Why Outsourcing Software Development Is Crucial for Your Business?

Living in the age of globalization, every business needs to invest in technological innovation. Moreover, the competitiveness within the industry has pushed companies to find ways of improving their operational models consistently. One of the most efficient ways to optimize work while innovating is resource allocation. While setting up the groundwork for a new project, the first course of action is to allocate your resources and finances accordingly. This applies to software development projects as well. 

Despite the ambiguity surrounding how and when to outsource software development, there is a high demand for third-party software development outsourcing companies. This is endorsed by Statista’s expert researchers, who estimated the overall revenue generated for IT offshoring would be 351 billion U.S. dollars by the end of 2021. 

Before deciding whether to outsource your software development project, let us understand what outsourcing is.

What Is Outsourcing?

In layman’s terms, outsourcing refers to the process of disseminating business operations to third-party service providers. These service providers have their own on-roll workers skilled at offering the specific solutions that the client companies require. Furthermore, outsourcing partners have the relevant infrastructure, tools, and technologies to deliver world-class services. 

However, often the main question that clients have is how is outsourcing different from an in-house setup.

Difference Between In-House and Outsourcing

Determining whether you want to establish an in-house team of software developers or outsource your project to a renowned software development company can often be tricky. An in-house development team will work under your payroll and execute specific tasks for which they have been employed. However, it can be extremely expensive for small and medium enterprises as they need to invest in the infrastructural configuration, tools, dedicated devices, and recruitment process. Moreover, they would have to conduct necessary employee training, offer HRA benefits, paid vacation days, and other benefits to the salaried staff.

Contrarily, outsourcing offers you the freedom from going through extensive recruitment drives to identify skilled professionals for every single aspect of the project. Businesses can hand over their entire development projects to an experienced software development outsourcing agency to get the product they want at an affordable price. Additionally, outsourcing reduces the expenditure on the workspace. They also get access to world-class talents from across the ocean without any added toll to their budget.

Types of Outsourcing Models

There are six software development outsourcing models based on two primary determinants - Location and Relationship.

a. Location-Based Outsourcing

Location-based outsourcing solutions are determined by the distance between the hiring company and the outsourcing partner.

1. Onshore Outsourcing

Onshoring, also known as onshore outsourcing, is where the client company is based in the same country/province as the outsourcing service provider.

2. Nearshore Outsourcing

In nearshoring or nearshore outsourcing, the client outsources services to a partner located in a neighboring or nearby country. Often both parties are based in the same time zone.

3. Offshore Outsourcing

Offshoring or offshore outsourcing defines the process of outsourcing services to an outsourcing agent situated in a more distant country.

Nearshoring and offshoring modules are opted to receive services at a more affordable cost as opposed to onshoring. 

b. Relationship-Based Outsourcing

Relationship-based outsourcing models are defined based on the responsibility carried out by the client and the outsourcing firm.

1. Staff Augmentation

This model places the majority of the responsibility on the hiring company. The client company subcontracts just the workforce from the outsourcing service provider to offer additional support to your existing internal development teams.

2. Managed Team 

In managed team model, the software development outsourcing agency is a separate entity with inherent frameworks and management. The client shares the responsibility of development projects with the outsourcing partner, that acts as a middleman, finding the right talents to complete assigned tasks.

3. Project-Based Outsourcing

As the name suggests, Project-based outsourcing is where the client company assigns an entire project from development to deployment and maintenance to the service providers. This is ideal for mitigating large bulk of operations while ensuring quality control.

How Outsourcing Software Development Projects is Beneficial?

From small-scale businesses to multi-national corporations, a vast majority of industries are opting for outsourcing their software development requirements. The following are five key advantages of outsourcing software development projects.

1. Cost-Effective

The top software developers can help you greatly minimize the expenses of developing software solutions. Businesses not only save substantially on devices and office spaces but also can get experts from nearshore and offshore to get the same quality solutions for a reduced price. Moreover, you do not need to spend on licensing high-end tools and technologies as the service provider bears the cost of such resources. The software development outsourcing companies also offer multiple payment modules such as Fixed price, Profit-sharing, Consumption-based pricing, Time and Material, and Incentive-based pricing model. This allows service seekers to select a customized pricing structure that suits their budget.

2. Easy Scalability

Every project has its high points where multiple departments are simultaneously working as well as low points where just a single unit is operational. This calls for flexibility which can be challenging to attain with an in-house setup without having downtime. Outsourcing offers you the flexibility to upscale or downsize your resources whenever necessary. Moreover, outsourcing allows you to add resources to fast-track your software development process. You can also incorporate selected teams and agents based on the development phase. For instance, you can hire a staff of agents who offer post-deployment support to your customers only after your product is live.

