Top Reasons Why Companies Outsource Software Development

A Quick Overview: Outsourcing software development has become a common practice in today's business landscape. If your company's growth heavily relies on software and your internal IT team is unable to take the project in hand, it is worth considering outsourcing your software development needs. In this blog, we will present you with an eight-point list, coupled with benefits and tips, explaining why entrusting your software projects to an offshore company remains a viable option.

Outsourcing development projects is a smart decision businesses can make to maximize their productivity in a cost-effective manner. This proven approach has become the new normal because it allows companies to focus on their core growth objectives while their software development needs lie in the best hands. This clearly helps to achieve a competitive advantage in a technologically driven market.

Furthermore, if the in-house IT department has too much on its plate, opting for software development outsourcing services is always a good call because it will get the attention and skills it deserves. So, there is no compromise with the quality too.

According to the report, the global IT software outsourcing market is projected to reach US$460.1bn in 2023.

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On top of this, Deloitte has reported that 65% of businesses outsource at least some parts of their software projects.

Now that we are talking so highly about the outsourcing strategy, what does it exactly mean? And most importantly, who do organizations outsource services to development firms?

This blog aims to answer that question, i.e., decode the compelling reasons why you should outsource your development project. Read on.

Outsourcing Software Development: What Does It Mean?

Outsourcing software development is a type of service provided to tech and non-tech clients from a third-party service provider, so to say, to deliver development assistance using various business models.

In layman's terms, it defines the process of taking service from an external source, mainly an IT partner, to meet software development requirements.

For a more thorough understanding, here’s an A-Z guide on software development outsourcing you must include on your reading list!

What is the Need for Outsourcing in the Software Development Business?

Outsourcing has turned out to be one of the most effective business strategies in the 21^st century, for good. Though it's a win-win proposition for both the client company and the software development service provider, organizations can specifically benefit from outsourcing system development for a number of reasons.

For example, a company has a small team of developers who are unable to build certain features of a mobile app. But if they outsource software development resources from an external party, they can complete the project while focusing on what they’re good at. It allows them to tap into a talent pool and compete with larger companies on a global level.

And for non-IT companies, they don’t have much option than to outsource software developers. For instance, if a medical institute needs to build a healthcare application, hiring and setting up an internal development team will be an unnecessary hassle. Instead, they can team up with a development partner and delegate the project to experts.

This is why you must consider working with software projects outsourcing companies whether you’re in the software development business or not. The need is more and less equal.

Top Reasons to Outsource Software Development

As mentioned above, building complete in-house software can be expensive and equally time-consuming. Most importantly, not every company has the advanced technology and skilled developers to build a software application.

In such scenarios, hiring an IT staff augmentation company is always the best choice.

Outsourcing software development to an experienced and reliable offshore company gives businesses a competitive edge by reducing costs, improving product quality, and augmenting customer service.

Are you still wondering why it’s good for your company? Check out these top reasons:

1. Reducing Software Development Cost

One of the biggest reasons for outsourcing is cost savings. Businesses can save a lot on their operating costs and execute the project without any budget overruns. And there are several ways it can help you save big money.

Most small-to-medium businesses and startups don’t have the technical expertise and skilled people required for an effective and flawless software development process. Initial investments in infrastructure can be significant and time-consuming.

But an experienced outsourcing development company has the technology systems and talent it requires to build cutting-edge software. So, you can be sure of excellent quality without having to spend millions of dollars on setting up advanced IT infrastructure.

Creating an in-house software development team can dig a huge hole in your pocket. The recruitment process, training, salaries of professionals, perks, and incentives – all add up to a huge expense for your business. But when you successfully outsource software development, you pay only a fraction of the amount.

Another integral factor is when you build all of the software internally, it can cost exorbitantly to your business. Rather, you can hire a dedicated development team and choose to outsource some portions of the development process to them. This will ensure quality as well as cost savings.

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2. Leverage Modern Technology and Global Talent

When you hire a credible and experienced company, you automatically get access to a highly skilled workforce across the globe. Additionally, it is not possible to always keep up with the latest technology trends and required skillset within your team.

Therefore, the best way to ensure excellent quality is through an outsourced development team because it helps you make the most of global technical capabilities in a cost-efficient manner.

