10 Key Benefits of Outsourcing Software Development

Arshpreet Kaur
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Table of Contents

Table of Contents

Software development outsourcing has seen a steady rise over the past decade, with U.S. companies outsourcing more than one-third of their software development projects to outside development partners. The same study also found that 99% of U.S. companies outsource at least some of their IT tasks, and the market will continue to grow in the years ahead.

What makes outsourcing so popular? We’ve taken an in-depth look at this question, and we’ve outlined 10 of the most popular reasons why companies turn to outside tech partners to address their business needs.

Why Companies Outsource Software Development

Outsourcing comes with a wide range of benefits when companies work with talented offshore and nearshore software development teams. Yes, there are risks and potential challenges involved in outsourcing, but those risks can be managed through proper vetting, solid contracts, and asking tough questions.

Many companies outsource software development for the cost savings, but that’s just one of the benefits. Outsourcing provides all kinds of competitive advantages, which we’ll outline in this blog post.

10 Key Benefits of Outsourcing Software Development

10 Key Benefits of Outsourcing Software

The competitive advantages of outsourcing range from massive project scalability to a more strategic and effective use of company resources and in-house tech talent. Outsourcing can help everyone from large enterprises to scrappy startups, and what follows are 10 of the most impressive benefits that outsourcing provides.

  • Increased project scalability

    Project scalability is one of the most powerful benefits that come with augmenting an in-house team with an outsourced development team’s efforts.

    Once you know exactly what you need to accomplish with a given software development project, you can multiply the number of developers in short order by hiring outside help. Rather than expanding your in-house development team by hiring internal staff one by one, your outsourcing partner can provide a dedicated team for the length of the project.

    The increased production leads to faster releases and results in a faster time-to-market, and it’s usually more cost-effective than hiring more full-time staff. We’ll explore that concept in more detail below. All this amounts to a powerful competitive advantage.

    The best part is that once you’ve hit your goals and released the product, you can easily scale back down if it makes good business sense. Scaling up and down as markets and product cycles demand is an effective business practice, but it simply isn’t an option without a strategic IT outsourcing program.

  • Cost efficiency

    Working with a high-quality outsourced team is almost always more cost-effective than hiring an in-house software development team. There are a number of reasons for this, including:

    • Reduced labor costs when working with many offshore developers
    • Eliminating payroll taxes and benefits costs, since outsourcing companies employ their own staff
    • No onboarding and hiring costs associated with new employees
    • Fewer managerial costs when working with full-service software development outsourcing companies that offer project management services

    All this amounts to significant cost savings when working with an outsourcing partner, but there’s one caveat. Outsourcing firms will only save you money if they know what they’re doing, follow best practices regarding cybersecurity, and strategically engage effective development methodologies like Agile.

    That’s why we don’t recommend going with the cheapest option, unless the cheapest development firm happens to come with solid recommendations and brings decades of experience to the table.

  • One-stop shop

    Working with a full-service outsourcing firm gives you access to an app development team that handles every aspect of the design, development, and testing process. If you want a dedicated team to take care of large swaths of your development and/or digital transformation needs, a full-service firm can help.

    A full-service team can be your one-stop shop for:

    • Project management
    • Market research and business analysis
    • User Interface (UI) and User Experience (UX) design
    • Software product development
    • Quality Assurance (QA) testing

    This approach can be very helpful for both enterprises and startups. While enterprises typically have strong in-house teams to handle regular IT projects, they can expand their in-house staff’s capacity by handing entire components of their IT strategy over to an external team.

    Outsourcing benefits startups as well, often helping them to create their Minimum Viable Products (MVPs) from scratch, and helping them develop future iterations with features inspired by early adopter feedback. This allows the founders to save money and focus on their business strategy.

    Once a startup business is off the ground, they can look into hiring an internal team of developers, but that doesn’t need to be the top priority—and often it’s a distraction in those early days!

  • Access to global talent

    When connecting with outsourced development teams to address your business needs, you open yourself to the possibility of sourcing designers and developers from a worldwide talent pool.

    Sure, you’re going to find plenty of developers in your own backyard if you’re located near a technology hub in the U.S. or Europe. However, when you consider the sheer volume of tech talent across the globe, it only makes sense that expanding your reach will expand your options.

    Not only are countries like India and China home to exceptional software engineers, but the low cost of living and labor amounts to highly competitive development costs. India alone has 5.8 million software engineers, making the world’s most populous country an IT hotspot.

    One of the few potential downsides to working with talent across the globe is that language and cultural barriers may get in the way of clear communication, but that’s easily avoided with thorough vetting.

