What are the true advantages and disadvantages of outsourcing software development? Can time zone differences, costs and communication really be the biggest nightmares of your company? Read this article in order to find out!
What is software development outsourcing
When outsourcing software development, you entrust coding to an external development company. That means you don’t have to build an internal development team and are assured of the development resources whenever you need them.
Software development outsourcing is sometimes confused with IT outsourcing, but it’s not the same. IT outsourcing happens when a company hires external experts to handle their IT needs and help them achieve their business goals. This can include tasks like managing computer systems, developing software applications, and maintaining the company’s digital infrastructure.
So to be precise, IT outsourcing is a bit broader term, while software development outsourcing is just a part of it.
Nowadays, outsourcing software solutions development is becoming more and more popular among various companies around the globe, and there are many benefits from such an approach.
There may be many reasons for it, such as the lack of experts in a particular field in one’s workplace or the lack of money to fill up a full-time employee vacancy.
We completely understand that you can be worried that the rates will be too high or that these unknown software outsourcing engineers may mess up the quality of your product.
To avoid such situations, choose the best software development company. To make that happen, it might be beneficial for you to read an article about how to choose the best software development company by Mike Popov.
What to choose: in-house team or outsourced software development?
There’s no one simple answer to this question. Everything depends on your needs. There are always pros and cons of outsourcing software development, so you have to choose the best solution for your company.
Searching for outsourcing options, you might find terms like Onshore or Offshore and wonder how they differ. In short, those terms refer to the exact localization of the company you hire and how distant it is from where you’re based yourself. If you both are from the same country, it’s called an on-shore outsourcing. When they are located nearby, it’s near-shore, and when they are far away from the country you outsource from, it’s off-shore. We explained all –shore terms in our article about Onshore, Offshore and Nearshore and how to choose the best solution indicating their pros and cons. I suggest you read it if you don’t know whether it’s better to outsource your project inland or far away from your country.
But now, let’s take a look at the collation of the pros and cons of outsourcing software development.
Pros of outsourcing software development
Software development outsourcing might benefit the entire company, not only results in a great app.
Below you’ll find the reasons why many business owners choose software outsourcing instead of hiring an in-house development team. So, let’s check the outsourcing software development pros.
Cost-efficiency and predictability
Who would not like to reduce expenses and paperwork? Software outsourcing is one of the ways to do it. Instead of hiring a full-time worker, you simply employ contracted workers who will do the same job for you, but what’s important, with no legal costs of employment, insurance and vacancy to be upheld.
By hiring a company, you have your payments under control. You can estimate development costs and make sure the expenses don’t exceed profits in the long run. You manage the roadmap flexibly to adjust it to budget fluctuations instead of paying your internal development team monthly salaries all year round.
Moreover, you may also save money on outsourcing while choosing particular areas of the world (like Eastern Europe). Depending on location, the hourly price for outsourcing software may differ greatly.
But be clever and witty. Choose cost-effective rates of software outsourcing with all of its benefits. I suggest you check an article on how to choose the best software development company by Mike Popov.
Outsourcing very often prevents work interruption and unnecessary pauses caused by any personal reasons that could possibly come up. There are no pauses in development when workers take sick days. There’s no need to wait with a crashed app until an in-house team member comes back from their leave. The contractor of your choice is obligated to provide the service continually. You don’t need to provide a desk in the office or equipment.
The outsourcing provider is the one who worries about all the mentioned above issues; the client receives highly skilled team members who bring, together with their resources, high experience and intellectual property.
Not only outsourcing companies but also start-ups and many other businesses strongly rely on the relation between cost and time. One of the greatest things coming together with choosing development services is saving your and your long-term employees’ time. Thanks to software outsourcing, you and your team can focus on what is the most important and urgent (your core business, of course), but you also have enough time to fit it all into your schedule.
Who does not like having everything under control? Another way of saving time is, in this case, temporarily getting some more of the highly specialised people into your team in order to speed up the whole development process (and why not simultaneously add to the quality of code and the overall software, too?).
Moreover, as a business owner, you don’t have to be your company’s HR manager and go through the recruitment process with so many candidates and create a new vacancy just for the reason of creating and maintaining a website or an application. This equals less bureaucracy, reduces the risk of hiring the wrong candidate and having time for you, your firm, your employees and your client is highly vital, and you should know about it best.
No need to employ anyone full-time
Short-term employment of professionals is a perfect solution for start-ups. Hiring a third party (or simply – software outsourcing) allows you to avoid hiring in-house developers in the long term. As I said above, for you, it means less bureaucracy and less worrying about expenses, sustainability needs, payroll taxes, personnel training and many more. Sometimes you just need somebody for a month or five (you will always need someone for software maintenance).
There is no point in creating a whole new position just for them, so outsourcing makes your life way easier, no matter if it is a big or a small project. Especially when the outsourced team knows what you are doing and how to manage work between different time zones.
Immediate start and team extension
While hiring an outsourcing unit, you may be nearly sure that the work on your project will start rather quickly and smoothly, and it is an additional pro compared to the long recruitment process.
