Pros and Cons of Outsourcing Software Development

Software outsourcing is a popular approach for developing high-quality software products. The critical reason for this is cutting business expenses. Deloitte 2020 research shows 70 % of companies choose outsourcing to save costs.

Despite this significant benefit for every business, there is one more reason that makes outsourcing highly demanded today — a shortage of specialists. By involving the most innovative technologies and top engineering talents worldwide, you significantly save time and achieve results faster. In this article, let’s specify when and why you need to outsource technical requests to experienced development partners, and discover outsourcing software development pros and cons for businesses.

Why and when do you need to outsource software development?

Let’s start with the definition. Software outsourcing is a process of delegating coding to an external vendor, without hiring an in-house team. Businesses prefer to outsource for many reasons — unique experience of the vendor, right tech stack, usage of latest technologies, industry knowledge, technical specialists and management of the process. Digital transformation in business requires all of these. To focus more on other core activities, business owners outsource technical goals to professionals to avoid the time-consuming and challenging tasks of managing them on their own.

The implementation of technical solutions requires the use of different programming languages, data management platforms, and integration with multiple systems. For this, you will need experts in different fields and, thus, you may face shortages on the local labor market, while outsourcing enables you to involve talents worldwide. By hiring an outsourcing company you get a team of professional developers with specific domain expertise in many industries that help you mitigate risks and avoid possible errors. Getting access to the pool of talents and technology stack is an additional advantage that speeds up the process of creating your product.

With outsourcing, there is no need to rent an office, assemble a team and manage the whole time-consuming process of product development. The only thing you should do is to find a reliable development partner. There are both advantages and disadvantages of outsourcing software development and we will look at them closely later on.

In house vs outsourcing software development: Which is better?

It’s getting more difficult to find the right talents for projects nowadays, especially if you’re limited with time and budget.

If you compare an in-house team and outsourcing, both of these options have their pros and cons. Also, I’ve recently expanded on the topic “How to choose between outsourcing team and freelancers”. If you’re thinking about these two options, read it to know more.

An in-house team provides face-to-face communication and shares the same corporate values. Being in the same office space and working the same hours allows team members to communicate easily. Surely, it affects the working process positively.

On the other hand, an in-house team comes with administrative hassle. The employer has to take care about the recruiting process, motivation, taxes, staff replacement issues, management and other side-costs.

Considering the outsourcing team, you should know that it is not a panacea. It's a cost effective and attractive business solution, but it has its own drawbacks.

Comparing outsourcing to a software development company and working with in-house employees is like comparing apples and oranges in terms of involvement and time spent by the business owner. Using outsourcing, companies reap the benefits from fast recruitment, unique expertise, fair ratio of skills and rates, absence of administrative hassle, team motivation and proper management. Looks good, but let’s weigh all pros and cons of software development outsourcing below.

Main advantages of software development outsourcing

I would like to highlight the benefits of outsourcing software development compared to in-house development.

1. Control over costs and predictable billing

When you outsource, you hire a suitable partner without spending on hiring, equipping jobs, and providing technical upgrades. These costs may affect profits in the long run. The advantage of software development outsourcing is that you only pay for services that are available on demand. Here you can look at our engagement models, to discover how we collaborate with our partners on building software depending on specific requirements.

2. Efficient process of software development

By cooperating with a development team, you optimize the whole process of product development. Outsourcing allows you to hire a team quickly and add or remove team members upon request. It helps to accelerate product development. However, software development speed is not only determined by technical specialists.

The benefits of software outsourcing are also ensured by effective team management and systematic control over the whole process. By partnering with an IT service provider, you can delegate the workflow to a responsible project manager. It’s a great way to save time for other activities while being timely informed about the entire team’s workflow and progress.

3. Access to the relevant set of skills and experience

Outsourcing provides you with an opportunity to pick a partner without geographical limitations. This is a great chance to do a global investigation of IT companies and contract with a company which best fits your requirements. Check the company’s experience, tech stack, and portfolio. Getting the desired remote development team within a short period of time and their quick and easy integration will be an additional benefit. Learn more about the ways of expanding your capabilities and hiring a dedicated team to your project on our Dedicated Team Services page.

Advantages of outsourcing software development include access to a wide consulting package you may need and a full-cycle software solution. It means gathering requirements, estimating tasks, design, project delivery plan, development services, and software maintenance and support. At DigitalSuits we have an engineering team with vast experience in successful product launches in various domains and operating a technology stack with the benefit of saving time and budget. Using the vast experience of your tech partner, it’s easy and fast to implement an idea by creating an MVP or PoC and checking whether it is viable. Changes and corrections can be made right during the software development phase to obtain the desired product.

High-quality development services in the area you need is an advantage of outsourcing which will help you avoid technological barriers to project implementation.

4. Agile project management

The principle of lean approach is highly important for product development. We, at DigitalSuits, ensure high-quality software delivery based on efficient management, communication, and a well-organized process that ensures continuous product improvement. We do it using an agile methodology.

Agile approach in project management is an advantage of outsourcing, which means dividing the process into sprints. Each sprint usually lasts two weeks. It is typically a time for developing a product increment or a functional component. Each component is demonstrated at the end of the sprint. The methodology allows you to quickly monitor the development of project components and make the necessary changes right during the development phase.

5. A scalable development process

As the scope of a project may fluctuate during the development phase, either growing or decreasing, it is easy to make changes using agile methodology. An outsourcing software development сompany can provide sufficient staff with the requirements of your project, or quickly reduce the team at your request. It is possible to get a part-time team member on an hourly basis if needed. In the case of in-house employment, the number of team members isn’t so easy to change and you may be short of a team member of a particular qualification.

6. High-quality work

Working with a trusted outsourcing team, you get high-quality services and a stable product launch. To meet this goal, we have Quality Assurance Engineers responsible for testing and debugging the written code of your software. A QA team verifies the correct product functionality in accordance with the requirements and ensures that the product will work smoothly.

Main disadvantages of software development outsourcing

Despite the obvious efficiency, you may encounter a number of downsides of the outsourcing model. Let’s find out what the outsourcing software development risks are.

1. Communication issues

The first reason that may affect a process or its result is the insufficient English level. Check the English level beforehand, talk about it with the company representatives or each member of the team.

Time zone difference can also be an issue for remote cooperation in case of an improperly organized process. It can be adjusted by setting a schedule of meetings that allows you to configure the connection correctly.

2. Security challenge

Risks of outsourcing software development may arise as you entrust your product development to a third-party vendor. Before choosing an agency, it’s better to conduct a proper vendor research, contracting a vendor with a clear approach, and establishing transparent cooperation. Read reviews on hiring platforms Clutch, GoodFirms, DesignRush. Check the vendor’s portfolio, business ratings, and expertise domains. It may be the basis for your successful cooperation.

If you feel unprotected, you can solve the risk of data leak by contacting a partner company that offers NDA and signing it. Don’t forget about such important steps as discussing data security, legal aspects, property rights, and all other issues that need to be resolved with the company representative at the early stages.

3. Hidden costs

Outsourcing is cheaper than in-house employment. It is more effective to hire a remote team with an agile payment system than hire an employee on a full-time basis. However, in the event of ineffective planning, managing or contracting, unexpected costs may occur. But don’t worry, it can be avoided by signing a detailed contract with a clearly defined scope of tasks, responsibilities, and product requirements.

Conclusion: Does software development outsourcing suit you?

Software outsourcing is not easy, but definitely worth consideration. A detailed agreement with the right vendor will help you organize the process properly and launch your product successfully. It can be a great beginning of a long-term collaboration. If you are looking for a partner with transparent and open-book management, we are ready to help.