    If you can clearly communicate with a potential vendor’s team, and you see that their website is written in native-level English, communication isn’t likely to be an issue.

    The other potential challenge could be time zone differences, but some companies will adapt to your time zone—we’ll do that at Net Solutions if it’s something you need. Of course, you may choose to work with the time zone difference so production carries on around the clock. It’s all up to you!

  • Focusing on core business needs

    Technology plays a key role in nearly every business today, but in many cases, its primary role is to support a larger business strategy using the latest technologies and powerful software solutions.

    Non-technical leaders don’t want to get bogged down in managing the development process, and working with an outsourcing partner helps them focus on what they do best—things like big-picture strategy, product positioning, getting investors onboard, and other key tasks.

    When it comes to technical leaders, it’s perhaps even more important to have a quality, full-service development team in place that can successfully manage the day-to-day tasks related to software development.

    We say that because technical leaders can sometimes get lost in the development weeds, which can be time-consuming and pull them away from tasks that require their leadership.

  • Reduced HR burden

    Human Resources can cost up to 25% of a company’s budget. That may seem expensive, but when you consider all the costs associated with recruiting, hiring, onboarding, training, managing conflicts, firing, and other HR-related duties, it’s easy to see why HR is so costly.

    One way to minimize HR costs is through outsourcing services. An outsourced service provider handles all their own HR-related tasks because they hire and manage their own employees. That means you can keep your in-house staff lean and successfully manage HR costs.

  • Access to technology

    Technology stacks are constantly evolving, and assembling the perfect technology stack for your business is a challenging process.

    When working with an outsourced team that offers cutting-edge software development services, they’re likely to be plugged into the latest and greatest technology, and they probably understand all the most beneficial software development outsourcing trends. After all, they’re specialists in the field and their livelihoods depend on it.

    When hiring an outside vendor, ask them about their technology stack and what they believe might be an ideal tech stack for you (at least preliminarily, based on how you assess your current needs).

  • Expert domain knowledge

    Specialists really do save you time and money, even if you ignore the savings associated with lower labor costs. That’s because a professional who specializes in a given task will do it more efficiently, and they will minimize the need for rework.

    When building an in-house team, especially in a startup or even a mid-size company, it makes sense to fill your IT department with team members who can perform a number of different tasks. After all, business demands change daily, and you need professionals who can adapt.

    When hiring a good-sized, talented, full-service outsourcing partner, rest assured they can assign specialists to each element of your project. That makes for an efficient, knowledgeable team that ultimately saves time, saves money, and produces quality software products.

  • Improved time-to-market

    Time is of the essence with new software products and software releases. The first-mover advantage is real because customers don’t like to change vendors unless they see a powerful advantage in switches. If you can produce a quality product and beat your competitors to the market with new features, it will be that much harder for them to poach your customers.

    One of the reasons the software outsourcing market is so strong is that working with an outside partner can significantly reduce your time-to-market.

    This circles back to the first benefit we explored—increased project scalability. If you can scale a project quickly, you can speed up the development process and hopefully beat your competitors to the punch.

  • Maximized resource utilization

    A key benefit of outsourcing comes down to using your tech talent for what they do best, which is why many companies use a staff augmentation model. If you’ve got talented senior developers on staff, you don’t want to squander their talents on simple tasks that a junior developer could handle.

    Companies that don’t work with outsourcing partners often struggle with resource optimization since their top staff gets pulled away from more challenging and important tasks—those that meet their pay grade and warrant the salaries you’re paying them.

    This isn’t just bad business from a cost-benefit standpoint—it’s likely to impact employee retention because top talent will get bored doing mundane tasks. Like all skilled professionals, they like to be challenged.

    Hiring an outsourcing partner connects you to a team of professionals who can free up your most prized human resources to do what they do best—solving complex problems and adding massive value at every step.

Now Over to You

Are you looking to reap the rewards of outsourcing?

Net Solutions has been working with startups and enterprises for more than 20 years, helping with every aspect of software development—from business analysis and project planning to design, development, and testing.

We’ve worked with leaders like Unilever, Xerox, and American Golf, along with ambitious starts. And we handle everything from new product development to digital optimization.

Talk to one of our specialists today to explore how we can help you achieve your business goals.

Arshpreet Kaur
Written by

Arshpreet Kaur

Arshpreet Kaur is a Lead Business Analyst passionate about resource management and in-depth, data-driven competition analysis. She is a highly motivated and results-oriented individual with a proven track record of increasing team productivity.

Arshpreet’s well-rounded knowledge of engineering concepts and a certification as a Scrum Product Owner helps her handle multiple projects effectively while defining the product vision and delivering value to customers.

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