The Pros and Cons of Outsourcing Software Development

September 14, 2022

pros and cons outsourcing software development

Seeking outsourcing software development companies is easier than ever. Even big names in any industry rely on third-party companies to accelerate certain aspects of their operations.

In every sector and industry, the demand for software development is soaring. Anticipate a remarkable annual growth rate (CAGR 2024-2028) of 10.99% in IT outsourcing revenue, propelling the market volume to US$777.70 billion by 2028!

Whether to save money or get competitive, there are many benefits to outsourcing software solutions, but there are also some risks that should be considered.

Do you think that outsourcing is the best option for you?

Let’s take a look at the pros and cons of outsourcing software development that can help you make a decision:

The Pros of Outsourcing Software Development

Nowadays, software development teams are hired not just to troubleshoot issues but also to provide innovative solutions.

Here are the top six benefits of outsourcing software project:

1. Focus on your core business

While some businesses choose to keep software development in-house, outsourcing projects can often be a more productive option. Your in-house staff is limited by time or quality, while outsourcing allows you both flexibility and expertise that will improve any project outcome.

In-house teams are great, but they can be spread thin. This is especially true for software projects where quality should never be compromised. To save you time and stress, avoid DIY-ing your mobile or web development project.

It’s also the best option if you have another project in the working process because then there will be no distractions from either side of this deal, making everything run smoother for everyone involved!

2. Cost savings

Outsourcing your SaaS application development project overseas might be your best idea if your main goal is to reduce the cost of that project. Besides, you’re not the first business owner to do it anyway.

According to the 2020 study by Deloitte, 70% of companies who choose to outsource their software development projects do so to save money. It’s no wonder why many software development outsourcing companies are booming!

Latin America, Eastern Europe, and Asia are the locations you should consider when looking for affordable rates. Take advantage of economies of scale, as outsourced teams from these areas often have access to lower-cost resources.

The Philippines is a great spot for businesses seeking top-notch, cost-effective business processes. With a skilled English-speaking workforce and lower costs, it’s no surprise that companies opt to outsource their software projects here more and more.

[Also read: Offshore Software Development: Philippines vs. Spain]

StarTechUP is a Philippines-based company offering software development services to clients from all over the world. We have highly skilled developers, project managers, and quality assurance specialists who will get the job done for you.

StarTechUP Tailor-made Software Development Services

3. Access to talented developers

Do you have preferred programming languages that you want to use for your project? If so, you should know that one of the advantages of outsourcing software development is access to a global pool of talent.

More often than not, offshore teams have a wealth of skills and experience that may not be available in your local market. You can find developers with the expertise you need to get the job done right.

With the demand for hiring specialists on the rise, finding top talent can be a challenging task. A recent report from the IMF points out a worrying forecast: a tech talent shortage of over 85 million workers is expected by 2030. That’s why you need to take proactive strategies to attract and retain skilled professionals in the evolving tech industry.

But when you gain access to a trusted external partner with a pool of talented resources, you can complete projects quickly and efficiently. What’s good is that dedicated teams work solely on your project, so you know what to anticipate.

4. You don’t have to worry about managing a team of developers

It may not be the most obvious among the outsourcing software development advantages, but you may find it convenient that you don’t need to manage another team. You can avoid those headaches because the outsourcing company takes care of everything.

The recruitment process, management, and quality control for a team of developers are no longer your problem. Likened to hiring new employees, you still get to see the skills and experience of the outsourcing team that will be working for you.

Outsourcing providers have a rigorous selection process so that you get the best talent for your project. You also don’t need to deal with conflicts and differences in working styles, as the outsourcing company will handle all of these issues.

5. Application of innovative technologies

outsourced software developers quote

Aside from talented developers, getting access to the technology stack is definitely a pro in outsourced software development. Artificial Intelligence, automation, and machine learning technologies are only some of the most used in IT projects, and using them in your business would attract more customers.

You can’t fully rely on your in-house development team to keep up with the technologies today, let alone upskill in such a short time. Since software development changes at a rapid pace, it’s better to save your internal resources for your core business operations.

With outsourced software developers, you can be confident that you are working with experienced professionals. They are always up-to-date on the most innovative technologies in the industry, giving you a competitive edge in your industry!

6. Faster time to market your software product

One important aspect of marketing your software product is the time it takes to reach your target audience. However, you can save a lot of time when you outsource software development.

By teaming up with professionals with technical expertise to work on your product, you can get your product to market faster and make sure it meets the latest standards. They can handle all aspects of development, from design to coding to testing.

As a result, you can focus on other aspects of marketing, such as promotion and sales. That’s why more and more companies are software development outsourcing. It’s definitely a smart choice if you want to stay competitive in the market.

[Also read:

The Cons of Outsourcing Software Development

Of course, like any business decision, there are also potential drawbacks to outsourced software development.

Here are some of the six common cons that businesses may face:

1. Hidden costs

Although cost-efficiency is one of the outsourcing software development pros, many businesses have fallen victim to additional costs. Be careful of outsourcing companies that charge hidden fees for project management, administrative support, and electricity.

woman recording the hidden costs

These hidden costs can quickly add up, eating into any savings that were achieved by outsourcing in the first place. All of these can lead to project delays and added expenses.

Before you outsource any project, be sure to have a clear understanding of all the costs involved at the very beginning. This includes getting predictable billing to ensure you’re not going to spend beyond your budget.

2. Difficult to find the right outsourcing company

With so many options, it can be tough to know where to start. Expect to spend plenty of time sifting outsourcing firms in other parts of the world. Not to mention the significant time zone differences that can make communication and project management a challenge.

