5 Hidden Costs You have to Bear with IT Outsourcing Company

5 Hidden Costs You have to Bear with IT Outsourcing Company

Outsourcing software development can be a real deal-breaker for companies that lack the technology related capabilities and in-house strength to develop the required software.

Over the last few decades, offshore outsourcing has been on a steady rise with companies of all sizes getting on board to cut costs and their operations smooth and profitable. However, hidden costs are a huge risk that companies usually face down the road.

It is not implying that software development companies are being fishy about sharing these hidden costs. But if you haven’t worked with software development outsourcing previously, then you might not be aware of these costs. So, without wasting any more time, let’s explore all the primary implied costing of software development outsourcing.

Cost of Hiring Reliable IT Outsourcing Company

When it comes to software development outsourcing, where you are creating a big-size project, you must bear in mind the cost of finding a relevant and reliable partner that delivers desired result.

Research and understanding the strengths of various technology companies will cost you efforts, time and money. Sending RFPs, evaluating responses, actual contractual agreement, aligning your project needs with relevant models- all of this can take up to few months and cost about 2% of your total budget.

According to a report in 2018, global market spending on outsourcing and shared services (OSS) amounted to approximately 688.4 billion U.S. dollars. By 2023, this market is expected to spend 971.2 billion U.S. dollars.

By 2023 the global market is expected to spend 971.2 billion USD on Outsourcing and shared services, which were only 688.4 billion USD in 2018. Click To Tweet

Your Time and Involvement in the Development

Once your software’s development is assigned to an IT outsourcing company, don’t think your job is done. You also need to invest your time and resource to brainstorm, discuss, implement, test, and manage the project development to ensure that your project needs are being fulfilled.

Moreover, during the development, your software development partner might require your inputs or suggestions on few critical pointers. You need to effectively manage your schedule for regular calls and update meetings.

Read More : How to Do Time Estimations for Building Custom Software?

Maintenance Cost

Once the software is developed, it needs to be managed well to ensure proficient performance at your end. You must take the efforts and funds that would require to maintain the project in your organization after it is deployed by the IT outsourcing company.

Your organization must have the infrastructure and technical understanding to maintain the execution of the software. To ensure its efficient performance, you have to take care of server and domain renewals, security parameters, etc.

Security also becomes paramount because, in this era of software and digitalization, a slight security glitch might result in complete shutdown of the software, be it on web or local.

It might happen that you will need to hire dedicated human resources in-house to manage the software once it’s deployed by the IT outsourcing company. Therefore, you must include the wages that you have to bear for the new staff.

In some cases, your existing team would be able to manage the software, but you might have to educate and train them to understand the functionality of the software. Hence, you might have to invest in training programs to teach them how to use your software.

5 hidden it outsourcing cost factors

Impact on Productivity

This could be the most undermined challenge that nobody is talking about. It could result in sluggish procedures and less efficient project development if not coped up properly. Developers might travel to your location and that may add up to the actual cost.

Cultural and communication difference may add up to the cost that would result in iterations or missed contexts.

As per data more than one-third of small businesses (37%) currently outsource a business process, and more than half (52%) plan to outsource in 2019.

More than 37% of small businesses currently outsource their business process to increase efficiency and productivity. Click To Tweet

Upgrade the Software

With the passage of time and evolution of the latest technologies, you would need to change your software to meet the future needs and requirements of your business.

Then, you might have to upgrade your software by again working with an IT outsourcing company. If you want to scale your software and make it more accessible or dynamic, you might have to revamp the complete source code to make it as per your choice.

In this case, you might have to repeat the whole process of software development outsourcing that you followed previously with the same or new IT outsourcing company.

Therefore, updating and scaling your software would be as good as creating the new project. So, whenever you are into software development outsourcing, keep future use-cases in mind and develop a scalable app to cope with any future demands.

Managing with an overseas software development company involves significant costs- its important to understand the critical steps to leverage bottom line benefits for your business. It may not be uphill task if you tread the path cautiously with clear goals. Let’s begin it here.

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Pratik Mistry is a rare mix of technologist and senior business head at Radixweb. His passion lies is in helping companies to grow revenues by delivering top notch software development services and build value-based partnerships. When not driving high-impact go to market strategies, Pratik loves to try new cuisines and going to the movies.