to fully concentrate on your core business.
Hiring external help eradicates the need of overloading your employees with work that demands from them a new skill set – enabling you to use their potential in their specialized fields.
And it goes without saying that handing over the non-core tasks to the experts of respective domains results in improved efficiency and better results.
Another big advantage is that you can re-prioritize, upscale, or downscale your business activities without disturbing your core operations.
For instance, to follow up on a strict deadline, you can have a part of your project done by the external hiring. It is surely the best way to do so!
3. Instant Access To Latest Technologies & Skilled Professionals
It is impossible to have every latest piece of technology and people of all expertise in the rapidly evolving software market. But by outsourcing, you can access any talent, any technology present across the world.
Doing so, you can enhance your technical capabilities, introduce new aspects to your products and improve your overall service quality.
This explains why the outsourcing companies that hire experts from various sources enjoy the freedom of taking on as many new projects as they want.
4. Diversification Of Portfolio
Software companies should try to diversify their services to have a better edge over their competitors. And outsourcing does just that.
Instead of having you put all your eggs in one basket, outsourcing allows you to diversify your portfolio, ensuring better risk management.
It won’t be an understatement to say that outsourcing has become somewhat vital for a software firm to maintain its existence over a long period.
Are There No Cons At All?
Like every business model, outsourcing software development has its disadvantages as well, the most important of which is the loss of control.
In addition to that, the lack of communication is also a challenge.
However, the difference can be bridged by scheduling regular meetups so that you can inspect and monitor the outsourced task from time to time.
Models Of Outsourcing Software Development
There are various models of outsourcing based on the agreements between the clients and the outsourced firms.
These models are mainly based on the level of involvement of the outsourced partner, their job responsibilities, and the expectations their clients have of them.
It must be noted here that no model can be declared to be the best one as all of them work differently in different settings. You must understand all the models to decide which one is suitable for your particular project.
The three most commonly used outsourcing models for software development are as follows:
1. Project-Based Model
In this type of model, the outsourcing firm has to manage and execute the designated project on its own. They have to strictly adhere to the desired specifications and product timeline, as issued by the client company.
The outsourcing company has full liberty over product management and execution. However, their operations are regularly monitored by the client through progress reports and meetings.
This model is suitable when the scope of work is clearly defined, project timelines are fixed, and there is no need for modifications throughout the process.
The project-based model is often used by medium and small-sized businesses. The pros of this model can be summarized as follows:
- Clear deadlines
- No hidden charges
- Minimum involvement of the client
- Complete transfer of responsibility/ risk
- Well-determined and easy-to-assess outcomes
- Opportunity to see different viewpoints
2. Staff Augmentation
In this approach, the employer evaluates the technical abilities of their existing workforce to identify the skills they are lacking. The in-house staff is then augmented by the people with the desired skillset so that the knowledge and experience gap can be bridged.
The outsourcing company enhances the capacity of the core team for a limited period, until the execution of the project they were brought to help with.
In addition to being cost-effective, the staff augmentation model relieves the outsourced company from the hassle of the recruitment process.
The biggest benefit is that you still have control over your project’s working despite getting it outsourced.
The staff augmentation model is suitable for medium and small-sized businesses. The pros of this model can be summarized as follows:
- Very convenient
- Improved communication
- No recruitment hassles
- High flexibility
- Better control over the product development
3. Dedicated Team
In a dedicated team model, the outsourced partner is tasked with providing a specific set of services to the client. These services might include basic management, measurement and assessment of product quality, and efficient resource utilization, etc.
The outsourced partner has to figure out the optimal process that should be used by the client’s original team for product development.
They also have to continuously supervise the original team to make sure they are properly executing the project. Moreover, they are also responsible for suggesting changes and improvements.
The dedicated team is the most suitable model for outsourcing dynamic projects where the scope isn’t clearly defined and is usually a preferred choice of big corporations.
The pros of this model can be summarized as follows:
- Highly flexible
- Get talented professionals within a short time
- Most suitable for projects where the scope is susceptible to change
To Sum It All
Outsourcing software development has become the need of the hour.
From diversifying your portfolio to saving you both time and money, it helps you maintain the competitive edge that you need to thrive in the rapidly changing software market.
Outsourcing sure has its downsides, but its pros easily outweigh its cons.