A lot has been written about software development outsourcing and the myriad of opportunities and changes that it has brought to the global economy. What we have witnessed in the last 15 years has proved one thing for sure – outsourcing is here to stay. So let’s recap why you should take advantage of software outsourcing and how to get started.
It takes money, time and not to mention a large pool of talent to complete the development of applications in-house and in situations where businesses lack one or more of these key elements, companies turn to software outsourcing to get the job done. Simply put, software development outsourcing requires an arrangement between a business and a contractor that passes on the software development work on to the 3rd party expertise.
The outsourcing of software is a global trend that turned into the new normal in business operations. Even more, it is somewhat considered the holy grail for growing competitive advantage and increasingly becomes integral part of business strategies across industries. The reasons are clear: it allows companies to achieve greater economies of scale (proportionate cost saving caused by increased level on production) and even more importantly – focus on their core competencies without spending excessive amounts of time or money. Hence, all of these aspects boil down to this simple equation:
Software outsourcing = Cost effectiveness + Better Product (enhanced Customer Experience) + Timely Delivery
It then comes as no surprise that the industry stats paint an identical picture. A report by the Information Services Group that focused only on the contracts over $25 million determines the annual global revenue from IT outsourcing lays between $60 and $70 billion. The latest GSA report estimates that 70% of the surveyed companies are going to rely on outsourcing even more in the next couple of years while 35% of them will do so significantly.
So let’s get a better look into the benefits that software outsourcing provides and how you can leverage them to grow your business.
Broader access to talent and technology
For most companies, it is simply not feasible to have an in-house expert in every technology available in the digital ocean. Indeed, one of the main reasons for outsourcing software development is to get the best talent on board, irrelevant of geographic locations and business hours.
On a broader scale, outsourcing also takes a big chunk of the stress away: you needn’t worry about every little detail when you got experienced professionals taking care of it backstage. You can save the trainings and guidance for the people in your organization that perform the core capabilities of the company. You don’t need to expense the resources and time to manage the project while simultaneously enjoying shorter development time (and you guessed it: quicker time to market).
Increased Focus on Core Business
Marketing 101: Differentiation is key for success (meaning profitability). We have never seen markets so saturated in (almost) every industry as they are today. Therefore, now more than ever before, we need to find a way to innovate and outrun the competition with better offerings. Outsourcing software development strengthens the focus on improving core processes as it allows your in-house team to concentrate on the strategic goals that grow your business rather than feeling overwhelmed with work outside their scope of expertise.
On the one hand, outsourcing links to cost savings from salaries and employee benefits due to smaller in-house team sizes (after all you won’t need a specialist for every technology used throughout the project). On the other hand, depending on the type of outsourcing you select (onshore, nearshore, offshore), additional costs efficiency is unveiled by the significant wage gap in developed and developing countries.
Improved Risk Management
Finance 101: Don’t put all your eggs in one basket. We are so used to the idea of diversification of financial assets to ensure the long term viability of the company that we rarely think twice about it. The same rule applies to software development projects and just like with portfolios, it takes a well prepared strategy to reap the benefits.
A great way to mitigate risk is to split the project into components and assign those to different vendors. Of course, due diligence is needed: check references, look at their portfolio, discuss requirements and then make your decision.
If your in-house team does not comprise of IT experts, there is a high possibility that your software’s security is not in good hands. Security issues mean, among many other things, that sensitive information about the company can be leaked.
Software development outsourcing covers the basis on the security front as the programmers’ job is to make sure that the code and processes through which it is build are up to the industry’s highest standards.
Spend less on Support
Software needs continuous attendance in the form of maintenance and support. If you are to do this in-house, you need to set up a team to look after the ongoing modifications and bugs. Outsourcing allows you to free up resources as the vendor will look after this on your behalf. Also, with offshore outsourcing the time difference may play in your favour by allowing for 24 hours business operations.
Fast-Forward time to market
We all know plenty about the first mover advantage. To get it, however, is not an easy task. Relying solely on your in-house team presents a significant obstacle when time is a crucial factor. Outsourcing offers a great opportunity to lay out the timeline of the project and receive dedicated engineers at your service that make it happen.
How to get on the outsourcing train (next stop Business Growth)
As with any other business decision it all starts within. Analyze your needs, the benefits and the strategic advantage that the application in question will bring to the business. After initial audit is done, look for an outsourcing partner. And here the word partner is key. You are looking for someone that can bring to the table experience, expertise and motivation that will support a strong and open (not to mention mutually beneficial) relationship.
Shortlist potential candidates and share your requirements. Discuss your project and get a sense of what their working style is on these first meetings. Don’t forget to do your due diligence and if needed compile additional list of questions for potential partners to answer.
Leverage the flexibility, cost efficiency and competitive advantage that software outsourcing provides. This is a great way to introduce digital transformation and growth while minimizing risk and optimizing profits.
Want to talk more about outsourcing a project? Contact us for more information.