Outsourcing is a strategy that can really boost your business. In this article, you will learn what outsourcing is, some of its pros and cons, as well as look at a “How-to-start” guide.
What is outsourcing? Outsourcing is a business practice in which certain company functions are assigned to outside service providers rather than performed in-house. In other words, a company seeks external help or support to performs some of its business activities so it can stay focused on core business goals and save time and money.
There is a good chance you have heard the terms offshore, onshore, and nearshore software development. But what does it really mean? Basically, the “shore” term in the phrase relates to outsourcing software developers from abroad. Knowing that there are markets with skilled and affordable talent, many venture capitalists, small business owners, and startups choose this path and outsource their developers from abroad.
However, when the terms offshore, onshore, and nearshore are brought up, they usually start Googling them and their meanings.
To save you some clicks, we will explain the difference between nearshore, offshore, and onshore software development using one picture below.
ONSHORE means you are outsourcing to a third party in the same country in which you are located.
NEARSHORE outsourcing is an under-utilized option, in which the third party is located in a neighbouring country.
OFFSHORE, therefore, simply means outsourcing to a third party in another country.
Why outsource your software development: Advantages of Outsourcing
1. Cost Savings
You may add up the cost of hiring, training, and housing staff. Whether you require a team of 5 or 1000 workers, it is much cheaper to outsource an entire project than to hire each developer individually and place the developers on internal teams. Outsourced labor in Eastern Europe may cost 80% less than the same labor performed in-house in Western Europe or North America, specifically for low-level tasks.
Additionally, you don’t need to purchase equipment or other supplies required for software development. The main objective of offshore companies is to provide customers with the best possible material handling solution at a reasonable price.
2. Time Savings
Software development takes less time when people work 24/7 to deliver your product within the deadlines you set. Also, you don’t have to spend time looking for new developers and then hiring and training them to suit your project needs.
3. Lack of in-house experience
When the internal team does not have the right experience to deliver the required solution, then outsourcing software development will bring additional knowledge and power to accomplish the task.
4. Flexibility
Hiring a full-time in-house developer for short-term projects isn’t really practical. Either you will have to keep him or her busy through the year with new projects or you will have to provide them with salary and other benefits even when they aren’t actually working. However, software development outsourcing gives you the option to choose developers for a single project. You can retain them for future projects or choose another developer if you want.
5. Focused Strategy
Your in-house software development team may have to deal with more than one project at a time. As a result, you will have to compromise on the quality and sometimes delay some projects. If you think of hiring new employees, you will have to spend time and money to recruit and train them. However, when you outsource software development, those you hire will focus entirely on the project you provide them and deliver high-quality outputs within the deadline.
6. Improved Compliance
Outsourcing software development allows you to create an automated compliance system that will reduce human follow-ups in business processes.
7. Reduced time to market
In fast-paced business environments, it is crucial to innovate quickly, and being first in the market can be a critical factor for success. For those reasons, an outsourcing company is a great solution to gain control over the speed of your software development. Rather than letting your available resources dictate the timelines, you can quickly scale a remote team to move forward much faster.
8. Technological Advances
Technology has emerged in countries around the world. For this reason, businesses trying to gain a competitive advantage start looking for external providers when their projects require complex skillsets or know-how that they do not have readily available and developing these capabilities in-house is simply not feasible. By teaming up with an external partner who has a proven track record of excellence, companies can build cutting-edge solutions in the latest technologies without having to master them themselves.
9. Bring in a fresh perspective
Writing great software frequently requires trying new approaches and thinking out-of-the-box. By adding external members to your team, you will almost certainly profit from hearing new perspectives. Remote team members might surprise you with unexpected feedback and fresh ideas about how to improve your project.
10. Less Risk
You can reduce risks by choosing an outsourcing company that has a top-grade project management team with a tried-and-true process for software delivery and maintenance.
11. Talented IT Professionals
You’ll have instant access to seasoned IT professionals by outsourcing and bypassing the gaps in hiring pools you may face in your country.
12. Improved Precision
Offshore development will improve work accuracy in terms of given deadlines on a project. Defined software will deliver accurate results in less turnaround time.
13. Forceful Strategic Planning
Outsourcing software development helps to streamline the business development processes. It will provide an intensive strategy to have an advantage in the technical race.
14. Focus on Your Core Business
Let the experts handle your product development so that you can focus on the core value of your business. In the long-run, this will help your company grow and expand much more efficiently and rapidly.
15. Reach a Broader Market
Look at outsourcing as an opportunity to grow your business in new directions from a global perspective. It allows you to work with talented developers who will take your business to new levels with their performance.
Disadvantages of Outsourcing
Are there any disadvantages of outsourcing? If you are outsourcing a project, this could create problems with standards and performance. Simply do what you do best, outsource the rest, and this will help you greatly to get the best software and provide a better user experience for your customers.
1. Lack of Control
When you sign a contract with an outsourced provider, you are effectively giving the management of your task to another company. Your vendor will not be driven by the same missions and goals as your company; they will most likely only be driven by profit.
2. Hidden costs
You will sign a contract with the outsourcing company that you hired regarding the service the company is going to provide. Take note that any details not covered in the contract will cost extra. If the outsourced company sets up the contract, you will most likely be at a disadvantage when negotiations start.
3. Risk of exposing confidential data
Every relationship between a company and an outsourced provider is built on trust. However, be careful not to expose confidential data to the software development company, as this could cause problems for your company.
Why do we outsource? There is a simple reason why software development outsourcing has become a trend. This modern business strategy combines low-cost software development and seasoned professionals. The success of any outsourcing project is important to both the customer, who hires a remote team, as well as the outsourcing company itself.
Here are some large companies that have succeeded using this strategy to launch their highly-valued businesses:
Skype, AppSumo, Github,AlertBoot, MYSQL, SeatGeek, Opera, etc.
Define Your Goals
This is a primary step for all future outsourcing activities. Describe in detail the process, product or service that you need to be outsourced. You need to bring together a core team to evaluate the outsourcing provider and start negotiations.
Check Their Experience, References and Work Samples
One more thing you need to consider is verifying an outsourcing company’s experience. Their past projects illustrate their expertise. A company’s projects show the technologies and skills that can be applied to your project as well.
Cross-Cultural Features to Consider
The country and culture of the outsourcing company are important to consider when choosing your outsourcing provider. This will tell you about the economic and social conditions of the region.
Do you think of India or China when you hear about outsourcing?
However, there are better alternatives. Whether you are a small or big business looking to hire a full-stack development team, Eastern Europe and places like Belarus may be the best option. The world’s most influential media like Reuters or The Wall Street Journal refer to Belarus as “the Silicon Valley of Eastern Europe.” From another perspective, Ernst & Young, one of the Big Four audit firms, has released a report titled “The IT industry in Belarus: 2017 and Beyond.”. Ernst & Young concludes that Belarus deserves more attention from investors and businesses that are looking for technological partners.
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