Once you sign a contract with an outsourcing company, their software development team will be reachable within a very short period of time (hours, even minutes, if something urgent happens). It will also be easy to hop back on the cooperation you’ve put on hold (because of either lack of funding or the fact that they’ve done their job and you had nothing going on for them anymore) and start a new project with the outsourced team services without any new unnecessary hiring process.
Software outsourcing allows you to hire someone for a specific amount of time, even just a few hours a week, if needed. Thanks to the possibility of working remotely, co-workers from the outsourcing team can easily help and substitute for each other in times of need. This arrangement also offers flexibility in working hours since remote employees do not usually have fixed schedules.
When your company is done with the project or hits a low season, you can simply come to an end with your cooperation, and both you and your outsourcing vendor will go your separate ways.
Having chosen this type of cooperation, there is no need to discharge any software developers in such a case (not to mention that hiring and firing people all year round is still more expensive and comes with a great load of bureaucracy each time).
Greater expertise – outsourced straight to your region!
By not having to limit yourself just to people living in your area or country, you open yourself up to new possibilities. You may hire highly skilled software developers worldwide (check the best outsourcing destinations).
Somewhere ‘far, far away,’ in a different time zone, you could find a new person (or a full team of them!) that has a higher level of expertise or working capacity than the ones available locally. In simple words, outsourcing allows you to break the chains of the local pool of workers and seek them in other, perhaps more suitable environments (if you need to read more on this, check our guide through on-shore, off-shore and near-shore companies).
Obviously, the best quality outsourcing companies, which gather the best development experts in their fields, will be more expensive but will also provide you with an equally valued solution.
It’s especially important when your project is demanding. You need the team to have core competencies and the latest technologies. Using the most innovative technologies is sometimes risky if they are not properly tested. A reliable company won’t let you make the wrong choice.
Another benefit is that you don’t need to invest in training your developers to make them up-to-date. It’s all up to the company you are hiring.
All the talents you might need!
Software development is not just coding. You need an analyst to analyse your business area, indicate your target audience and research the competition (to mention just a few aspects). Having those, you need a designer who will visualise the app, a developer who will code it (backend and frontend), and a QA tester to check its quality and whether it’s bug-free. You also need to have in-house project managers in your team.
Before launching the app, you need to create a marketing strategy to gain customers and make the project successful. Even if you have your own marketing department, experienced professionals who know software marketing might provide your company with valuable insights and support.
Without an outsourcing company, you need to hire (and then probably fire) all those people. An experienced outsourcing service provider will address all those needs.
Relieve your in-house staff
As all the ‘hard work’ will be taken care of by the outsourcing company, you and your day-to-day workers or software developers can focus on maintenance, content management and customer service without being overly fatigued with the stress of so many additional tasks.
As a client, you only have to provide your outsourcing vendor with vital information about what you want to achieve and the overall data and technology that you want to use. It sounds harsh, we know. But in order to get the project the way you wanted from your in-house development staff, you would have to go through the same process. It only seems more complicated, but actually, once you get someone solid to outsource for you, they lead you by the hand while also working their asses off in the technology you choose. Your role is to accompany them.
Specialization & industry knowledge
Outsourcing software development allows you to hire qualified specialists for particular tasks, making ticking them off easier, quicker, and smoother. You can (or actually SHOULD) always choose software developers who fit your tech stack needs and know everything about the industry novelties (they’ve done several projects at least), internal business processes, has the best resources, and provides the client with high-quality outsourced product development.
Do your research beforehand and choose the company that perfectly suits your dream tech stack and is willing to adapt itself or propose another technology or framework that will suit your needs well. This is the most vital in the case of a start-up as it is really difficult to run a good race after tripping at the very beginning.
We assure you that you will find a team of eager project partners with domain expertise that will happily take care of the whole process, and the cost of that business project will be reasonable (or maybe you already have – drop us a line!).
When you hire a software development partner, you are hiring experts. They are developing digital products daily, so they know how to effectively manage the software development process.
They should also provide you with a project manager. Because of this, you can save time and, therefore, money that might be needed for an in-house team to establish an effective process.
All the software jobs will be done by a team of experienced developers from an outsourcing company specialising in software development. They will, most likely, have the best high-quality equipment (this way, you do not have to buy it yourself!) and the knowledge needed to complete the tasks.
Your vendors will also be up-to-date with all the latest industry news and tools that may come in handy. You may expect the software development partner to provide you with software tools and data management platforms needed in project management.
Good communication within the team of outsourcing software developers
When choosing offshore software development services, you usually have at least a few professional development teams to choose from. The people outsourcing your software will most likely be some in-house employees or coworkers that have known each other for quite some time.
A well-oiled team communicates better. Teammates know their strengths and weaknesses and can easily take care of problems or substitute others’ skills once in need. Instead of the time-consuming process of getting to know each other, they can focus on your long-term goals and all the offshore benefits they can provide you with.
An additional asset is no warm-up time. A well-knit team equals no problems with the new workplace, new people, new team, new device, or new technology. They only need to get familiar with you, your project and the technical documentation. Then they can sit down to their tasks straight away, splitting the outsourced tasks between the people who will know their way around them best.
