In today’s business landscape, there are various ways to get ahead of the competition. Hiring great talent is one of them, and probably the most important factor. With outsourcing, business owners can benefit from 2 things simultaneously - getting excellent specialists and saving costs. Outsourcing is growing in popularity in the last year, as it proves to bring significant returns to businesses. At the same time, outsourcing is not without risk. Companies should be more careful with how to outsource software development. Spending more time in the service provider selection process, setting up the processes and people responsible for managing relationships with the outsourcing party and choosing more flexible contracts and ways of working are the few examples of minimising the risks.
What is software development outsourcing?
In a nutshell, software development outsourcing is a business strategy of delegating the tasks related to software development or the whole project to an external company instead of executing it within in-house capabilities.
The company to which you outsource software development can be in your city or country (Onshoring), in the nearby region (Nearshoring), or in an overseas location (Offshoring).
The outsourcing applications are quite diverse - from delegating a specific task to the range of services and until the entire product development. The last one can be for both - your internal use or for your customers.
The 3 Most Common Software Outsourcing Models
Project-based outsourcing puts the entire project in the hands of an outsourcing service provider. Project-based outsourcing typically involves having to first explain the full requirements of the project to members of the outsourcing company such as project managers and business analysts. These specialists become responsible for forming the development team and seeing the project through its execution and till its completion. The outsourcing service provider has the expertise to meet client’s needs and deliver the right outcome. Project-based outsourcing is a cost-efficient and time-saving solution for businesses with one-off projects which require special skills and resources that your organisation does not possess internally.
A dedicated development team is a team of software developers and engineers and additionally on request Project Managers, DevOps support members, QA specialists, UX UI designers, and other necessary members that are put together to work on the client’s project. While the outsourcing partner is responsible for recruiting and administrative support, a client will directly guide and manage its dedicated team.
In fact, a dedicated development team acts as a virtual in-house team or as an extension of your in-house team. Hiring dedicated development teams enable entrepreneurs to concentrate on growth instead of spending time and finances on recruiters. It also allows companies to quickly hire experienced specialists, flexibly scale up (or down), and save on IT costs.
Employee augmentation is an outsourcing method wherein a company hires the service provider to supply the necessary skills to respond to its business objectives. This technique consists of evaluating the existing staff and then determining which additional skills are required. With employee augmentation, regular employees and outsourced personnel can work together to meet business objectives.
The 6 Key Benefits of Outsourcing Software Development
Here are a few benefits of outsourcing your software development team:
Software Development Outsourcing is cost-efficient
It is far more reasonable to work with an outsourced team rather than gathering a development team of your own in most cases. Firstly, because of the costs connected with the recruitment process (job post advertisement and hours of work spent on the interviews). Second, the companies providing outsourcing services are based in countries with lower wages, resulting in a reduction of the software development costs for your company or project. Third, outsourcing can save you costs on maintenance and further development. Developers in outsourcing companies have a high level of education and rich experience. Let’s take Poland as an example. The high quality of computer science graduates in Poland has a very beneficial influence on general code quality. Polish developers know their craft well, and they are ambitious to improve. It results in high-quality, ready to scale, and future-proof digital products. Deloitte 2020 global outsourcing survey shows a sharp increase in the number of organisations giving priority to cost reduction (70%), and in the face of a pandemic-induced global recession, this outsourcing trend will only gain traction. Besides cost reduction, clients seek providers who can elevate the way they do business, enabling them to be more flexible, help them leverage the latest technologies, and improve their overall speed to market.
Outsourcing saves time and energy
An outsourced team can start working on a project within a short period. Companies that choose to outsource their software development are not wasting time and money on recruiting candidates. The best developers and other tech specialists are selected for them by the outsourcing company.
Instead of waiting for the right developer to pop out of nowhere on a local market and spend time, money, and energy on recruiting, there is an outsourcing option to consider.
