Looking to outsource software development? Did you know that the global IT outsourcing market amounts to over $92.5 billion?
Ever since the development of technologies like cloud computing, high-speed internet and sophisticated online software, the volume of outsourced IT service has been on a steady rise.
From major global organizations like Alibaba and Uber to small startups and SMBs, companies are taking advantage of outsourcing software development. If you too are looking for a simple ways to solve business challenges at affordable rates and scale your company, then hiring a good IT outsourcing company is the best answer.
In this blog, we’ll take a detailed look at the various advantages and mistakes in IT outsourcing, the best ways to outsource software development and the various outsourcing models.
Table of Contents
Benefits of Outsourcing Software Development
Outsourcing is typically when you have a third-party to do the work on your behalf. This work can be anything from developing a complete IT product from scratch to maintaining your existing tools and applications. Here are some compelling reasons why you should outsource web development.
1. Expert Skills at Affordable Rates
Outsourcing to a third-party is often the best choice when you want the expertise but can’t spend a lot of money. When you compare the cost of hiring in-house developers with the outsourced, experienced developers, you can see a distinct reduction in the expenditure when you outsource.
Since you are hiring developers who have experience working in the same domain or platform, you don’t have to spend a lot of time supervising the work. You can discuss the deliverables and the project’s expectations and the team will keep you updated on the progress. You can also accelerate the time taken to deliver the product when the developers are well-experienced in your field.
2. Access to Resources Without Bounds
Did you know that the global talent shortage already amounts to 40M skilled workers worldwide? And the numbers are predicted to increase to 85.2M workers by 2030.
With such a huge talent shortage, it only makes sense to search for the right talent without boundaries.
You may be staying in Canada and want to hire an expert development team from Europe. Outsourcing is the best way to hire a team without being bound by the location.
You aren’t restricted to the available companies or developers in your area. When you cannot find the right candidate in your location, you can search for the best team in other parts of your country or even on another continent!
Such flexibility and access to the global market are some of the main reasons many go for IT outsourcing.
3. Reduce Your Internal Workload
If you are a growing startup, you can quickly find yourself suffocated with so many responsibilities. Your IT team can be struggling under a lot of pressure to manage the existing workload.
Such times call for external assistance from a third-party development team that’s well-equipped to handle the workload and act as an extended part of your in-house team.
When you’re unsure about the volume of work you’ll have in a few months, the flexible hiring model will be the best way to manage the load and give some breathing space for the internal team.
4. Minimize the Development Costs
36% of outsourcing companies attribute the cost-savings as the prime reasons for outsourcing. This is because you require lots of tools for developing software. From investing in technologies and procuring the development tools, it can be a lot of money.
Instead, when you hire an outsourcing company, you’ll only be paying for the team you’re working with. This cost is comparatively much lesser than the price of development resources and the in-house team.
5. Best Product Quality
Often, when you outsource an IT project, you hire the team that’s best equipped to do justice to your idea. Many small businesses outsource because they want to increase their efficiency of operations (24%), available expertise (18%) and flexibility (16%). Many SMBs and large organizations also outsource because they want high-quality output.
When you have a team of qualified developers, along with all the required resources for software development, you will get the best version of the product. Even if you are outsourcing the modification in an existing IT product, an expert team will make informed decisions based on your target market and include innovative features that improve the product quality.
6. More Time to Focus on Your Important Tasks
Everyone possesses a particular skill set they are best at. When you try to perform the job outside this skillset, you will take extra time and effort in completing it.
Instead, when you outsource your work to a well-equipped IT company, you can focus on your core expertise tasks and let the specialists take care of the software development.
Models of Software Outsourcing
Since outsourcing in itself is an extended version of having a flexible team, there are a few models of outsourcing that you can choose based on your requirements. Let’s discuss and compare the three commonly-used software outsourcing models.
1. Project-Based Model
In a project-based model, the entire responsibility of the project falls on the IT outsourcing provider. So this means the outsourced team will take care of the complete project from start to finish. In this model,
- The scope of the project is defined clearly.
- The project deadlines and various points of completion are pre-defined.
- The billing cycle may be based on the individual iterations.
- The outsourced team will create timelines in collaboration with the in-house team.
Such a model is best for one-off projects for the development of an IT product or software. After the delivery of the project, the project will be handed over to you.
2. Dedicated Resource Model
This type of hiring model is used by companies that do not have a defined project scope. When the need for the resources and the duration of the task is undecided, you can choose to hire a dedicated set of resources who will work with you until you need them.
- This model is typically used for long-term engagement.
- Most open-ended projects will need this dedicated resource model.
- The outsourced team will send a bill monthly or weekly based on the duration the resources spend on your tasks.
3. Staff Augmentation Model
In this model, the company takes responsibility for the task rather than the IT outsourcing company. You can hire a bunch of people to work with you. You will have complete control over what these people do and will take charge of their day-to-day work.
- You should direct the outsourced employees to collaborate with your in-house team.
- Typically, this model is used for internal projects where you lease employees for a specific duration.
- You can be flexible on the duration of the hire and you’ll pay for the resources you need.
Many companies are now preferring this model of outsourced projects when they have a huge staff requirement for a project for a limited period.
Mistakes to Avoid When Outsourcing Software Development
While outsourcing seems like the best way to get a good quality product within your budget, it’s vital to avoid certain mistakes when outsourcing to maximize your investment.
1. When Communication Becomes the Biggest Barrier
When you outsource to a company that’s in a different country and has a different native language, there are chances that you’ll be facing communication issues.
This is not to say that all IT outsourcing companies hired from outside your country will have this issue. However, when the team struggles to articulate their thoughts in a language you can understand or vice versa, it can cause serious trouble for your project.