So, you can rest assured that your entire software development needs are in safe hands. From ideas and consultation to development and deployment, the company leaves no stone unturned to ensure high-quality deliverables that meet all your specifications.

Moreover, they can also provide additional guidance and training to your in-house team on modern software engineering. Exposure to wide-ranging talent certainly gives you a competitive advantage.

3. Meet Deadlines Quickly and Efficiently

As a business owner, your core objective is to minimize your product’s time-to-market. By outsourcing custom software development to an expert team, you can minimize the load of your in-house programmers.

Whether you outsource the entire project or only a part of it, the outsourced development team ensures prompt and quality delivery by the deadline guaranteed. They can also rapidly plan and collaborate with your internal team and leverage the Agile software development methodology to speed up the time to market.

4. Saving Time by a Large Margin

In today’s cut-throat competition, there isn’t a minute for businesses to waste. When software development is not your USP or core business process, outsourcing it to a professional offshore software development company will help save your valuable time.

This gives you more time and helps boost your concentration in improving what matters most to your business. Relieve your in-house resources from performing a task that is not their forte after all.

Rather, they can be allocated to help achieve key business goals. So, when you outsource software development, you get more time to focus and propel business growth.

5. Mitigating Mission-Critical Risks

It is rightly said that the more you spread your investment portfolio, the lesser you are at risk of losing money. The same concept applies to outsourcing software development. It is an effective process of mitigating your risks and harnessing the far-fetched benefits it offers.

Instead of trying to get everything done by your in-house team, diversify your business risks by splitting key operations and components amongst various offshore agencies.

However, make sure you choose the outsourcing vendors carefully because a lot depends on it. Follow the best practices, such as checking their industry experience, expertise, ratings, and reviews before making a wise decision.

6. Achieving Flexibility and Scalability

Let’s face it! It isn’t practical to hire full-time developers to work on short-term projects internally, especially if software development is not your core business.

Take for instance, when you only want to build a successful enterprise application to bring your business on your phone. Hiring a full-time professional for the job is irrelevant here because there aren’t enough projects to keep him busy. You will have to continue paying him a salary even if he is not actually working.

In this case, IT projects outsourcing gives you the utmost flexibility as well as the scalability you need. Depending on your project requirements, you can choose the size of your dev team. And based on the project’s progress and demands, you can also scale it up or down. This, in turn, helps you save big time.

7. Focusing on Your Core Business Areas

Since you get the opportunity to hand over your complex technical tasks to experts, it allows you to concentrate on what you do best – running your business and driving growth. You can redirect your internal resources and attention to the aspects that directly contribute to your core competencies and competitive advantage.

For example, consider a retail business owner who wants to develop an eCommerce platform to expand their services and offerings. Although the company might have some in-house development expertise, it would be impractical to dedicate their resources solely to eCommerce software development and divert their attention from core retail operations, such as customer experience, sales and marketing, etc.

Offshore software development empowers them to stay focused on their forte and provide exceptional retail experiences while getting the software project done with desired outcomes.

8. Gaining Superior Product/ Service Quality

If your in-house department does not have specialized skills in IT, chances are your software will show up with poor quality and security. This can affect your business credibility.

However, with an outsource development company, you can be assured of highly skilled IT professionals who are committed to delivering high-end software quality and security. They have mastered the art of software product development services, and they can build high-quality, cutting-edge software in a prompt way.

9. Better Risk Management Strategies

Outsourcing helps you mitigate several risks associated with software development.

First of all, leveraging external resources helps you avoid the risk of draining investments in infrastructure, recruitment, and ongoing maintenance. This is especially effective when you’ve got a limited budget, a small team, and time constraints.

Secondly, you can reduce the risk of encountering technical difficulties and making costly mistakes. Since the outsourced team has the needed skills and expertise in respective fields, there’s hardly any scope for delayed projects, missed opportunities, and customer dissatisfaction.

10. Getting Round-the-Clock Support

Software development isn’t the end of the process. You need continuous support and maintenance to ensure it is bug-free and performing as expected. By outsourcing software development to a professional offshore IT company, you can get quality support and regular software maintenance services.

