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Advantages and Disadvantages of Outsourcing Software Development

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Last updated on April 16th, 2020 at 12:09 pm

Outsourcing software development is one of the most popular trends witnessed in the last few years, with a profound impact on the global market. Both small and large businesses are outsourcing their software development to offshore/nearshore companies. Outsourcing companies both create software products and provide services/maintenance along with it. The global ITO revenue in 2019 was 66.5 billion USD.

Products that don’t need constant supervision can easily be outsourced to vendors. You can choose your outsourcing vendor by factors such as project requirements, vendor company reviews, work culture, etc. There are obvious advantages to outsourcing software development, such as cost-saving, access to a skilled team, etc. But nothing is perfect. And even though outsourcing has it’s benefits, it also has its faults.  

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Advantages and Disadvantages of Outsourcing Software Development

Let’s review both of them, starting with the advantages.

1. Money

This is one of the most important reasons most companies are outsourcing software development these days. A local, full-time professional is very likely to charge you more than the outsourced one. Factors that reduce project cost in outsourcing are:

  • Labor: The fees charged by outsourcing companies tend to be less than the one charged by the local companies. 
  • Training: Since you don’t have to provide training to the new employees, it saves a lot of money. No Knowledge Transfer (KT) or test systems are required. 
  • Operating Costs: The cost of operating ranges from very little to zero as you don’t have to provide machines, software licenses, offices, office equipment, or Internet connection. You save a lot of these expenses. 

2. Time

If you are completing a project in-house, you have to worry about completing the project in the best possible way in the least amount of time. With outsourcing companies, you save a lot of time through the following:

  • Lead Time: Since you do not need to train people before starting a project, it saves a lot of time. Software development can be started right away, rather than waiting for when the professionals are adequately trained and ready to start working. 
  • Round-the-clock working: Many developers work around the clock, which means that your project gets completed in the shortest amount of time with the least amount of problems. Twenty-four hours support also reduces system downtime.  
  • Hiring time: Since you don’t have to hire staff, you don’t waste time in interviewing and selecting candidates, setting contracts, inducting them, etc. You can just set your project guidelines, define goals, and your project will get started. 

3. Skilled Team

With outsourcing, you get the best skillset. It gives a chance of accessing talent across the world and fills the gaps that the resources in your company can’t overcome. In new fields such as blockchain and Artificial intelligence, you can outsource the work to niche developers that are already skilled at these technologies. For example, BairesDev. It’s a software development company that provides full-cycle custom software development. They are equipped with the top 1% of talent that helps them drive meaningful change.

4. Efficiency

Since the people handling your project are experts, you can rest assured that they will tackle your work efficiently. Matching premium talent to your requirements also reduces the risk associated with the whole thing. Since they have their own leadership model (Software delivery managers, team leads, Project manager, CTOs), outsourcing keeps the project transparent and delivers successful results.

5. Focus on core competencies 

Since you don’t have to handle development when you outsource, you can focus on your niche skills. 

There are some disadvantages to outsourcing software development too. The most notable ones include:

1. Losing Control

When you’re outsourcing your project to vendors, you lose control over how it should function. Sure, you send guidelines, but you can’t control day-to-day tasks. For all things associated with the project, i.e., project customization, QA, are dependent on the outsourcing vendor.

2. Losing Quality

Sometimes, the output provided by the outsourcing companies is not up to your expectations. You can do quality control and monitoring for developers in your company, but it becomes difficult to do that with an outsourcing company. To avoid a situation like this, check reviews and past experiences of the company before setting up a contract. You can also start with a small project and build up gradually to understand the work culture of the staff. 

3. Communication

Since chances are you won’t be meeting face-to-face with the outsourcing company, misunderstandings may occur. The developers may not fully understand work expectations, or they may understand them wrong. Important guidelines may get lost in translation. Sometimes, there may be a time gap between the two parties. Vendors may work in different time zones, and communication may be slow. You may have to wait for some time before getting a response.

4. Hidden costs

There might be hidden costs to a project. These depend on the scope of the project that you can’t determine at the beginning. 

Conclusion 

Outsourcing your work may be one of the best financial decisions you ever make. The benefits of the process are self-evident. They provide the stepping stone for a partnership that offers you quality work at a little cost.  

At the same time, you have to be careful while selecting your business partner. Carefully vet your vendor before signing that contract. You also have to be clear about your business requirements so that you don’t end up unsatisfied with the end product. There are a few things that may go wrong in outsourcing your work. There is a risk associated with it. But in the end, the probability of your risk paying off is quite good. 

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Cover Image Source: Aapna Infotech

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