Businesses often outsource software development to leverage expertise, access a broader talent pool, and reduce their overall costs, among other benefits.
But despite its potential benefits, outsourcing software development also comes with risks.
For instance, some projects can fall short due to misaligned expectations, communication gaps, or a lack of comprehensive project management.
To avoid that from happening to you, it is important to understand the pros and cons of outsourcing software development.
In this article, we delve deep into the pros and cons of software development outsourcing so that you can assess how they will affect your project. This will enable you to make an informed decision.
Software development outsourcing means hiring third-party agencies or individuals to develop the entire or some part of the software development lifecycle. This includes everything from the software's design and development to testing and maintenance.
Businesses often choose this approach to leverage specialized skills, reduce costs, and focus on core business activities.
Consider an example of a startup company that wants to build a SaaS-based carpooling software because it is one of the top SaaS ideas in today's market. However, since it is a startup, the company has limited resources in the technology department.
Hence, the startup can collaborate with an external company like Make IT Simple, which has several years of experience and the resources required for software development. Make IT Simple will then create the carpooling app according to the startup's specifications.
This enables the startup to bring their app to market quickly without investing heavily in hiring and training developers.
Outsourcing software development has several potential advantages organizations can leverage to achieve their business goals. Here are some of the pros of outsourcing software development:
Cost savings is often considered one of the biggest reasons companies outsource software development. According to a recent survey by Deloitte, 70% of the companies outsourcing software development do so to save money.
You are a startup headquartered in the US. You want to build custom software for your business. If you hire in-house developers, you might have to spend $96,600 annually – the average salary of software developers in the US. On the other hand, if you hire a software developer from a developing country like the Philippines or India, you will be paying only around $10,000 annually.
Moreover, you generally don't need to invest in buying equipment or other infrastructure when outsourcing, as the outsourcing company is responsible for its facilities. And you don't even have to pay recruitment or overhead costs. All of these contribute to significant cost savings when outsourcing software development to a third party.
Outsourcing allows you to access specialized expertise that might not be available in-house. You can tap into professionals with extensive experience in specific programming languages, frameworks, or technologies, leading to higher-quality and more innovative solutions.
This access to developers with expertise in specific programming languages can be vital for your project. Every project is unique, and every programming language is more suitable for a particular type of software.
Hiring in-house developers with such varied skill sets can be costly and time-consuming. Data shows that it can take around a month to hire in-house developers. But if you opt for outsourcing, you can select different project vendors based on their skill sets without spending a lot of time. For instance, you can easily find developers with different skill sets from a single outsourcing agency.
Another potential advantage of outsourcing software development is faster time to market. With access to the vendor's expertise, established processes, and resources, you can ensure quick completion of your software development project, resulting in faster time to the market.
One significant reason behind the quick time to market is that outsourcing eliminates the time-consuming process of hiring and training developers. When you get direct access to a talent pool with specific expertise required for your project, planning and building the application becomes easier.
The vendor's experience and resources also play a vital role here. Most reputable outsourcing vendors like Make IT Simple have established development processes and methodologies that were refined over time. These efficient processes can accelerate development timelines.
Outsourcing allows you to scale your development resources up or down based on project requirements. When you face a sudden increase in project demands, outsourcing enables you to tap into a pool of skilled professionals who can immediately start working on your tasks.
This agility in resource allocation ensures that projects are completed within deadlines. It also prevents bottlenecking, which often happens when relying solely on an internal team.
The technical landscape evolves quickly. The programming languages that were popular a few years back might not be that useful today. Moreover, each upcoming version of a particular programming language adds something new.
Hence, your in-house team might not be well-versed with the latest technical developments, especially if you don't practice continuous learning at your workplace. In such a scenario, outsourcing gives you direct access to developers with knowledge and understanding of the latest technologies.
On top of that, outsourcing companies are also often quick to adopt new technologies because they need to remain competitive in the market. When a new technology emerges, these companies are more likely to invest in training their teams and acquiring the necessary skills to use it effectively.
Software development involves various stages, including app design, coding, testing, and deployment.
The entire process requires that you dedicate a lot of human resources to software development. Through outsourcing software development, on the other hand, you can avoid the need to dedicate the majority of your staff to a particular project.
This saves time and resources that can be better directed toward your company's primary operations, such as enhancing customer experience, marketing, and sales.
Another benefit of outsourcing app development is reduced management burden.
Since outsourcing companies have expert developers, it reduces the need for intensive micromanagement from your side.
Moreover, managing an in-house development team requires administrative tasks such as hiring, training, HR management, and providing the necessary infrastructure.
Outsourcing can eliminate or significantly reduce these administrative burdens for you.
Outsourcing software development has numerous benefits. However, you should also know about outsourcing risks to make an informed decision for your company.
So here are some major cons of outsourcing software development:
Outsourcing means you’ll have to give up monitoring the development process. After all, one of the biggest reasons for outsourcing is gaining time to focus on other core activities.
This limited oversight over the development and testing processes, however, can lead to a drop in the quality of the final product.