Keeping distinct time zones in mind, they can also provide round-the-clock services to ensure you are always on edge to outrank your competitors.

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But that’s not it. As a bonus, here are some more sound reasons why outsource software development:

• Access to domain knowledge
• Meeting customer expectations
• Scaling software development teams skills
• Bringing in a fresh perspective for your project
• Technological advancement
• Working with a managed development team
• Accommodating project serge

Benefits and Drawbacks of Software Outsourcing

The scope of the topic is tremendous. But every rose has its thorns. Let's bifurcate the pros and cons of an outsourced development team.

Benefits of Outsourcing Software Development

Although the list of outsourcing benefits is long, here are some of the most common ones:

• Economic Stability

This is one of the biggest reasons for its fame and exposure. In a short span of time, you can pay less and get top-notch resources to execute a software project delivery.

Does that mean you are paying less to your workers? Of course not! Every country has its own economic scale. For example, if you are from Sweden and outsource software developers from Bangladesh, the wage range of Bangladesh is way lesser than in Sweden. The rate of payment depends on the locality of the partner hired.

• Quality of Software Deployment

There are chances that if you try to create an internal team, there may be many employees who do not have the right skillsets. But, with a little investment, outsourcing software development projects can guarantee the desired project outcomes.

• Level of Confidence

A competent outsourced partner excels in Agile software development solutions to enhance the software and tests the same before delivering. since you know that your project is in expert hands and the team knows the nitty-gritty of the development industry. This creates a sense of confidence for the company to choose outsourcing system development.

Drawbacks of Outsourcing Software Development

Although IT software outsourcing offers you a plethora of perks, the process has its pitfalls too. Here are the things you should keep an eye on:

• Geographic Barriers

Since the offshore teams come from different regions, the cultural barrier often comes as a hindrance. This issue gets bigger when both parties do not understand each other's language and fail to communicate at all. Additionally, you must overcome the timezone difference to get the best out of IT outsourcing.

• Compromised Security

Since outsourcing development work means trusting a third-party vendor with all your data, there is always a fear of data theft and security. Hence, before recruiting the outsourced partners, the first step goes without saying that the company should cross-check the development firm well before handing over their data.

Tips for a Successful Outsourced Software Development Partnership

According to a recent survey, a substantial 39% of outsourcing deals related to software development end up failing, either partially or entirely.

Consider the case of the IBM-Queensland deal, which stands out as one of the biggest failures in outsourcing. This unfortunate incident resulted in a staggering loss of $1.2 billion and even led to a legal battle.

However, despite the risks involved, there is still a chance of being part of the successful 61% of endeavors.

And to increase your chance of achieving success in outsourcing software development, our team at Radixweb has compiled ten valuable tips. These suggestions aim to provide you with more reasons to outsource as well as some actionable steps to help you navigate the landscape:

1. Define your requirements clearly with the software consulting team.
2. Begin with a trial project with no commitments.
3. Focus on the progress rather than micromanaging the developers.
4. Make the most of consistent communication practices.
5. Create a cross-functional team with various skill sets.
6. Staying in line with the latest software development trends.
7. Performs a background check through online reviews and portfolios.
8. Choose the engagement model that fits your requirements and budget.
9. Calculate an estimated software development cost to avoid budget overrun.
10. Create a risk mitigation plan including an NDA and code ownership.

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Outsource Software Development to RadixwebLet’s end with a quick recap: Software development outsourcing guides in reducing your costs, mitigating risks, and maximizing operational flexibility. It can help you innovate and gain a competitive advantage by leveraging the skills and technology of global resources but in a cost-effective manner.However, before you take the leap of faith, it is crucial to choose the company wisely.Radixweb stands out in the field of software outsourcing and IT projects with its unique perks and reasons. We take a comprehensive approach to IT outsourcing, thoroughly understanding our clients' problems and finding optimal solutions. Our commitment to high standards ensures efficient development processes and top-notch quality.The eight advantages we mentioned are backed by decades of experience in the industry. Having successfully completed over 4200 projects, Radixweb has a proven track record in developing innovative IT and software systems, along with positive custom reviews and customer-friendly pricing. We’re the outsourcing partner we’ve been looking for.Get in touch with us!