The Pros and Cons of Outsourcing Your Software Development Projects
“To do it yourself or have someone else do it?” has been a subject of debate in the last few years when it’s about software development, as outsourcing has become more commonplace. Given the latest developments in globalization and cloud computing, it is now possible to find an expert for any particular subject and outsource the task.
“To do it yourself or have someone else do it?” has been a subject of debate in the last few years when it’s about software development, as outsourcing has become more commonplace. Given the latest developments in globalization and cloud computing, it is now possible to find an expert for any particular subject and outsource the task. Placing your utmost trust into an outsourcing company you know little about is naturally no easy feat. Moreover, it is impossible to always guarantee a smooth and problem-free journey when developing the product according to your vision. Understanding the risks involved with the process is one of the first steps to take before on-boarding on the journey.
Let’s start off with a few of the top benefits for why you should outsource your software development projects.
Pro #1: Costs
Cutting costs is one of the first, if not, the main reason why companies outsource. Outsourcing the work to a custom software development team will allow the company to pay for only what it needs. This is by far one of the most cost-effective ways of getting the work done, especially when we look at the comparison to hiring a full time employee. In certain countries with tougher staffing laws, it can get very expensive to add a new full time member to the team. Some companies see it as simply too much of a commitment to hire an in-house staff.
A common question thrown around is, “Why contract an outsourced team if I would need to spend the same resources on training for an in-house team?” The truth is, it’s not exactly the “same resources”. There are several strings attached when it comes to hiring an in-house team — the bonuses, the benefits, the payouts. The lengthy screening and interviewing processes carry a cost load of their own, and outsourcing does an excellent job at minimizing these.
Pro #2: Talent scarcity
The growing concern with the present day’s lack of available talent might not be immediately apparent until you’re given the responsibility of hiring the next hotshot developer. The task is closely resemblant with that of finding a needle in a haystack.
Figures from a 2017 study show that there were less than 50,000 Computer Science graduates in 2017 with over 500,000 open positions in the States. The gap is due to increase even more with the expected number of unfilled positions at 1 million by 2020.
With more job openings than there is manpower to fill the demand, we can expect a hike in developer salaries. Companies are already finding it a challenge to attract the right talent. As a result, several tech organizations have turned to non-traditional approaches in filling the gaps such as internal training and increased leniency towards applicants.
Pro #3: Flexibility
Outsourcing is not an all-or-nothing affair and many companies are not aware of this. On the spectrum of in-house developed and outsourced custom software development, there are a whole lot of options in-between that could fit well in certain companies’ strategies. For a company that is not heavily tech-centered, receiving on-going services from the outsourcing team may not be a necessity. For example, if the development of a custom software product is all that is needed, the company might benefit more by bringing in an in-house IT staff. On-going support from the outsourcing team might be kept to only a few months while the transitioning process takes place for the new IT staff to take over. There are many options out there that can lower expenses and bring about several benefits in the long run, when compared to, either, fully outsourcing, or fully developing the product in-house.
Companies that outsource also have an easier time predicting their expenses with a higher degree of accuracy – remember, you only pay for the work you need done.
Pro #4: Expertise
This one is pretty self-explanatory. Emerging advanced software technologies such as Blockchain, IoT, Machine Learning, etc are now becoming more commonplace among companies. Various new applications of these technologies are being implemented with every passing day. It’s now more crucial than ever to find an IT outsourcing company with a speciality in the technologies that are relevant to your company. It’s also in your best intentions to have the most highly skilled workers on your side. The numbers speak for themselves, with IT staffing still being the most commonly outsourced, and with HR in second place.
Pro #5: No emotional attachment
A major drawback that is not as apparent is the potential danger of being emotionally tied to the code. Having a personal attachment to the project may render you blind to certain types of criticism and could also inhibit growth. It is a lot harder to throw away a failing project that you coded yourself than it is to throw away one developed by an outsourced team. Hiring a custom software development team to do the grunt work will also allow you to the extra time to work on other projects in parallel, which is another benefit on its own.
With a growing number of options and ease of access, outsourcing has become an extremely attractive solution, globally. Due to the increasing volume of outsourcing teams worldwide, we can expect to see an increase in the quality of work to dollar ratio due to natural competition. If you’re a company with its main priority being to lower expenses, outsourcing is the way to go.
Great rewards come with risks, and everyone talks about all the benefits and the great things that come with outsourcing, but few cover the potential little things that can lead you off course. However, you can constantly work to minimize the risks of unforeseen circumstances. Here’s a list of things to look out for when outsourcing your custom software development:
Con #1: Communication troubles
Looking at the inherent and root cause of most problems in outsourcing, we can pinpoint communication as being the culprit. Most companies are not out there to take advantage of you or cut corners to minimize expenses. In fact, it’s actually quite the opposite — it’s in the best interests of the custom software development company to serve its client as best as possible while delivering on the promise with the highest degree of accuracy.
