To outsource or not to, that is the question. Discover the impact of the recession on outsourcing and its potential benefits for your company.
The modern world dictates its own rules for business, no matter whether it’s a newly born start-up or a long-lasting giant. It demands a swift pace, keeping up with the latest advances, highest than ever customization levels, and a client-friendly orientation. With the rise of the IT industry, it all became available with one mouse click or a 10-minute video conference with your partner somewhere half the world away.
Software development outsourcing is a phrase any prosperous entrepreneur is well-acquainted with. It is no longer just a perk for global companies and medium-sized enterprises (SMEs), it is an approach that helps enterprises adapt, grow, and reach their goals. By transforming industries, outsourcing also evolves, offers better services and solutions, and evidently changes companies’ operations.
Deloitte research says that in 2023, global spending on outsourcing will reach $519 billion. As a worldwide practice, it encourages businesses to look for the best vendors and most qualified experts in the field. Today we’ve prepared helpful info and tips so you can get more acquainted with the service, how to find a proper vendor, and, last but not least, how to manage your outsourced tech team. With these clues, you’ll know more about how to outsource software development successfully in 2023.
What is software development outsourcing?
Let’s look into this catchy and trendy phrase you have probably heard but may not be entirely sure what it means.
Software outsourcing, in simple terms, is a delegation of particular tasks to a third party. Depending on your requirements, you can find software engineers with specific tech stacks, QAs, project or delivery managers, team leads, architects, and other specialists for your project. Software application development is the most frequently outsourced IT function, according to a Statista report. Among other chores that can be outsourced are software testing, quality assurance, custom mobile, and web application development,
MVP (Minimum Viable Products) development, and cloud computing.
Software outsourcing providers are considered valuable partners in today’s business environment who can help businesses grow. For example, outsourcing helps small and medium-sized enterprises (SMEs) to scale faster without fear of the absence of in-house experts specialized in cloud computing, AI, or blockchain.
Defining your specific requirements and timeframe for delivery is your starting point, and only after that can you search for a good company for this purpose. The most crucial is understanding the result of the development process because it’s the factor driving your selection of an ideal-matching software outsourcing company.
Despite the fact that this operating scheme is quite widespread nowadays, there are still some questions to answer in this regard.
Why do companies decide to outsource software development?
There are many reasons for businesses to outsource, starting with the absence of physical space, lack of tech expertise, and ending up with time-consuming recruitment. Indeed, if we compare in-house development and outsourcing, the last one will be reasonably cheaper, faster, and more efficient in timescale. But let’s dive deeper into these pain points.
Making use of software engineering outsourcing is a wise decision for those lacking the necessary technical proficiency. Clients can reach software vendors with only a product idea in mind and let them turn it into an MVP and full-fledged product. Or they can enhance their in-house team with fresh minds, new tech expertise, and perspectives, which brings engineers out of their bubbles and lets them focus on their strong sides instead of learning completely different programming languages. Access to a world-class talent pool opens many business possibilities and allows clients to embrace cultural diversity.
Software outsourcing allows clients to cut costs, but not the quality, as outsourcing vendors provide candidates with the perfect match of rate and skills. Due to the reasonable cost of hiring outsourced engineers, businesses can focus on their primary functions and solve capacity problems. Outsourcing can increase the flexibility of scaling your project. Depending on the development stage, you can easily add or remove certain positions, which is almost impossible with in-house teams.
By starting your cooperation with an outsourcing company, you may face the point of management. You can select a responsible person on your side, who will take care of deadlines and task delegation, or you can entrust it to the company. Management is crucial as engineers and clients belong to absolutely different worlds. Requirements, tasks, and estimates may be perceived in completely different ways and lead to misunderstanding. To avoid such outcomes, project managers are necessary.
By resorting to the outsourcing model in software development, you gain a myriad of benefits, including time-effective delivery, avant-garde technologies, minimization of expenses, high productivity, and a tailor-made attitude.
What do outsource companies can offer to your business?
▪ High level of competence and proficiency. Outsource development teams consist of highly skilled and knowledgeable IT professionals who are carefully selected for this company.
▪ Experience with projects like yours. High-profile outsourcing companies have experience working with numerous relevant complex projects, so they can provide custom-tailored solutions for you.
▪ Effective communication via the project manager to meet your specific needs. A respectful outsourcing development company is always interested in well-established communication with all parties involved. This is the key to delivering the product to customer satisfaction.
How much does it cost to outsource software development?
Pricing policy is another point to pay attention to. Don’t lap yourself up with a promising opportunity to pay precious little for a high-quality product. It must be admitted that rarely something worthy may be bought for peanuts. Given that, keep in mind that a large complex project can’t cost little. The complexity degree should correspond to the offered price.
Why do we stress this aspect? Of course, as an entrepreneur, you would want only the best for your business, but by buying into a cheap offer, you can end up with a product that sucks and need to find another outsourcing company to fix it or even start from scratch.
