Apart from maximising profit and driving growth through innovation, businesses are also focused on gaining a competitive advantage through outstanding customer service, optimizing efficiency and reducing cost. However, your company doesn’t have forever to achieve all these goals. So you might be looking for a solution. Many organizations would agree without a second thought that the quickest way to get there is by outsourcing.
Although this technique is now widely adopted by many startups and even established companies, outsourcing software development has both downsides and advantages. This article will discuss the benefits and drawbacks of this practice.
Image Source: By Jirehg [CC0 Creative Commons] via Pixabay
Benefits of Outsourcing Software Development
If you’re aiming for a strategic approach towards your business, outsourcing will be a fitting choice. Here are some of the benefits you can expect from outsourcing software development:
#1. Its Cost-Effective
The first thing that comes to mind when you think about outsourcing is its cost-effectiveness. Businesses outsource software development projects to other agencies because it costs them much less than it would if they had assigned an in-house team to the task. This makes outsourcing a great option for start-up businesses, who often struggle with limited finances in the beginning.
So why is outsourcing IT or software development so cost-effective? According to Tholons 2016 ‘Top 100 Outsourcing Destinations,’ Bangalore in India holds the first position as the most preferred place to outsource from and Philippines Manila (NCR) comes second.
To better understand why outsourcing is cost-effective, you need to differences between annual average salaries earned by software developers in India and the Philippines and annual earning of software developers in the US and UK. According to a PayScale analysis, average salaries of software developers per year in India is $6097.951 approx. and in the Philippines it is $7264.347 approx.
In the US, however, a software developer’s annual average salary is $69,083 approx and in the UK it is $39429.60 approx per year on average. You can see there’s a huge gap in the pay developers are getting in different countries for the same job profile.
So if a company in the US plans to employ an in-house software developer then it is not necessarily taking into account the cost savings that would result from outsourcing software development from countries like India or Philippines. Going by the PayScale estimates, the average difference in the cost for the US company to hire a professional based in the US would be $62,985 approx per year compared to India and $61,818 approx per year compared to the Philippines. This clearly shows how cost effective it is to outsource software developers for companies.
#2. Allows Time to Focus on Other Essential Tasks
Offshore software development agencies save you a lot of time. Especially the start-ups are always strapped for time. Firstly because they are struggling to make a mark for themselves in the industry and secondly because they are short on manpower.
Hiring a software development outsourcing agency will deliver your start-up from the responsibility of recruiting, training and housing staff to develop applications for your business. Your company will have an immediate access to high performing and expert team of professionals. Their experience and expertise will help you gain a competitive edge in the technological race.
So through an offshore software development agency you can have a team of professionals at work on your applications round the clock. This will allow you more time to focus on the other important aspects of your business which need attention.
Image Source: By Imonk72 [CC0 Creative Commons] via Pixabay
#3. Offers Competitive Advantage
Outsourcing software development will not only streamline software development process for your company. It will also provide you with a competitive advantage in your industry along with the time and resources to focus on other crucial elements.
So what competitive advantages do outsourcing offer you? Why a company decides to outsource software development may vary but the competitive advantages provided are compelling:
- It allows companies to remain ahead in the race for their partnership with offshore agencies that have the capability and the expertise to bring innovations into the field of technology.
- The experience and expertise of offshore partners offers businesses the impetus to enter and start functioning into new markets.
- The reduced cost allows firms to act without heavy financial burdens, as a result of which they can afford to respond to a new market at the ideal opportunity.
- It allows time to focus on core competencies and offer value to customers by strengthening those skills.
Image Source: By Free Photos [CC0 Creative Commons] via Pixabay
Drawbacks of Outsourcing Software Development
Despite all the advantages, outsourcing software development also has a number of disadvantages that you need to watch out for. Let’s find out what they are:
#1. Quality May not be Always Good
You need to be very careful while choosing the outsourcing company because there can be huge differences in the quality of work provided. Some companies may offer a lower price, but there’s a chance they’re compromising on the quality of work. You can ask for code samples to verify whether or not they’re delivering high-quality work. And before you finalize your partnership, go through their background and previous client records.
To ensure the quality of work, you can check out a few things like :-
- The number of years the company has been offering services
- Employee strength
- Customer retention rate
- Infrastructure etc.
#2. Lack of Communication
Communication is one of the biggest challenges of working with outsourcing companies. This can be problematic since communication is crucial for determining and understanding the progress of a venture.