The most common of communication related problems in outsourcing evolve from language barriers and cultural differences. Do not choose a company only based off its number of native English speakers, but certainly use English proficiency as an indicator to calculate the risk of any potential issues that can arise from a lack of expertise in the language.
Communicate your goals accurately and concisely. You first need to get a clear idea about your own goals before you can communicate them to others. Having an unclear vision can hinder your progress and lead you down a path full of obstacles and inefficiency. It can also lead to misaligned expectations that could potentially derail the collaboration. Continuous communication is key to both parties, and is especially effective when done at every stage of the software development project.
Great outsourcing teams are made up of great listeners who are also capable of breaking down the project strategy and presenting it in understandable language. Outsourcing custom software development is not a one-time process. It is a long-term relationship that can have significant impact on the growth of the company. It is important to partner up with a team augmentation provider who upholds the same quality standards as you.
Con #2: Incentivisation within technologies
Everybody has their own favorite language or technology they prefer to work with. Some strengths may be others’ weaknesses and vice versa. While a developer may accept a project out of various reasons, some may go the extra mile and produce vastly different results than others. The main factor at play here is the “what’s in it for the developer?” To believe that paying a substantial sum of money will automatically result in a superior product is far from the truth.
A risk that some companies run when using outdated or deprecated technologies is that they may end up with developers that will settle or “accept” to work on the project, unaware of the level of excitement or interest that the developer has for the said project.
An in-house employee might be more tolerant to work with such technologies due to various financial incentives such as shares or options the company may be offering. An external team member is unlikely to have the same entitlement to these incentives. This is not always the case but it is certainly an indisputable possibility.
Con #3: Level of involvement
A classic Steve Jobs quote goes, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” A solid outsourcing team does not just execute orders blindly. It should be acting as a consultant and an advisor, first and foremost, presenting all possible options and helping the company walk through the decision making process. With knowledge comes responsibility and it is the outsourcing team which must be on the lookout for any challenges that might arise during implementation. Failure to do so at an early stage could prove to be costly later on.
Con #4: Choosing the right team
Every company has its own strengths and weaknesses and it’s important to identify them before making a decision. Choosing based off of reviews is simply not enough anymore. There are other factors at play that must be considered.
Here are some other measures you should consider taking:
- Run an organic search on Google and other search engines
- Research the credibility of the company by looking up its ratings on sites such as Clutch and Goodfirms
- Analyze the development and growth of the company in the past 5 years
- View the company’s portfolio and past work
- Conduct price vs. value analysis and compare with other companies
Never put price as a top priority. Lowering expenditure is on every entrepreneur’s mind but quality should never be compromised in the pursuit of saving a few bucks.
Con #5: Lack of synchronicity
We’re not just referring to the challenges posed by time zone differences, although, those too can have significant implications over the long run if a plan or solution is not implemented at an early stage. Imagine trying to clarify a requirement with the other team, which is located in a ten-hour difference timezone. There will be a lot of back and forth but the development would essentially be halted until the requirement is clarified and confirmed. The outsourcing team could, at best, assume what the client wants, and do the work, but there would still be the risk of having to redo some of the work. In some cases when the time difference is too great, the fundamental aspect of being able to communicate anytime you want is no longer possible. These sorts of delays could have major increases to the cost of the project as well as an overall reduction in the client’s level of satisfaction.
However, the main concern that comes with a lack of synchronicity is the potential risk of delays in delivery time and outputting a substandard quality product.
Outsourcing can come with its risks, much like everything else in the world — the good news is, it is risk that can be either eliminated or at least controlled. Choosing the right outsourcing team can take several months and it is not something that should be rushed. Take as long as it’s needed and ask as many questions as required. Having a clear strategy and set of criteria for choosing the right team will place your business in an advantageous position and will allow you to reap greater benefits.
Now that you’ve gained some exposure to, both, the risks and rewards of the deal, it should make the decision process a little bit easier. In summary, we see the following as being the key points:
Preparation – do I have a clearly defined set of criteria and do I know what I’m looking for in an outsourcing team?
Research – have I used all the tools available to make an informed decision? Referrals, Google organic searches, review sites such as Clutch and Goodfirms, portfolio of past work, price vs. value analysis.
Patience – have I spent enough time looking for the right team? The search process can sometimes take up to six months or even a year.
Strategy – if tomorrow I were presented with the perfect outsourcing team, would I know how to make the best use of the resources available to me? Having a vision is great but communicating it to a set of people is a different story.
Our advice is, you can never be too prepared.
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