To avoid this, look into websites that review offshore software development companies. Remember that this step is a significant investment for the growth of your company, and these efforts will pay off when you find the right one!

Here’s a tip: Ask about their company culture and what makes them different from other outsourcing companies. This will give you a better idea if they are the right fit for your project.

3. Lack of control of the project

Compared to working with an in-house team, outsourcing development services requires you to give up some control over the project. This can be difficult for those who like to be in charge and have a lot of input into every aspect of a project.

If you are concerned about a lack of control, try a partner company with a similar management style to yours. This way, you can be assured that your vision for the project will be understood and executed properly.

You can also try out practices like the ones you use with your internal team, including regular check-ins and updates to make sure everything’s going smoothly. Your development team will have a project manager to keep communication flowing between you and the developers.

4. Security risks and confidentiality issues

security measures quote

Involving strangers in your development project is one of the disadvantages of outsourcing software, even if they say that they are the best-dedicated team in the industry. There is always the potential for security risks when outsourcing.

Although the same risks apply to in-house employees, your communication with an offshore team relies heavily on the Internet. Your outsourcing partner can easily stop any contact in an instant. This can be scary for companies worried about security breaches and data theft.

If security measures are not in place, your confidential information could be at risk of being leaked. Your company’s confidential information, such as your trade secrets, could be leaked to your competitors.

It’s imperative that you only work with a reputable third-party vendor. When you’re considering offshore software developers, be sure to ask about their security protocols and what they do to protect client information.

5. Costs can pile up

One of the most significant disadvantages of outsourcing software is that it can be hard to keep track of spending. While working with an outsourced team can help save on costs in the short term, there can be difficulties recovering from these costs down the road.

Monitoring the team’s working hours and ensuring the project’s internal processes are on schedule can be a lot of work. In addition, outsourced teams can sometimes be less responsive to your needs and less flexible due to time zone differences.

You may not have as much visibility into how your money is being spent, which can make it hard to manage your costs long-term. When considering software development outsourcing, be sure to weigh the short-term cost savings against the potential long-term costs.

6. The language barrier

Software development outsourcing firms are usually based in other countries. This can lead to a language barrier, which can be frustrating when communicating your company’s vision for digital transformation.

Outsourcing teams that can speak English is ideal. One of the key benefits of outsourcing in Asia is their skills in speaking English. However, some companies may not be using the latest technologies, which could cause your project to lag behind.

Otherwise, you run the risk of miscommunication and misunderstandings. Remember, personal communication is essential. Be sure to have regular video calls or in-person meetings if you want a smooth process in when you enter the SaaS development outsource arena.

startechup contact us

5 Tips for Successfully Outsourcing Software Development

Now that you’ve weighed the offshoring software development pros cons, you’re probably thinking of starting right away. When done right, software outsourcing can save you time and money while providing you with a high-quality product. But when done wrong, it can be a costly mistake. 

Here are 5 tips for acquiring the huge benefits of software outsourcing: 

1. Define your business goals 

Before you start reaching out to a potential outsourcing partner, take some time to think about what you want to achieve with your project.

  • What problem are you trying to solve?
  • What features do you need?
  • What is your budget?

Answering these questions will help you find the right vendor for your specific needs.

2. Thoroughly check their company profile

Once you know what you’re looking for, it’s time to do your homework. Talk to your network of business owners and see if they have any recommendations.

Once you’ve narrowed down your options, take some time to read online reviews and check out the website and portfolio of your prospective external vendor. This will give you a good sense of their work style and whether or not they’re a good fit for your project. 

3. Have a plan 

Many business owners make the mistake of not having a clear plan for software dev or business process outsourcing. Before signing any contracts for outsourcing services, make sure you have a detailed project plan that outlines your objectives, milestones, and deliverables. This will help ensure that both you and your remote team are on the same page from day one.

planning the project

4. Be present in every step

Just because you’re outsourcing doesn’t mean you can wash your hands of the project altogether—you still need to be involved in every step of the development process to ensure that everything is going according to plan.

Schedule meetings or virtual check-ins with your service provider so that you can track progress and give feedback as needed. Don’t hesitate to speak up if something isn’t going how you want it to—after all, it’s your project!

5. Manage expectations 

Last but not least, it’s important to manage expectations on both the advantages and disadvantages of outsourcing. Make sure your service provider knows what they’re getting into and that they’re realistic about what they can accomplish within your budget and timeframe.

Similarly, don’t expect miracles—understand that there will always be some risk involved in software dev outsourcing and even in knowledge process outsourcing and that delays are inevitable from time to time. If both parties go into the project with their eyes open, everyone will be able to weather any bumps in the road that come up along the way. 

teaming up with software developers

Let’s Team Up for Your Project!

When it comes to outsourcing your software development, StarTechUP is a clear choice. Our team of experienced developers are experts in a range of programming languages and have years of experience working with clients worldwide.

We understand the importance of meeting deadlines and producing high-quality work, which is why we guarantee both on-time delivery and 100% satisfaction with every project we undertake. So, when it comes to web development, mobile app development, and IT staff augmentation, let StarTechUP be your partner in success.

So if you’re looking for a reliable, affordable, outsourced development team that can help take your business to the next level, book a free consultation with us today!

About the author: Andrea Jacinto - Content Writer

A content writer with a strong SEO background, Andrea has been working with digital marketers from different fields to create optimized articles which are informative, digestible, and fun to read. Now, she's writing for StarTechUP to deliver the latest developments in tech to readers around the world. View on Linkedin