Disadvantages of outsourcing software development
In-house software development is not always the best choice, and sometimes it’s better to have an in-house team. Below you will find the most common problems that may occur when outsourcing software development.
Although off-shore or even near-shore outsourcing might be a cost-effective solution, it may have issues you must be aware of, like the risk of miscommunication.
First, you and your contractor will probably use different languages, so make sure you understand each other right. Software engineers not speaking the target language nor English fluently make communication between the parties difficult in general.
Secondly, sometimes different cultures equal different approaches to fields related strictly to doing business and work, so work ethic can mean different things in different places. Therefore, even if the company is vocational and hires professional developers, sometimes you won’t be able to overcome these obstacles and avoid miscommunication.
Different working hours
Another challenge is keeping communication smooth across distant time zones and having only a few overlapping hours. The more distant the location of your contractor, the more flexibility in working schedules from both subcontractors is required.
Therefore, ensure the contractor you want to hire is a professional and has made at least a few worldwide projects. Such a company is probably used to working flexibly, so there should be no problem with communication. However, to define that, I suggest checking testimonials and references. You can look for hints on how they cooperate and communicate in cases like yours when clients are geographically distant.
There are always some risks while giving your confidential or sensitive data to someone from outside of your company, and this is why it is so important to check whether the outsourcing team is reliable. Do some research: check information about their experience, and read a few opinions about the provider, not only on their own website but on special platforms designated for honest feedback, such as Clutch.
For example, you can check out our reviews right here. What is also important at this point is the gathering and signing of all the necessary documentation guaranteeing the confidentiality and safety of your data.
There is a risk of choosing the wrong company for the wrong task. Some people may not be skilled enough in a certain field that is vital for your app or website. To make sure you’re making the right choice, choose the company carefully (you may use our comprehensive guide).
The lower the price for the company’s service, the higher the risk. High-quality developers are not that cheap (even in Eastern Europe). This is why you should contact potential providers and interview them on your own. Do not trust absolutely everything you read or hear about them.
It is not that easy to check up on the daily progress and the general direction of the project when one hires a remote team. Sometimes it is simply easier to create a crew working on-site.
Remember, though, that it’s no different from hiring someone who works remotely for your internal team. If you need top-world talents, you probably choose this model of work anyway.
However, even though this side of outsourcing software may be problematic or annoying, it is all between you and the developers and what priorities you set at the beginning of your cooperation.
It is best to stick to communication – it costs nothing and can help make the working process between your teams of the greatest quality.
Don’t listen to companies that state that you don’t need to be involved in the process. It’s exactly the opposite. As a business owner, you have to be a part of your team, and you should cooperate and supervise to make the best app ever.
When interviewed, a potential outsourcing partner might assure you that they will deliver the solution without any proof. It might be the case when your app requires innovative solutions.
Beware when a potential contractor proposes you use not properly tested brand-new technologies. Those might be promising, but there’s a risk for your app development. Such technologies might not be battle-tested and not have a strong community willing to help your developers solve their problems. You may not be able to find another contractor who will overtake the project if the first company fails.
Sometimes you might have unexpected expenses, especially when the project is ineffectively managed or planned. Keep in mind that higher costs may appear because of an improperly defined scope of work. You can avoid this situation by hiring a reliable company and precisely defining the tasks to be done.
Additional costs might also appear when you need the project flexibly changed when the app concept changes (you may add some features that were not contracted). In that case, a software development company may allocate resources to develop those features instead of the contracted ones. It doesn’t mean the project is poorly managed. That means they are adjusting the project to your needs.
A situation when it makes no difference
Despite all disadvantages mentioned above, there are also certain situations where there is no difference whether we outsource software development or build an internal team. Below, you can find a perfect example of such a case.
Time to fix the problem
If you have a problem with a working product, someone has to fix it immediately. There’s actually no difference whether you have an external or internal team; the reaction time will probably be similar (unless your in-house developer will be on leave).
When outsourcing software development, you have your own dedicated team that is obligated to solve the problem within a particular time (it’s about an SLA). Sometimes such a solution might be better than having an internal team, which is always overloaded with tasks and might put off urgent fixes for a while.
Let’s sum up what was said above. There’s no golden mean for your company to choose when outsourcing development. Planning digital transformation or satisfying customers, you have to assess which solution will be best for your company and provides you with a competitive edge.
If you outsource software development, you can increase cost efficiency by reducing the costs of hiring and maintaining an in-house team, gaining an advantage from external vendors’ experience and knowledge and receiving the best quality app. If you’re involved in app development, you have everything under control and may see the external team as internal indeed.
However, there are some risks behind this solution. You might be concerned about the communication level, confidentiality and additional costs. If you’re not involved enough, you may lose control over the outsourced project. Choosing the wrong development company might even result in your app failure.
Now it is time for you to analyse all of these advantages and disadvantages of outsourcing software development services and make the decision by yourself.
Maybe you know someone that had an outsourcing team working for them, and this way, you can ask the very clients about a particular company’s services and cost? Maybe not all of the risks are applicable in your situation.
We hope that you found this article handy and that it will help you make up your mind.
If you need further guidance, check out our article on how to choose the best partner company!