What’s the solution?
Communicate clearly with the team you’ll be working on before you hire them. Speak with the individual team members, gauge their communication skills and then give the green sign to hire that particular team.
Most IT outsourcing employees are fluent in English. So, if you can communicate in English, then it’s a boon to choose a company of your choice.
2. When There’s a Lack of Project Ownership
‘Who will take charge of the project?’ is one of the biggest questions for which you need a clear answer.
If the outsourcing team comprises part-time employees who don’t take ownership of the project, then it can drag the completion of the project for many weeks.
What’s the solution?
When you’re outsourcing a company, make sure to enquire about all the team members, understand their working process and be clear on the accountable person. This person will typically be your point of contact and so, this person should be someone who communicates clearly and takes ownership of the project.
3. When You Miss Out the Loopholes in the Contract
Not many IT outsourcing companies take advantage of the loopholes in the contract. However, it’s always best to keep yourself safe from such chances.
When your contract is loosely framed in favor of the outsourcing company, you may end up paying more than what you expected or get subpar quality.
What’s the solution?
Make sure that your contract has the following terms clearly mentioned:
- The scope of the project
- The assigned manpower
- A time commitment with timeline achievable
- Terms about unfulfillment of the contract
- Milestones before payment
- Intellectual property rights
- Confidentiality agreement
- Termination clauses
- Resolution of issues and the jurisdiction for it
4. When The Outsourced Team Doesn’t Adhere to the Code Quality
This is one of the common challenges faced by non-tech clients. Maintaining proper code quality and following the best practices will make it easier to run updates, improvements and maintenance.
Let’s assume that you aren’t a tech company. You assign a product to an external team of contractors with a certain level of quality expectations. But you may be able to assess the code quality early on in the development phase.
Almost 50% of the outsourced employers say that the quality of the service providers along with the reactive vs. proactive approach are the common frustrating things for them to deal with.
This can cause a major issue when you experience the quality after completion or when the problem starts cropping up long after the project delivery.
What’s the solution?
Get the help of a tech person when signing the contract to set specific milestones for meeting the code quality and following certain development practices. Conduct in-depth application testing that includes checking the quality and use project management tools to log in the issues and backlogs. All of these can be included in terms of the project development to make it clear.
5. When the Outsourced Team Doesn’t Under the Project
This is one of the worse things that can happen when outsourcing. If the team members fail to understand the project’s scope, then it’s natural that the final product won’t meet your expectations.
What’s the solution?
The only way to solve this issue to keep open communication channels and conduct project introductory sessions with the outsourced team. Establish sufficient groundwork and provide complete documentation for the team to refer to when in doubt.
Clearly mention in the documentation about the back-end project’s expectations, how the front-end design should look like, and the various integrations with other applications. This will clear up the doubts and give the outsourced team better clarity about the project.
How to Outsource Software Development
So, now that you’re aware of the advantages as well as the mistakes to look out for when outsourcing, let’s find out exactly what you need to do to outsource your software project.
Step 1: Have a Defined Project Scope
You can make inquiries for IT outsourcing services before you have a clear project scope. But when you want to get down and discuss the details, you need a clear idea and, preferably, documentation of your expectations.
It’s imperative to make yourself perfectly clear about how you want the project to turn out. This will give the outsourcing company a good idea to allocate the right resources and choose the team members to fulfill your project specifications.
Step 2: Research the Best Software Outsourcing Companies from Around the World
There are millions of IT outsourcing companies globally that are ready to take up your projects. Some are extremely smart and skilled, while some provide subpar quality.
Spend time analyzing the country from where you want to hire the outsourcing company. If you want to choose from your own country, well and good. But keep in mind that outsourcing companies in developed countries charge more than the developing nations. If you want to get the best cost and the best skillset, you can look for outsourcing companies in developing countries.
Once you’ve zeroed in on the country, then start researching about the various companies to which you can outsource and shortlist a few.
Step 3: Schedule Free Consultation Calls
Most companies nowadays offer free consultation calls, giving you a better idea about their expertise. If not, you can directly connect with the company with your project requirement and have a discovery call.
During the call, you can talk about:
- The technologies needed to implement your project
- Their previous experience in working in the same domain
- Their portfolio
- The estimated cost of the project
- Additional costs, if any
- The duration of project completion
- Their software development process
- The guarantee and the terms of the development
If you’re still not convinced, you can ask to speak to a developer or a project manager to get an in-depth idea of the company’s capability to fulfill your project.
Step 4: Compare and Choose the Best
Based on all the information you’ve gathered from multiple companies, you can compare and decide which one suits the best for your project requirements as well as your budget.
During these conversations, you can also note the promptness with which they reply to your messages, their communication skills, the tech expertise, and their commitment towards the project.
Such indirect indicators during the conversations will also give you lots of insights to choose the right IT outsourcing service.
Step 5: Finalize the Terms and Share the Project Scope Documentation
Once you’ve chosen one company, the next step is to finalize the terms and conditions.
As we saw earlier, check for any loopholes in the terms and fix them. If you have any specific requirements like timelines for reporting, regular feedback sessions, or any tools you want to use during the development phase, you should make it crystal clear in the terms.
After you’ve finalized these details, you can share your documentation for the project specifications and get started.
Outsourcing software development is one of the best things a company can do. When done right, you can minimize the cost of development and fetch high returns. Make sure to follow these vital steps when looking to hire a good IT outsourcing company to get the best output. You can also check the top software development companies in London. to make your job easier.
Are you stressed about finding the right company to outsource? Logicsofts is one of the most reliable companies that have worked with clients from the US, Europe and Australia. Just get on a call with one of our IT consultants to know more about our expertise, development process and delivery quality.