It is easier to communicate with an in-house developer than with offshore agencies mainly because they’ll be working in the same office and timezone as you. With offshore developers, they’re not physically present to respond to your problems and there could be huge time difference between the two of you.
Lack of communication can also result in the offshore agencies losing their focus from your project. But given the benefits of outsourcing, it isn’t too much of a concern.
Communication problems can be handled effectively if both parties involved are clear about their expectations from each other right from the start. Here’s what you can do to maintain a healthy communication with your offshore partners.
- Scrum meetings or the 15 minute daily stand-up meetings can also help fostering communication between a company and its offshore partners. This will make both teams more productive and efficient. Focus on these three points and you will be able to ensure an undisrupted workflow. Such meetings can be held over video calling.
- Targets accomplished since the last meeting.
- Things that need to be worked on until the next meeting.
- If a work is not done, then find out why.
- Project Management Professionals or Project Management Institute certified professionals can help streamline the progress of your project. They are trained to look after every aspect of a project. Hence, certified project managers help facilitate communication by interacting with the team and communicating in common business language. For example, a certified project manager will understand the difference between quantitative and qualitative risk analysis. The project managers also play an important role in selecting seller or vendor. The entire process of soliciting, analyzing and negotiating is also later review by project managers to determine their impact on the success of the project.
- Try to have on your team an offshore ambassador until you have forged a strong relationship with the agency.
- Since the you have limited time, make sure every moment of your conversation counts and discuss the most crucial points that you need addressing. Try to make a list of all the points that need discussing before you begin your communications.
- Email communication is important as you can clearly lay out everything that needs to be addressed in a single email and the recipient can easily refer back to the email if necessary.
Image Source: By Felix_Broennimann [CC0 Creative Commons] via Pixabay
Conclusion
So these were some of the most important advantages and disadvantages of outsourcing software development. While there are drawbacks to this technique, there’s also a way out of each one of these. Therefore, even if you face a problem, it is possible to deal with if you are careful enough and fast to act on it. You can outsource parts of your project if you do not want to handle out the entire task. That way you will be able to learn how to handle the drawback while not putting too much at stake.
Are you looking for a cost-effective yet an efficient outsourcing option for your business? Contact us now to find out what we can offer you. 
Apart from maximising profit and driving growth through innovation, businesses are also focused on gaining a competitive advantage through outstanding customer service, optimizing efficiency and reducing cost. However, your company doesn’t have forever to achieve all these goals. So you might be looking for a solution. Many organizations would agree without a second thought that the quickest way to get there is by outsourcing.
Although this technique is now widely adopted by many startups and even established companies, outsourcing software development has both downsides and advantages. This article will discuss the benefits and drawbacks of this practice.
Image Source: By Jirehg [CC0 Creative Commons] via Pixabay
Benefits of Outsourcing Software Development
If you’re aiming for a strategic approach towards your business, outsourcing will be a fitting choice. Here are some of the benefits you can expect from outsourcing software development:
#1. Its Cost-Effective
The first thing that comes to mind when you think about outsourcing is its cost-effectiveness. Businesses outsource software development projects to other agencies because it costs them much less than it would if they had assigned an in-house team to the task. This makes outsourcing a great option for start-up businesses, who often struggle with limited finances in the beginning.
So why is outsourcing IT or software development so cost-effective? According to Tholons 2016 ‘Top 100 Outsourcing Destinations,’ Bangalore in India holds the first position as the most preferred place to outsource from and Philippines Manila (NCR) comes second.
To better understand why outsourcing is cost-effective, you need to differences between annual average salaries earned by software developers in India and the Philippines and annual earning of software developers in the US and UK. According to a PayScale analysis, average salaries of software developers per year in India is $6097.951 approx. and in the Philippines it is $7264.347 approx.
In the US, however, a software developer’s annual average salary is $69,083 approx and in the UK it is $39429.60 approx per year on average. You can see there’s a huge gap in the pay developers are getting in different countries for the same job profile.
So if a company in the US plans to employ an in-house software developer then it is not necessarily taking into account the cost savings that would result from outsourcing software development from countries like India or Philippines. Going by the PayScale estimates, the average difference in the cost for the US company to hire a professional based in the US would be $62,985 approx per year compared to India and $61,818 approx per year compared to the Philippines. This clearly shows how cost effective it is to outsource software developers for companies.
