How to Make Software Outsourcing Work for You

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How to Make Software Outsourcing Work for You


Vaishnavi Shah

Published September 14, 2022

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Software development has become a critical part of businesses. To thrive in the digital world, most leaders rely on web applications to gain a competitive advantage. But developing high-performing and user-friendly applications can be a costly endeavor. 

Today, business leaders are unlocking value by outsourcing most high-value functions, including software development, testing, and quality assurance. Whether prompted by the shortage of talent or the increased need for digital transformation, the importance of outsourcing is growing. 

Research shows that 45% of global companies plan to outsource their work. As customers rapidly move to digital channels, it’s time for businesses to ramp up their technology stack and get access to the best talent pool to curate engaging customer experiences. 

Let’s explore why companies outsource their software development function and how it can benefit your business. 

What is Software Outsourcing?

In simple words, software outsourcing is delegating the task of software development to a reputed company. You hire developers, software engineers, testers, and other experienced professionals for a fixed period to help you design, develop, and test software. 

The best thing is that you can delegate the tasks to a third-party vendor based on your needs. Whether onshore or offshore, outsourcing enables you to secure the right talent for your project.

Imagine this: You have designed a project management tool, and your in-house team has even developed it. But you don’t have the people or technology to test the application for bugs. This is where outsourcing comes into play. You can outsource your software testing process to a third-party vendor and get everything done cost-effectively. 

As opposed to hiring an in-house team, outsourcing helps your business maximize profit by cutting-down costs and increasing efficiency. 

Top Reasons Why Companies Outsource Software Development

In the wake of recent economic and technological disruptions, customer habits have changed drastically. Under such circumstances, launching applications on schedule and being able to focus on other business activities can be overwhelming for even the most capable IT leaders.

Thankfully, outsourcing can help you tackle software development challenges easily.

Some of the reasons why companies choose to outsource software development are: 

  • Access to a Global Talent Pool

Attracting and retaining talent is a challenge for companies worldwide. A shocking survey revealed that talent shortages in the US were at a peak in 2020, and the situation doesn’t seem to be improving anytime soon. 

Today, talent search has become a global phenomenon. Outsourcing allows you to get easy access to the most talented workforce in the market. 

Whether you need the top 1% of developers, software engineers, or designers, you can screen the best people for your project. Even players like Slack, Google, and Amazon use the outsourcing strategy to design and deliver the best applications to their users. 

  • No Need to Build an Infrastructure From the Ground 

The cost of building an IT infrastructure can be sky-high. From up-front costs to maintenance fees, the budget for running the infrastructure can easily exceed. It also needs constant upgradation. 

For instance, most companies integrate their cloud platforms with cutting-edge technologies like AI, Blockchain, and IoT for faster data analysis and better personalization opportunities.  

This is not all. According to Forbes, software deployment can also lead to massive costs as it needs networking, storage, and operating systems. 

With outsourcing, you can avoid paying such sky-high costs. Reputable outsourcing companies have the technical capabilities and the expertise to handle projects of high complexity. They also offer flexibility and scalability options to enterprises to accelerate their growth. 

  • Faster Time-to-Market 

In the past two years, valuable lesson enterprises have learned is that things can change pretty fast. Digitalization and data have enabled teams to work from anywhere in the world. In such a market, speed-to-market can be a differentiating factor. 

Let’s talk about this practically: Customers are paying extra for speed. They are buying Youtube subscriptions to make their video load faster and paying additional fees for their packages to arrive quickly. If you delay a software update or take time fixing a bug, this is going to disappoint your customers. 

The truth is that 86% of buyers are willing to pay more for a better customer experience. But if you take too long, you have to say goodbye to additional revenue opportunities. 

Thankfully, you can save a lot of time and effort with outsourcing. 

Outsourcing benefits your business by reducing the time to develop and deploy software applications. You will immediately get solutions to problems you face by working with a team of experienced professionals. By doing this, you can accelerate the delivery pipeline and put the product in the hands of your customers without them having to wait too much. 

How Outsourcing can help

Things to Consider When Designing a Software Outsourcing Strategy

Outsourcing is a lot like playing a game of football. You work towards scoring a goal 

through teamwork. But to get there, you need a plan. Here are the top things you need to consider when designing a software outsourcing strategy for your business. 

  • Map Out the Desired Outcomes

As mentioned above, business outsourcing begins with an end goal. If you don’t have an end goal or fail to communicate it to your partners, things can go sideways. A simple solution to this is defining everything in a contract. For instance, if you want technological advancements in your applications, you can create project descriptions specifying the desired outcomes and the skills you need. 

Creating concrete deadlines and deciding on key performance indicators will help you set expectations from the start.  

  • Do a Cost-Benefit Analysis

The purpose of doing a cost-benefit analysis is to control costs and derive a significant ROI. Here are some objectives you need to consider when opting for business outsourcing: 

  1. Determine if outsourcing a software development project is justifiable by weighing the costs against the benefits. 
  2. Compare the cost of developing the software project in-house and with a third-party vendor and decide which one benefits your company. 
  3. Keep a small budget aside for unexpected expenses and key that in with your cost sheet. 
  • Understand the Difference Between Offshoring and Nearshoring

Nearshoring is when you decide to outsource business operations nearby your country. Similarly, offshoring is when you outsource business functions to any country, near or far. You should note that with nearshoring, you get benefits such as time zone compatibility, better culture fit, and fewer language barriers. Offshore outsourcing is usually less expensive, but you may have to tackle cultural and geographical differences. 

Most successful businesses opt for a hybrid approach based on the scope and project complexity. 

  • Evaluate the Proposals From Vendors Carefully

When scouting the market for vendors, many will claim to have the expertise and the technological platform to help you get results. 

In reality, this does not happen. When deciding on a vendor, you should look beyond their proposal and do market research. It includes evaluating the reviews, ratings, pricing structure, and portfolios. 

Open the World of Endless Possibilities with ATC!

Being in the market since 2008, ATC has helped the world’s leading companies design, build, and deploy applications with the best user experience. From doing core development work to software testing, our experienced team can handle complex projects of any size. 

If you are an enterprise looking to scale your operations and get measurable results, our skilled team will understand your requirements and help you turn your idea into reality. 

Have any questions regarding our software outsourcing services? Don’t hesitate to reach out to us.

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