Why Do Companies Outsource Software Development?

December 17, 2021

why do companies outsource software development

If you’re like most people, you’ve probably wondered why companies outsource software development. After all, it seems like fairly straightforward professional services—you need some code written, so you hire someone to write it. 

However, there’s a bit more to it than that.

In this blog post, we’ll explore the reasons why companies outsource software development and what benefits they can reap from doing so. Let’s take a look at some of the most common reasons:

They don’t have in-house expertise 

From developing websites to creating mobile applications, companies outsource software development all the time these days. With companies having fewer in-house experts and more tasks to complete, outsourcing can be an attractive alternative.

Outsourcing allows companies to get expert work done at a fraction of the cost and time, freeing up resources to focus on other areas of business or get that ever-elusive good night’s sleep!

It may be true that companies don’t have the expertise in their own four walls, but when they look for outside help—it’s hard not to get excited about what is possible and the positive results they can get.

having another team quote

They want to focus on their core business 

Business leaders often expend a great deal of energy sidestepping through peripheral projects and activities, but not anymore. It’s the corporate equivalent of a New Year’s resolution—the realization that it’s time to get back on track, refocus energy and resources, and return to core business activities.

Outsourcing software development services allows companies to do just that. They can focus on their business objectives, letting the outsourced development team handle the technicalities and freeing up their own resources in the process.

In short, having another team on your side lets you recalibrate your goals, increase productivity, and get back on track.

They want to take advantage of the latest technology 

Software development is a constantly evolving field, and staying up to date with new technology is no easy feat! But if you’re looking for a new challenge, there’s nothing better than taking advantage of new features, gadgets, and platforms.

With software outsourcing, companies can access the latest technology without having to invest in costly training or dedicated employees. Whether it’s Virtual Reality (VR) or Artificial Intelligence (AI) development, there’s a developer out there who can help you make it happen.

Given this, companies remain competitive in the market and accomplish projects in a breeze!

They want to save money

When cost is king, companies have turned to cost-effective software development solutions to save on their bottom line. Whether they’re looking to outsource software development services, such as coding, database building, design, or maintenance, many organizations are taking advantage of what external contracting can offer—reasonable rates.

As more Australian companies scale their operations, they are looking to outsource development to the Philippines for lower costs solutions. Filipino offshore resources can be up to 20-30% cheaper than those in Australia, Europe, and the USA. Seeing this, companies get around 70%-80% savings on direct salary costs while still having access to comparable skill sets.

Deciding whether or not to outsource comes down to each company’s individual situation. However you decide to go about it, one thing is for sure: software development outsourcing saves a bundle rather than hiring an in-house team.

Startechup offshore software development team

They want to get the project done quickly

Companies who outsource software development often have the same goal—to get the project completed as quickly as possible. Thanks to modern tools and technologies, software projects can be completed quickly and efficiently without hiring full-time staff.

Companies save precious time outsourcing software developers because they can screen a perfect candidate for their software needs in less than an hour, then kick off the project that same day.

While this can be exciting, it’s important to do due diligence and make sure they choose software vendors carefully. Doing so will ensure that your software project is delivered efficiently and within budget.

They outsource because their clients demand it

Software outsourcing may sound strange, but businesses often take advantage of this practice to meet the project management demands of their clients.

It seems counterintuitive, but outsourcing can give companies more control over their project budgets and timelines to ensure client satisfaction—something that would be difficult to do without an outside team.

By taking advantage of the skills and specialization offered by outsourcing teams, companies can often finish projects faster with better results.

It’s easier to find talent abroad

With software development outsourcing, companies are discovering they will gain access to a much larger and more talented pool of software developers abroad than ever before.

Finding software development talent no longer has to mean waiting until you find the right software developer in your own backyard. One trusted software development outsourcing firm overseas can give companies greater flexibility, cost savings, and access to highly-skilled software developers with specific experience in the industry.

With this easy and powerful option available, any company can get the software development help they need without worrying about recruiting in-house team members—it’s like having your own software development superteam at the ready!