Access to Global Professionals and Latest Technology
With outsourcing, companies benefit from a larger pool of skilled developers. Organisations get access to specialists and third-party vendors around the globe to handle their custom software development projects.
IT outsourcing companies embrace the latest innovations and use the most modern technology stack to build software solutions for companies of all scales. The majority of specialised companies dedicate time to check up for the recent technical trends, making developers constantly learn and improve their work. Continuous learning affects the self-development aspect and has a direct impact on the products they build. The digital products become more future-proof, and the development process gets safer, faster, and more efficient with each update. On top of that, software development agencies have accumulated technical expertise by working with a wide range of clients.
IT Outsourcing increases flexibility to meet changing business and commercial condition
Outsourcing software development allows growing companies to bring in additional resources when they're necessary. Later they can be released or resized and restructured. The line-up can be adjusted when things slow down or the requirements change. Outsourcing is a saviour in maintaining a company's flexibility.
Also, any adjustments in the development process are easier when the team is working with Agile principles. This approach gives more flexibility in project management and control. It improves both product quality and project timeframes, increases transparency and communication, and reduces overall risks.
Outsourcing extends your company expertise
IT Outsourcing also helps create a seamless flow when a company is trying something new - either it’s extending its proposal on the market or enlarging the technology stack. Rather than stressing existing resources, which are set up to support the current services and tasks, or adding resources for a pilot period, companies might outsource certain elements. This ensures that existing business areas continue to function without disruption and dedicates experience and resources to deliver a specialist service, making adopting a new area as easy as possible.
Outsourcing helps you to focus on your core business
Outsourcing IT functions allows businesses to hand over the reins to experts in this area of business. This gives companies and entrepreneurs a chance to focus on what they do best. Outsourcing IT tasks frees the energies and enables you to focus on building the brand, invest in research and development of the business, and move on to providing higher value-added services.
How to choose the best outsourcing software development company?
While there are as many outsourcing companies as fishes in the sea you need to choose the one that fits your needs and requirements the best. Firstly, choose the model of outsourcing that works best for your project or company. Second, check if the company provide you with the following abilities:
The ability to make outsourcing a strategic advantage
Outsourcing to the right company can help to make your business more flexible and able to adapt to changing market conditions and challenges while providing cost savings and service level improvements. Outsourcing allows your staff to concentrate on their main tasks and on the future strategy while giving you access to capabilities and facilities otherwise not accessible or affordable.
The ability to do a Sprint 0 first
To create a successful digital product you can’t jump straight into software development. There is an important phase that precedes it, which, unfortunately, many companies skip. This phase is known as Sprint 0. The goal of this phase is to create a vision and a rough product backlog, to understand the purpose of the project and what can be defined as a success of it. Moreover, all the stakeholders will recognise the high-level requirements and how to work together effectively.
The ability to provide a model that fits your company
Choose the company that works with the same method or approach to software development you got used to or the one you would like to embrace. In most cases, the agile approach to software development is a preferable choice. Working with the Agile approach delivers many benefits for both a development team and a client like better product quality, faster delivery to market and a higher return on investment are between them. In this whitepaper, you can read more about the advantages of agile software development.
The ability to provide desired specialists and technologies
Make sure the outsourcing service provider works with the technologies you require. Check whether there are enough specialists for the technologies and experience level you are looking for. Ensure the opportunity to scale up the team or extend the project to not prevent the growth of your company.
4 best practices how to do Software Development Outsourcing successfully
It’s time to highlight the most critical practices for effective working with your outsourcing party.
- Choose the outsourcing model that fits your company or project the best. Do you want to outsource the whole software development or just hire a few additional specialists?
- Outsource software development to a trustworthy company. Invest the time to prepare the requirements, and do proper research. Consider all the factors of influence before making your final choice.
- Establish communication with your outsourcing partner that will work. Include all involved members of the team in communication. Schedule regular and occasional meetings to review all the questions, check the process and make short and long-term plans.
- Get your technology in place. Organize the systems and tools for planning, tracking, releasing, and reporting.