You might also be unable to choose the specific software developers that will work on your project. The outsourcing company will have a large team of developers and anyone from the team can be assigned to your project.
On one hand, outsourcing software development saves you a lot of money. But on the other hand, it also poses some hidden costs.
You will usually plan for standard costs like number of developers, timeline, resources required, etc. However, there is a chance that the project scope changes over the development period.
Consider this example. Suppose you want to build a mobile application for your eCommerce platform and opt for offshore development. As your working hours do not match, you will have to schedule meetings at odd hours.
This can impact the offshore team’s productivity and project duration, increasing the overall costs.
As the development progresses, you may realize that the initial requirements you gave to the outsourcing company were not comprehensive enough. Hence, you may request several changes and enhancements to align the app with your vision.
In this case, each round of changes will incur additional charges from the outsourcing vendor.
Whether outsourcing software development will largely benefit you depends on your chosen vendor.
If you choose a vendor that lacks the necessary expertise or experience in your project's technology stack or domain, the quality of the software they deliver may suffer.
This can lead to bugs, inefficiencies, and subpar performance.
That’s why you must assess the vendor's expertise and experience before making a decision. It is also advised to consider technical skills, reviews and reputation, cultural fit, and data security to find the right vendor.
Want to make sure you choose the right vendor for you? Then go with Make IT Simple. Our expert developers communicate effectively with clients to understand their requirements and build qualitative software.
Language barriers can hinder effective communication when outsourcing to a different country or region.
Misinterpretations, misunderstandings, and difficulties articulating complex technical requirements can arise due to differences in language and cultural norms.
Language barriers can further lead to poor communication. Without clear and constant communication, there's a higher likelihood that the expectations are misaligned between you and the outsourcing team.
This can result in the software not meeting the desired requirements or quality standards.
As per the recent statistics, around 800,000 cybercrime attacks happen annually. According to IBM, the cost of these data branches can be significant, amounting to $4.45 million on average.
Moreover, legal consequences and your brand's reputation are also at stake. Hence, data security issues become a top disadvantage of outsourcing software development.
Not to mention, when outsourcing software development, you also have to give away sensitive information, like the data you collect during research.
Sharing such data with external parties increases the risk of data breaches. This means your confidential information could be compromised if the outsourced vendor has inadequate security measures.
To avoid data security issues, you can sign a non-disclosure agreement with the vendor. The agreement should clearly define the steps each party will take to keep data confidential and the consequences of potential breaches.
Additionally, you can ask questions about the vendor’s security protocols and the measures they typically implement before handing over the project.
By now you know that outsourcing software development can have several benefits. However, following a structured approach is important to ensure a smooth and successful outsourcing process.
Here are five essential tips to consider when outsourcing software development:
Before you begin the outsourcing process, it's crucial to have a clear understanding of your business goals and objectives. Outline what you intend to achieve through outsourcing, whether it’s developing a new product, enhancing an existing application, or saving time and resources.
Defining your goals will help the outsourcing team understand your vision and align its efforts accordingly.
Thoroughly evaluate the profiles of potential outsourcing partners. This involves assessing their expertise, experience, and past projects. Look for partners with a strong track record in software development and have worked on similar projects.
Furthermore, consider their technological capabilities and whether they are up-to-date with industry trends. Additionally, check for client testimonials and case studies to gauge their performance and reliability.
Most reputed service providers will display their past projects on their website. You can check out Make IT Simple's past work on our website. Go through the portfolio of our previous work and decide accordingly.
A well-defined plan is a cornerstone of successful outsourcing. Create a detailed project roadmap that outlines the project’s scope, objectives, milestones, and timelines. Include technical requirements, design specifications, and any other relevant documentation.
This will help the outsourcing team understand your expectations and provide a reference point for measuring progress. A comprehensive plan minimizes misunderstandings and promotes effective communication.
While outsourcing involves delegating tasks to an external team, it's essential to maintain active involvement throughout the process.
Assign a project manager or a point of contact from your end to facilitate communication, provide clarifications, and address any queries promptly. Regularly scheduled meetings and updates ensure that both parties are on the same page and can address any potential issues promptly.
Effective communication is the key to managing expectations during the outsourcing process. Clearly communicate your requirements, preferences, and any specific quality standards you expect.
Be open to discussing challenges, changes, and adjustments as the project progresses. Review and provide feedback on deliverables to ensure they align with your expectations. Transparency and mutual understanding will lead to a smoother collaboration.
What outsourcing software development pros and cons you face or whether your project is successful depends on your chosen vendor. Choosing the wrong vendor can pose numerous challenges like lack of expertise, loss of control, security issues, etc.
If you are looking for the perfect outsourcing partner, look no further than MakeITSimple.
We have several years of experience in this field and can bring your software idea to life on time. Our expert developers commit themselves to surpassing client expectations and consistently delivering high-quality results.
So, if you are ready to outsource software development and want the best results, contact Make IT Simple today.
If you are looking for a bespoke software development company, please get in touch by phone by calling +44 (0) 1905 700 050 or filling out the form below.
Make IT Simple
+44 (0) 1905 700 050