Software Development Outsourcing: Pros vs. Cons

Software development outsourcing is more popular than ever. And it should be – it’s never been easier.

But companies should be aware of the risks involved, especially when rushing into projects for the sake of advancement. In this post, we’ll break down the pros and cons of software development outsourcing and how to help your business mitigate the risks.

For companies looking to advance their IT capabilities and maintain a competitive edge in their market, software development outsourcing may be the answer. And the data backs it up: in a 2018/2019 survey, 56% of companies reported using software development outsourcing to elevate their organization’s processes.

So, let’s say your organization has an idea for a new software product, and you want to take it to market. Is outsourcing the way to go? First, ask yourself these questions:

  • Are your internal development processes outdated or inefficient?
  • Does your organization lack the capability to develop the software in-house?
  • Is your internal IT team overburdened and lacking bandwidth?

If you answered “yes” to any of these questions – outsourcing your project probably makes more sense than keeping development in-house. But we’re getting ahead of ourselves. Before you commit to a decision, let’s take a look at what to expect from software development outsourcing, starting with the advantages.

Software Development Outsourcing Pros

Pro #1: It’s Better for Your Customers

The most significant factor when deciding whether or not to outsource development should come down to your customers. We say “should” because a lot of companies will focus only on cost. And while outsourcing will absolutely help you cut costs – the long-term benefit is that it will make you better able to serve the people that pay you.

But only if you’re working with the right development partner.

A solid development house will make you leaner and more responsive to market demands. This helps you accelerate delivery of new products and features, improve user experiences and focus more on customer service. As a result, you’ll retain more customers and increase referrals – both of which can help reduce marketing costs long-term.

Pro #2: It’s Better for Your Employees

Software development outsourcing can improve the overall quality of your offering and fill in the skills gaps of your existing team. This means decluttering your internal processes so employees can focus on the work they do best, and do it faster than before.

Gaining access to highly skilled developers will also help boost your own team’s expertise through knowledge-sharing. This, in turn, will reduce errors and repetitive tasks and make it easier for your employees to bring more value to your business.

Lastly, with a development partner streamlining your organization, your team can say goodbye to extra hours and late-night shifts. This way, you’re able to provide them with a better work/life balance, and they’re happier because of it.

Pro #3: It’s Better for Your Operations

A good development partner will optimize your operations because of how effectively they keep you on schedule. An offshore or nearshore vendor can reduce time-to-market by utilizing follow-the-sun software engineering principles. This means your team can meet tight deadlines and milestones when they’re supposed to, and sales and marketing can do their job on schedule.

A good software development company will also set the example for your internal team when it comes to increasing productivity in the SDLC. This includes best practices like implementing reusable components and flexible app structures, establishing a continuous deployment process so new features roll out seamlessly, and using test automation to improve test coverage of complex systems.

Now, that all sounds great. So, what would make a company think twice about outsourcing development to an expert? Well, like anything else, there are a few disadvantages to working with a third-party developer. But they only crop up if you’ve picked the wrong partner. Let’s take a look at why.

Software Development Outsourcing Cons

Con #1: Communication

The most critical disadvantage to be wary of when outsourcing software development is a break-down in communication. Is your potential partner from a western or eastern cultural background? Do they speak your language? Do they share similar values to those of your internal team? Do they have reliable communication methods and tools?

Time zones and language barriers are natural roadblocks to effective communication. Meetings have to be rescheduled, or they don’t happen at all. Then, project goals and direction become misconstrued, slowing development.

Poor communication also hampers innovation. If clear roles are not communicated at the beginning of the engagement, the outsourced firm will be forced to take a reactive approach to development. This means the product will suffer and so will your customers.

Con #2: Confidentiality

You always assume a few risks when you outsource. One of them has to do with IP. This is because hiring a team to help build or complete a product exposes your intellectual property to an external organization.

If you want to protect your IP, work with vetted, reputable vendors. This is especially crucial if you’re outsourcing to a nearshore or offshore company and you have zero experience managing the communication hurdles we talked about above.

Again, this is why you can’t take any shortcuts when choosing a partner. Find a company that can demonstrate their experience with results, case studies, and references. You should be able to get a clear idea of what it’s like to work with them before you sign on the dotted line.

Con #3: Company Morale

It’s normal for internal teams to feel threatened by outsourcing. So, if your organization decides to outsource, it’s important to communicate clearly with your team – especially if they are technically capable of getting the job done.

Also, just because you want to outsource, it doesn’t mean jobs are at risk. If so, be sure to make that crystal clear to your team. Because, as we reviewed earlier, outsourcing can offer many benefits for employees and they should have a chance to hear about them.

The Bottom Line

Software development outsourcing comes with a few risks, but with the right research and due diligence, you can avoid them without much effort.

But there’s one risk we didn’t cover: Waiting too long to get started. In this day and age, it’s easy to fall behind the curve and lose your competitive edge. So, by all means, take the time to look for a partnership that benefits your project, customers and employees. Just don’t take too much time.

Need a nearshore software development partner to help you get your product to market fast? We can help. Contact us today and tell us about your project.

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