Often, software outsourcing companies that lure their clients with low prices write trash codes, and later you may have to deal with numerous bugs and spend even more money on that.
When to outsource software development?
Entrepreneurs mostly go for outsourcing because they don’t keep their own team of developers in the undertaking. They usually don’t even require an IT department, for there won’t be much work for them. It is less effort-consuming and financially demanding to go for outsourced software development.
Software outsourcing development is the perfect option if you want to accelerate the product development process. Time-effectiveness appears to be among the most significant benefits of outsourcing because you don’t have to waste your precious time composing your own team with relevant experience.
Another cause can be if your in-house developers lack command of some languages or technologies. The project may require (and, of course, benefits from) specific rare skills for a one-time job or one small assignment. It isn’t worth hiring a particular person for such a case; instead, an outsourced team may offer the proficiency you need.
What software development outsourcing model to choose?
Before the very development process, the outsourcing company consults and investigates the client’s request. After analyzing the specifics of the product comes the proposal for further cooperation. Traditionally there are two types of software development and testing services: project-based and team-based.
Team-Based – consists of a dedicated team or department of experts that work exclusively on your project. It can be progressing tasks or setting up development processes from scratch. Team members can work on several client projects simultaneously, making it the best, especially if the working environment gets dynamic and changeable. The number of tech experts varies depending on your requirements. It can be a dedicated development center with multiple teams, a wide range of expertise, and strong governance, or a small team of 2-3 developers who will be managed directly by you. Another benefit of the team-based approach is knowledge retention. Even if a software engineer leaves the team, it’s easier to retrace their steps and process to fill in the replacement employee. The team-based approach best suits long-term projects or a series of smaller projects within complex domain expertise. The main goal of a dedicated team is to work organically with an in-house team to achieve high-quality results.
Project-based – a reasonable solution for short or medium-duration projects. This approach usually contains team members from different departments like UI/UX designers, business analysts, software engineers, architects, technical leads, DevOps, etc. Mainly the team cooperates directly, which allows them to communicate and solve all the upcoming issues straightaway. Traditionally communication between the client and team is performed via the project manager (PM). There is no need to reach each member separately, or with group calls as all the necessary information like project progress, costs, and risks will be presented by the PM. The main focus of this approach is to complete the project.
Where to outsource software development?
Thanks to rapid globalization and access to international markets, it has become way easier to outsource software development to specialists from other countries. So, if you decided to resort to the outsourcing model, you would probably want to explore top destinations to look high and low for software development outsourcing.
When picking where to outsource your software development, you should take into account the financial advantages, cultural proximity, as well as availability of a tech talent pool with relevant skills and competence levels to successfully conceive your project.
Three advantageous destinations for outsourced software development
Ukraine is the leader in offshore software development. Currently, there are more than 100 software development offices and R&D centers of global companies like Google, Snap, Lyft, Oracle, ABBYY, GitLab, Revolut, WIX, and many others. The IT industry was one of the most powerful economic engines in 2022. During the first quarter of 2022, the Ukrainian IT market generated $2 billion in revenue, showing stable growth and offering foreign companies attractive business opportunities.
The educational opportunities for developers here are vast and diverse, starting with traditional education and finishing with various courses and international educational platforms. Traditionally, most of the graduates (more than 20 thousand every year) decide to finetune their formal university education with additional extra curriculum courses.
Besides, the prevailing number of companies providing software outsourcing services prepare the developers they need by organizing and delivering their classes. After a course finishes, they select the highest-performing students to join their team. In this way, outsourcing companies ensure that all their employees perfectly match their needs and can deliver the requested products.
Ukrainian outsourcing software developers work in e-commerce, fintech, mobile, image, telecom, Big Data, cloud computing, logistics, and ERP domains. As of December 2022, there were 2,4 thousand IT companies and 243,9 thousand IT specialists registered in Ukraine. In 2021, the Global Sourcing Association in the UK – a reputable industry association for international outsourcing, awarded Ukraine as a Delivery Destination of the Year. Since 2021, more than 126 Ukrainian startups have raised their venture capital funding.
To this end, Poland is the state with a tremendous IT development pool. It has earned the status of a reliable country in outsourcing software development. Not only does it offer financial attractiveness, but also a host of bright programmers with more than 200 thousand experts in this sphere.
To know more about Polish IT infrastructure, we have a relevant article: 5 Reasons to Start Outsourcing Software Development in Poland. Read in one click.
India hails as a top place for outsourcing software development processes. It is believed to be the superior country to cooperate with for app development.
Among the tremendous benefits of outsourcing in India is acceptable quality at low costs if compared to other countries. Other distinct features of the outsourcing model in this area include an excellent understanding of the European market and a flexible work schedule – some work even 24/7 to provide their outsourced software timely and interact with their clients when convenient for them.
