There are different possibilities to outsource the work - you can choose nearshore, offshore or onshore. The difference between them depends on the destination where you decide to redistribute your work. Onshore refers to a third party, which is located in the same country as your company, nearshore defines outsourcing to the company located in the same geographical region, e.g. your neighbor country, offshore means outsourcing in another country.
Based on VironIT's article, we would like to present the pros and cons of outsourcing the software development process.
1. Cost Savings
Outsourcing the tasks or projects enables you to save money related to hiring, onboarding, training, and housing employees in your company. What is more, you would not need to equip your workers with supplies that are indispensable to provide software development services.
Furthermore, the cost of software development services diversifies between countries. In Eastern Europe, the cost of the same performed labor may differ by up to 80% compared to West Europe or North America.
Software development takes less time when you outsource some of the tasks to another company. Collaborating with an external company enables you to conduct the project much faster and efficiently. In addition, the time which you spend on finding an appropriate IT company to outsource your work is shorter than the recruitment process.
3. External experts
When you have a lack of internal experience and knowledge, the external experts will be needed to deliver the project on time. Not only will you meet deadlines, but also you exchange knowledge with the outsourcing company and learn one from another.
4. Focused strategy
Your internal team might be too small to conduct several projects at the same time. Dividing team efforts on different projects and tasks might result in low-quality performance as well as delays in delivering the product. Therefore, you should outsource some of the work to focus on the main tasks which enable your in-house team to provide high-quality services.
Hiring new employees for short-term projects is inefficient. It is important to take into consideration the downtime, which generates costs related to the maintenance of the additional employee. Nevertheless, you can outsource the particular project and avoid the costs linked with hiring, training, and maintaining new employees.
6. Reduced time to market
The IT business is developing very quickly, and it is essential to innovate quickly in order to gain a competitive advantage in the market. Outsourcing is the way to speed up the processes of software development in your company and being first in the market, which might occur as a success factor for your organization. Hiring an external team of experts enables you to deliver the product quicker and with higher quality.
7. Technological Advances
Not only may a lack of experts be the reason to outsource the work, but also inefficient technology. Finding external service providers with advanced technology is crucial for developing your business and gaining a competitive advantage in the market. Outsourcing the work to another company that has a proven track record of excellence enables you to develop cutting-edge solutions.
8. Reaching a Broader Market
Outsourcing is a chance for your business to grow in many directions, which would not be possible with your capacities. Working with highly-qualified developers enables you to improve your performance and reach a broader audience around the globe.
9. Bringing in a fresh perspective
The routine during daily-work might minimize creating thought-provoking solutions and out-of-the-box ideas. Working with external partners provides your company with new knowledge and meaningful feedback. As a result, you improve your work as well as the project.
10. Lower Risk
Collaborating with an external company that has long experience and a proven set of skills, you reduce the risk associated with not delivering a high-quality project on time.
Every company that decides to outsource the project has doubts regarding the aspects mainly related to trust.
Lack of Control
The main problem in establishing trust is a lack of control over the process in an outsourcing company. What is more, an external company usually has different values, mission, business goals, and management system, which also may affect your concerns about project control.
Collaborating with the external team might generate additional costs for providing the services which were not included in the contract. When you decide on outsourcing, you have to prepare for unexpected expenses and related negotiations.
Risk of exposing confidential data
As already mentioned, every relationship is built on trust. It might be hard to entrust an external partner with information about your clients. Therefore, it is essential to formulate a contract that will protect your company and clients' data.
The time zone differences
When an external company is located in another time zone, it seems to be problematic in terms of communication and collaboration. However, different time zones allow you to work almost continuously. When the outsourcing company starts working-day, they already have the answers to the questions they asked at the end of the previous day. This is because the offshore company works during the client’s night time, so the client has the results the next morning.
Certainly, there might be some disagreement over standards, management systems, and performance. However, when you focus on the field in which you perform the best and outsource the rest, your business definitely will benefit from that solution.
Implementation of the outsourcing strategy
In order to choose the right software development company for outsourcing, you should follow three simple steps:
1. Define your goals
You should describe in detail the process, service or product that you want to outsource to define the technology, skill set, and profile of the outsourcing company.
2. Check experience, references, and portfolio
It is important to verify the company's experience and its ability to deliver the project. The portfolio is very useful to distinguish previous work and the technology, which is used by the company.
3. Consider cross-cultural features
Last but not least, it is essential to consider the country and company culture to pick the right service provider and establish an effective relationship.
Nevertheless, there are reasons why companies decide to outsource software development processes. The main are low-cost, collaborating with professionals, and delivering a high-quality product on time. Large companies choose that strategy, which occurs to be successful to establish the highly-valued business.