Outsourcing plays an important role in the modern world of IT development. Each software development company outsources some of its projects. This allows to significantly optimize work resources and, most importantly, costs. The model has a lot of pros and cons. Therefore, if you are thinking about how to start a software company, you need to understand how this model works. You can also get acquainted with tips on how to hire the right outsourcing team and what pitfalls you should expect.
The Cause Of Software Development Outsourcing Popularity
For a start, I will explain the cause for the software development outsourcing popularity. You have probably noticed the trend of how the economy is moving in the direction of globalization. Many companies try to stay afloat using different methods and business applications. First of all, everyone tries to reduce their software development cost, make the most efficient use of all their resources, and provide the best customer support. Success in these three points allows any company to compete in its field of activity. To date, in any business, the IT industry especially, you need to constantly improve capabilities of your own and your product. Therefore, software outsourcing development is an excellent option that will help. However, this model, like any other, has its pros and cons, which must be understood.
Pros And Cons Of Outsourcing Software Development
As many are confused in terms, I want to pay attention that outsourcing is not the same as IT outstaffing. Outstaffing is a set of measures aimed at using personnel outside the company’s core staff. Roughly speaking, there is staff augmentation. It is a way of transferring the employer’s responsibilities to another organization. Outsourcing, in turn, this is a complete transfer of certain tasks. The customer at the same time gets the finished result from the process. So what are the main advantages and disadvantages of outsourcing?
- First of all, is a cost reduction. You can get finished task at a lower price and, probably, in better performance quality. On the example of Europe, this was due to the large wage gap between software developers in Western Europe and Eastern Europe, Asia, etc.
- Better quality due to the fact that you work with highly qualified specialists or an entire software development company.
- Allows to free up staff resources from a variety of routine tasks. This will help you and your team to fully focus on the important plans of your company.
- In standard companies new tasks are constantly arising and, sometimes, the need disappears even before the task has been accomplished. Outsourcing model provides an opportunity to save the time that you would spend on training your IT staffing and switching them from one task to another.
- You receive a quick and weighty assessment of your task from professionals who have long been specializing in this, and sometimes the outsourcing team includes highly qualified tech graduates.
- There may be a time loss due to any technical malfunction appearance. I mean that two different companies with different locations and working on a single project have more chances of having any technical issues.
- There is a possibility of losing control of the project. This is one of the major outsourcing challenges that occurs when you work with a separate company who may have their own interests to prioritize.
- Unexpected financial expenses. Turning to unscrupulous skilled developers, they can take advantage of your ignorance of technology and in the course of carrying out the task to demand and insist on any additional costs and services.
- There may be problems with intellectual property. Financing a project in another country, you risk losing rights over the product. This risk is due to the fact that laws regulating intellectual property in many countries vary.
Main Tips for Entrepreneurs To Choose the Best Outsourcing Company
- For sure now you will see a banal advice, but always conduct a preliminary study of outsourcing companies with which you are going to cooperate. Look for customer feedback, check their work, and check for the presence of the necessary tech jobs for your project.
- It is very important to understand how the outsourcing company is working. A single ability to write a great code is not enough. For those who will develop the necessary software for your needs to understand how your business works and optimize the work development in accordance with your requirements.
- It is necessary to demand from the outsource company a qualitatively written code. After all outsource by definition, means short-term cooperation. If at some point you wanted to hire software developer for in-house purposes, it may take a long time for your team to figure out the code, or worse will have to rewrite it.
What Pitfalls You Should Avoid
- It is important to pay attention to the total cost of the project. The market of outsourcing companies is prohibitive. Trying to hire dedicated developers, the customer is faced with hourly payment of a specialist. Hourly payment difference is very due to the geographical location of outsourcing companies. For example, in the US to hire software developer you will have to pay $80,000+ annually, in the UK it is about $60,000+, near $55,000 in the E.U., and only $40,000+ in Ukraine. From these data, you can easily find out the hourly rate, but it is not related to the total cost of the project. It is important to consider how long the work on the project will go, how many developers will be involved and whether there are the necessary resources.
- Use consultants. Before signing a contract, it is important to use only up-to-date legal experts, and when forming a value, consult with the developers who you trust to so an outsourcing company could not sell you an unnecessary service.
- From the very beginning of cooperation express yourself clearly and demand the same from representatives of a hired team. Remember that it is not bad to ask or clarify a question several times, however, it will be much worse if the product is ready and only then it turns out that there was a misunderstanding.
Outsourcing development model is a good decision for modern companies. You as a customer give the task to an outsource and you will not have to worry about how to hire a developer or how to create software. From you, it is necessary to receive only the idea, everything else will be done in high quality. Outsourcing helps significantly save money, and optimize the work of employees most effectively. However, it is worth remembering that when choosing an offshore company it is worthwhile to focus only on the total cost of the project since the choice of hourly rate is a bad decision. And, especially, do not forget to communicate clearly, trust me, it saves time and money a lot.