Indian IT experts provide the fullest possible range of software development outsourcing services, including app and web development, database management, system integration, consulting, and support. What is more, after the product is finished, the customer obtains all property rights and consequently the irrevocable owner of the code.
Among other countries that are considered to be favorable areas for software development outsourcing is China with almost 5 million tech graduates per year but poor English command; the Philippines with competitive prices for low-demanding works; Romania, with a highly diverse market of tech services; and Brazil with the abundance of junior developers for uncomplicated products.
However, it is worth accentuating that those counties are still developing a sustainable tech market and still have much to work on; for instance, their developers can have too poor English knowledge, and in some, they may not be skilled enough to embark on complex and comprehensive products.
When hunting for the appropriate place for you, it would be reasonable to do some reading about the country your future outsourcing company originates from and take stock of the information you find.
Choosing the right vendor
In the business world, which is filled with multiple software development companies, it might be challenging and frustrating for the client to pick one. The number of vendors worldwide is estimated to be around 45K, and each one claims to be the best. In a state of constant competition, it is not a surprise. Still, your goal as a client is not only to pick the most skilled engineers but a reliable tech partner who will enrich your business and help you grow. Here we’ve collected the most crucial points to consider while selecting a software development vendor.
01 Define your goals and business needs
More than ideas are needed for the proper software development. It would be best if you thought through the goal and purpose of your application. What needs is it supposed to cover, what type of application is it, is it a mobile, web, or desktop application, and what technologies should be used? How many engineers are required, what cooperation model should be used, would you need additional maintenance, et cetera? These points are the first steps as they give you a clear understanding of what you can expect from a software vendor and whether they can provide you with your requirements.
02 Set vendor selection criteria
What is the company size range, from 80-200, 150-300, or 500-1000. These points resonate with the size of your potential project and of course price. Rates in bigger companies vary greatly from middle one, yet propose additional perks. Pay attention to the company’s expertise in the desired domain, for how many years they work on the market, check their case studies, and ask for presentations and portfolios.
03 Check the client’s feedback or ask for a reference
In the era of digitalization, it is as simple as ever to find reviews and feedback on companies. If you are uncomfortable or doubting references, you can always check catalogs like Clutch, GoodFirms, ItFirms, BusinessofApps, and so on. Yet most of the software vendors are proud of their feedback and work hard to achieve an appreciation of their clients. You can always ask for a contact point and reach the previous contractor to find out all the questions, but mainly you can ensure you are in the right place from the first interview.
How to manage an outsourcing team?
By choosing to outsource your software, you might stand up to the question of management. A secret of fruitful cooperation lies in communication. Even though it is more challenging than reaching your in-house team, treating it as part of an integral team is essential. The ultimate goal is to have a self-contained remote setup that eliminates cross-team dependencies and doesn’t require too much supervision. However, before you get to that point, you need to set up basic communication with the remote developers and transfer your working methods. Below, we’ve collected key factors in managing an outsourcing team.
Communicating is the best way to acquaint your dedicated outsourcing team with in-house players. Provide your team with communication means. Pick tools like Slack, Jira, Zoho, Discord, and Google Meet, so they can see their tasks, reach team members, and track performance. By working together, reviewing each other’s code, and working on the same features, you will teach them the things that are impossible to describe in documentation, like how to communicate or approach problems and make decisions. If possible, do the on-site knowledge sharing, work in the same environment, and personal communication helps cover many crucial points. To stay up-to-date with the development process, you can always reach the PM, the Product Owner, or your responsible person who participates in the team’s regular meetings. In the opposite case, you don’t need day-to-day supervision, and having weekly sync-ups and being at demo meetings usually are enough.
The process establishment
Leaving your software development team with a sense of vagueness is the worst thing you can do. Ensure that the software development team understands your goals by presenting all the project details and explaining where your ideas come from. Prepare proper documentation, as it is one of the crucial points in software development. If you use Agile, make your remote team a separate Scrum or Kanban team with its own backlog. Also, make sure that everyone has the same understanding of the Definition of Done (DoD). So when something is delivered, you are sure it’s actually finished and well-tested.
Team composition and task delegation
To get started, consider assigning roles and tasks. You can assign tasks by feature so that each team member focuses on a single part of the product, or you can have them collaborate on a single technical component.
When considering the team’s makeup, it is best to have all of the necessary roles accessible in one area so that the team can successfully build a feature and evaluate it. Having someone on board who is responsible for managing the requirements is also advantageous. This individual could either be a Product Owner or if a full-time presence is not necessary, the QA can take on this role.
If you are still doubting outsourcing software development, you can always contact us for more information. Proffiz is a company with over ten years of experience in managing diverse teams of 100+ people for enterprises and startups. Our skilled engineers can help your business achieve your objectives and enhance products, whether they belong to a fintech, print, or photo industry. Agility and transparency are the motto and model we approach so you can get the best services. See our works, reach us via email, and ask your questions. We guarantee you custom web & mobile applications that empower business.
Start your journey today!
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