To mitigate risks

Nothing sinks the ship of a well-run business like risk. That’s why many companies choose to outsource their software development: to gain risk management benefits they might not be able to achieve within their own four walls.

With extensive software development expertise built up through experience with multiple projects and technologies, outsourcing can help businesses stay on top of potential risk mitigation solutions for greater peace of mind with their digital initiatives.

By entrusting risk management responsibilities to a third-party provider, companies can benefit from comprehensive risk assessment strategies that could potentially save them from disaster down the line.

choosing a file

Outsourcing Software Development Models

Software outsourcing isn’t a singular process. There are various cooperation models, such as recruiting an offshore team or establishing your own independent tech division internationally.

Each model has pros and cons, so it’s important to find the one that works best for your project and managed team. Consider doing outsource research and think carefully about the type of outsourcing model that best suits your company’s needs and budget.

Here are the three popular software development outsourcing models:

Dedicated Team Model

This model involves hiring an outsourcing team who are dedicated to working solely on the project. This team works remotely under the direction of a dedicated project manager responsible for monitoring progress and ensuring deadlines are met.

It’s suitable for long-term projects where the same team of developers is required for the duration.

Time and Material Model

If you’re a business that wants to outsource a specific project but maintains control over the process, the time and material model is for you.

In this model, the software outsourcing company creates a cost estimate based on a set hourly rate. This eliminates the need for close monitoring by the client while still allowing them to control costs.

Fixed Price Model

This model is suitable for businesses that prefer to outsource a project and have the provider take responsibility for the cost. They can give the outsourcing company a set budget, project requirements, and timeline—and then leave it to them to manage the process.

Most businesses prefer this model as it reduces the need for micromanagement and offers greater flexibility.

Project-Based Model

Last but not least, the project-based model is ideal for businesses that don’t have the resources or expertise to manage a long-term software development project.

It involves outsourcing the entire project to a development team, who are responsible for setting a budget and timeline and delivering results in a timely fashion.

partnering for a project

5 Tips for a Successful Software Development Outsourcing

You can outsource software development anytime, but you can’t guarantee success.

If you want to reap all the key benefits of outsourcing, consider these five tips for selecting the right partner:

1. Define Your Goals

Before you even start looking for an outsourcing partner, you need to have a clear understanding of your goals.

What are you hoping to achieve by outsourcing software development? Once you have a good understanding of your goals, you can start looking for a partner that will help you achieve them.

2. Do Your Research

Several software development outsourcing companies are out there, so it’s important to research and find a match for your needs.

Take the time to read online reviews and compare development costs as much as possible before making your decision.

3. Communicate Clearly

Communication is key when it comes to successful software outsourcing. Just like new employees, your development team needs to understand the project scope, timeline, and expectations.

Ensure you and your partner have a clear understanding of the project objectives, budget, and expectations for the final product. Importantly, initiate regular meetings and check-ins to stay up-to-date on the project’s progress.

4. Get a Trial

Before you commit to working with a software development company, it’s important to take the time to try them. This will give you an opportunity to test their abilities and assess if they fit the project.

An experienced team with established processes should have no problem offering a trial period before committing. It shows that they are confident in their abilities and have nothing to hide.

5. Prepare to Manage the Project

Even though you have outsourced teams, it’s still important to prepare to manage the project yourself. You can never know what may happen and so it’s best to be prepared in case it does.

More companies are making the mistake of thinking that once they outsource their development, all of their worries are gone. The truth is that you still need to be there to provide feedback and direction. So, don’t forget to set aside time to manage the project.

woman showing data

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We are a software development company that specializes in helping businesses of all sizes. With our years of experience, we can deliver high-quality, cost-effective solutions for a wide range of software projects.

Our team of developers is available to work with you on a range of different development projects, from mobile app development to web development and more. We commit to providing our clients with the best possible service and results, no matter what your project may be!

So if you’re looking for a reliable partner to outsource your software development project to, look no further, get in touch with us today and let us help you develop your software!

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