3. Wide Talent Pool

With the growing demand for world-class capabilities, it is becoming harder and harder to hire skilled personnel for companies. Outsourcing software development solutions empower businesses to work with the world’s best consultants regardless of their location. Whether you’re looking for developers skilled in a specific language and framework, graphic designers, project managers, etc., you can choose the best partner, free of geographical constraints. You can request specialists with in-depth domain knowledge and proven experience in your industry at no added cost. The market-specific expertise of these talented professionals helped businesses transform their core operations into profitable ideas.

4. Faster Deployment

Software development is a long-drawn-out process that compels all the active members to take extra care at all software development phases. Even the sales and marketing teams face bottleneck situations while promoting new products to the market. Having programming and coding experts at hand helps reduce the stress on all involved teams. Full-fledged software outsourcing partners have teams on standby for your projects. You can either hire teams to work on your project from scratch or employ staff augmentation at any stage of the process to offer rapid support to your team. 

5. Reduce Risks

Developing and deploying new applications have their own set of risks. These risks can lead to make-or-break situations for startups and SMEs, resulting in catastrophic failure for the entire business operations. A failed project can be impossible to recover from even after having dedicated in-house employees working full-time on product development. Outsourcing software development to skilled professionals can help businesses mitigate risks associated with developing products. They employ experienced teams that have established an effective workflow. They further take advantage of a high-quality project management system to create software applications that generate solid ROI. 

What Questions to Ask the Software Development Outsourcing Partner?

When selecting a software development firm, you need to evaluate a wide range of different aspects. These can range from assessing the number of developers who will be working on the project, the pricing model, the estimated period of the project. You also need to focus on the technical elements like languages and technologies to be used, the documentation, the software development tools, and the frameworks employed. However, before signing the contract, you must ask the following questions to get an unequivocal idea about the deal.

1. How Can I Help You Understand My Project Requirements?

This is the basic and most important question for either selecting or rejecting a company. If there is a gap in either communicating or comprehending the project requirements, you may end up with an application that is very different from what you imagined. The best software developers will ensure that they have a thorough awareness of your company's problems, timeframe, resources, budget, and market objectives.

Bonus points go to the firm that plans to provide prototypes, proof of concepts, and minimum viable products (MVPs) to express their knowledge and allow you to grow and improve your perspective.

2. What Is Your Software Development Approach?

It is usually a good idea to inquire about the competing development company's software development process. The top custom software development firms will use a tried-and-true strategy that ensures consistency and quality. Inquire about their Agile methods, UX/UI research, iterations, QA testing, and so forth.

Remember to inquire about any protocols they've ensured in previous projects to avoid system breakdowns, as well as how they plan to apply such tactics to your project. It is critical to find a software developer who can ensure there are no grey areas in the product once it is deployed. 

3. Do You Provide Software Maintenance and Staff Training?

Businesses may require the inclusion of fresh features and functions, as well as the fixing of defects and the timely delivery of updates after the software has been deployed. Post-deployment assistance is provided by the best software development businesses. Most software engineers for hire also provide software training to your in-house staff.

Inquire about the structure of maintenance and training provided by your possible software development firm. It's critical to clarify if these services are included in the previously mentioned budget or are available as an add-on.

4. What Level of Participation Do You Expect From Me?

It is critical that you properly state all of your needs to the software development business in order for them to produce software that matches your expectations. Depending on the software development approach, the development team may need to keep in touch with you on a regular basis.

Inquiring about your anticipated participation with the developers will enable you to make timely suggestions for any desired adjustments. Furthermore, both parties will be able to fulfill their particular obligations, resulting in a smooth software development process.

5. Why Should I Sign a Contract With Your Company?

This may appear to be a pretty broad issue. However, if the potential software developer's response is typical, it's possible that they don't comprehend your project. They should be able to articulate their qualities and potential contribution in terms that are relevant to your project.

At the same time, it's critical not to fall for service providers' exaggerations! Demand for samples or demonstrations of the team's quantifiable services and solutions. Hire a software developer with a proven track record in your sector that demonstrates their expertise and relevance to your project.

To Conclude!

Since we live in a technologically dominated era, outsourcing software development can help you transform your business. However, trusting an external team that can help you conceptualize your ideas into reality can be difficult. With Goodtal, you can hire all-inclusive software outsourcing partners or opt for dedicated Java developers, Python developers, Golang developers, or others based on your project requirements.