The global market size of outsourced services makes more than $92 billion, which means outsourcing is an extremely popular business approach to software engineering. Startup owners often choose to outsource when they need to develop software. The ability to cut down development costs is one of the most important reasons for global outsourcing. However, there are some more benefits you might not know about.
In this article, we shed light on the top reasons for software development outsourcing. Keep reading to find out all the benefits. But before we dive into this topic, let’s define IT outsourcing.
What’s IT services outsourcing?
Software outsourcing is the process of delegating some part of software development or the whole project to a third party.
You might want to outsource your project if you don’t have enough competence in this or that area. For example, if you’re an experienced back-end engineer but you don’t know how to ensure a great design for your software, you might want to delegate design tasks to professionals. It can be that you have a great startup idea but you lack technical knowledge. In such a case, you can outsource the whole project.
Let’s have a look at three IT services outsourcing models that you can choose from.
Onshore outsourcing is delegating your project to a team or company located in your country or region. It can be a great choice for you if you want to work with people of the same cultural background to avoid misunderstandings during your cooperation. Choosing an outsourcing company in your country, you won’t worry about different time zones as compared to offshore companies. However, you won’t be able to save much money in development since the hourly rate will be the same.
Near-shore outsourcing means that you delegate development to a company in a country within your continent. You might want to use this option because it allows you to work with people of similar mentality in a more or less convenient time zone. You can also save up some money but it’s not always the case and depends greatly on your location.
Offshore outsourcing is what you should choose if you want to dramatically cut down development expenses. By ordering offshore development services, you hire a company from a country beyond your continent. While this variant can imply some inconveniences such as different time zones and cultural backgrounds, there are a number of advantages, too. Lower hourly rates, a great choice of talents, and no hassle with hiring processes are some of the benefits of offshore outsourcing.
Let’s consider these and other advantages of global outsourcing services in the next section.
Top reasons for global outsourcing
If you’re still thinking about whether it’s worth outsourcing your project, we list the top reasons that can convince you it’s the best choice for you. It’s important to mention that we discuss the advantages of outsourcing in comparison to having an in-house team.
Ability to cut on development cost
This is the first and most important reason for international outsourcing. Let’s see how exactly outsourcing your project helps you save money.
- Lower hourly rates. If you run a business in a country with high hourly rates for development services, you will probably want to look for something cheaper. For example, startup owners from the USA, Canada, or Australia where the hourly rate can reach $180 will find development services in Eastern Europe more attractive in terms of cost.
- Paying only for the job done. If you have an internal team of software engineers, you have a lot of expenses. They include regular salaries even if your engineers don’t always have tasks to do. Plus, you’re responsible for paying sick leave and vacation bonuses, expenses related to software and hardware purchase, and more. While choosing to outsource software development, you only need to pay for the result your team delivers.
- Lower tax rates. If you compare taxes in the USA and Eastern Europe, you’ll find out that there’s a huge difference: taxes in European countries are several times lower than in the United States. So if in your country, taxes for having an in-house team are insurmountable, outsourcing can be the best option for you.
Focus on your core business
If you don’t own a software development company yourself, trying to handle IT-related issues can be time- and effort-consuming. But once you decide to outsource them, you get rid of the bunch of difficult tasks. Instead, you allow professionals to do their job while your specialists can focus on prioritized tasks such as marketing, financing, or working on growth strategies for your business.
Choice of professionals all over the world
While hiring an in-house team means you’re limited by the borders of your city, opting for global outsourcing gives you endless opportunities when choosing team members. According to Clutch, there are almost 18,000 global outsourcing companies.
Moreover, outsourcing companies are not only about quantity but also about quality. As of 2020, 69% of developers have a bachelor’s or master’s diploma which means you can be sure that you hire professionals.
Ability to quickly hire a necessary team
Hiring a professional who ideally suits your team can be a real challenge. In 50% of cases, it takes recruiting specialists from one to two months to hire a necessary professional. In some cases, the hiring process can take up to 4 months. Can you imagine spending 4 months to hire one specialist for your team while your competitors work on their product? And if you need three, four, or ten specialists at once? Sounds like a nightmare. But everything is different if you decide to outsource software development.
When outsourcing your project, you need to choose one company, and that is obviously easier (and cheaper) than hiring ten specialists separately. The hiring process is simplified, too. Let’s have a look at the main steps you need to take to hire a high-quality outsourcing company.
- Create a list of potential partners. As it was mentioned above, there are thousands of companies that provide IT outsourcing services. But you need to choose one provider. So, the first step you should take is to create a list of companies that meet your basic requirements. The requirements can relate to their industry, services, hourly rates, technologies, region, and more. You can look for global outsourcing companies on special sites such as Clutch, GoodFirms, or Upwork. These sites provide you with an opportunity to conveniently filter out necessary companies. Once you choose several good candidates, move to the next step.
- Check out companies’ reputations. You definitely want to work with the best, that’s why it’s sensible to take your time studying the companies’ profiles. If you use one of the abovementioned sites, you can see companies’ ratings and reviews. You will also find direct links to the companies’ websites where you’ll be able to see their portfolios. After this step, you will probably have your favorite: a company you prefer and would like to cooperate with.
- Contact a company’s representative. At this stage, you’re going to discuss your possible cooperation with a company of your choice. As a rule, outsourcing companies provide you with the whole team you need for your project so you get rid of the necessity to interview each team member. All you need to do is to decide if the company you’ve chosen among dozens of others suits your needs. And that’s exactly what you’re going to do during the first call with a company representative. During the call, you have an opportunity to ask questions about their approaches, expertise, development process details, and more.
After these three steps, you’re likely to hire a company for your project. In case you don’t choose a company on the first try, you have a list of potential partners that you can contact. Anyway, going through this hiring process with companies is much easier than doing the same with dozens of individual candidates.
Reduced time to market
This benefit results from the previous point. If you spend less time hiring a team to build your software, you can start the developing process faster. And the earlier you start, the sooner you’ll be able to launch your product. This is a strong reason to outsource your project to professionals in the conditions of tough competition, isn’t it?
No HR-related hassle
When you have an in-house team, you need to onboard every new team member. You also have to take care of your corporate culture and make sure everyone inside your team sticks with it. HR-related hassle also includes such things as organizing corporate events, keeping a record of team members’ sick leaves and vacations, making sure everyone is happy with working conditions, etc. But if you opt for outsourcing, you don’t have to do any of these. In most cases, an outsourcing company organizes workflow for the team, and if you don’t want to personally monitor working processes, you don’t have to do it.
IT outsourcing is a popular approach to software development, especially among young startups. It has three models that are onshore, near-shore, and offshore outsourcing so that every entrepreneur can choose the most appropriate option.
In comparison with having an in-house team of developers, outsourcing gives a number of advantages that you can find attractive. Reduced development costs, a wide choice of professionals, and reduced time to market are only some of the benefits of outsourcing.