#2. Allows Time to Focus on Other Essential Tasks
Offshore software development agencies save you a lot of time. Especially the start-ups are always strapped for time. Firstly because they are struggling to make a mark for themselves in the industry and secondly because they are short on manpower.
Hiring a software development outsourcing agency will deliver your start-up from the responsibility of recruiting, training and housing staff to develop applications for your business. Your company will have an immediate access to high performing and expert team of professionals. Their experience and expertise will help you gain a competitive edge in the technological race.
So through an offshore software development agency you can have a team of professionals at work on your applications round the clock. This will allow you more time to focus on the other important aspects of your business which need attention.
Image Source: By Imonk72 [CC0 Creative Commons] via Pixabay
#3. Offers Competitive Advantage
Outsourcing software development will not only streamline software development process for your company. It will also provide you with a competitive advantage in your industry along with the time and resources to focus on other crucial elements.
So what competitive advantages do outsourcing offer you? Why a company decides to outsource software development may vary but the competitive advantages provided are compelling:
- It allows companies to remain ahead in the race for their partnership with offshore agencies that have the capability and the expertise to bring innovations into the field of technology.
- The experience and expertise of offshore partners offers businesses the impetus to enter and start functioning into new markets.
- The reduced cost allows firms to act without heavy financial burdens, as a result of which they can afford to respond to a new market at the ideal opportunity.
- It allows time to focus on core competencies and offer value to customers by strengthening those skills.
Image Source: By Free Photos [CC0 Creative Commons] via Pixabay
Drawbacks of Outsourcing Software Development
Despite all the advantages, outsourcing software development also has a number of disadvantages that you need to watch out for. Let’s find out what they are:
#1. Quality May not be Always Good
You need to be very careful while choosing the outsourcing company because there can be huge differences in the quality of work provided. Some companies may offer a lower price, but there’s a chance they’re compromising on the quality of work. You can ask for code samples to verify whether or not they’re delivering high-quality work. And before you finalize your partnership, go through their background and previous client records.
To ensure the quality of work, you can check out a few things like :-
- The number of years the company has been offering services
- Employee strength
- Customer retention rate
- Infrastructure etc.
#2. Lack of Communication
Communication is one of the biggest challenges of working with outsourcing companies. This can be problematic since communication is crucial for determining and understanding the progress of a venture.
It is easier to communicate with an in-house developer than with offshore agencies mainly because they’ll be working in the same office and timezone as you. With offshore developers, they’re not physically present to respond to your problems and there could be huge time difference between the two of you.
Lack of communication can also result in the offshore agencies losing their focus from your project. But given the benefits of outsourcing, it isn’t too much of a concern.
Communication problems can be handled effectively if both parties involved are clear about their expectations from each other right from the start. Here’s what you can do to maintain a healthy communication with your offshore partners.
- Scrum meetings or the 15 minute daily stand-up meetings can also help fostering communication between a company and its offshore partners. This will make both teams more productive and efficient. Focus on these three points and you will be able to ensure an undisrupted workflow. Such meetings can be held over video calling.
- Targets accomplished since the last meeting.
- Things that need to be worked on until the next meeting.
- If a work is not done, then find out why.
- Project Management Professionals or Project Management Institute certified professionals can help streamline the progress of your project. They are trained to look after every aspect of a project. Hence, certified project managers help facilitate communication by interacting with the team and communicating in common business language. For example, a certified project manager will understand the difference between quantitative and qualitative risk analysis. The project managers also play an important role in selecting seller or vendor. The entire process of soliciting, analyzing and negotiating is also later review by project managers to determine their impact on the success of the project.
- Try to have on your team an offshore ambassador until you have forged a strong relationship with the agency.
- Since the you have limited time, make sure every moment of your conversation counts and discuss the most crucial points that you need addressing. Try to make a list of all the points that need discussing before you begin your communications.
- Email communication is important as you can clearly lay out everything that needs to be addressed in a single email and the recipient can easily refer back to the email if necessary.
Image Source: By Felix_Broennimann [CC0 Creative Commons] via Pixabay
Conclusion
So these were some of the most important advantages and disadvantages of outsourcing software development. While there are drawbacks to this technique, there’s also a way out of each one of these. Therefore, even if you face a problem, it is possible to deal with if you are careful enough and fast to act on it. You can outsource parts of your project if you do not want to handle out the entire task. That way you will be able to learn how to handle the drawback while not putting too much at stake.
Are you looking for a cost-effective yet an efficient outsourcing option for your business? Contact us now to find out what we can offer you. [:]
