Software development outsourcing

The concept

When it comes to software development, we can freely call it one of the key concepts that will make an IT company stand out in the face of competition. Recognizing it as such, IT firms decide between different models of executing software development tasks. They can take place in-house, where operations get carried out by familiar professionals within the company. However, this model takes up resources and increases costs. This brake on efficiency sometimes hits so hard that it pays off more to have software development done externally and free up the resources, which involves engaging a certified third party to handle your software development tasks. This arrangement is called software development outsourcing.

What makes it a relevant trend?

An IT firm that intends to handle software development in parallel with its basic mission is obligated to allocate time and manpower to this purpose on a continuous basis, increasing overhead costs dramatically. The personnel devoted to this task require constant training to stay up-to-date, while the new appointees need on-boarding and go through a learning process until they become experienced and seasoned enough to perform on the required level. By outsourcing software development, this complex setting gets boiled down to individual projects, which are then handled by an entity that develops software as its primary task. Understandably, the required quality is more likely to be matched even if the bar is set high, as the project is outsourced to a company that only deals with that specific problem. That means it is reasonable to expect a faster turnaround as well. When placed into the perspective of the fast-paced evolution of certain IT segments that we have witnessed this year, it becomes clear why outsourcing software development has become a trend. Cutting costs is not enough. Companies need to cut time-to-market in order to stay ahead.

The challenges of software development outsourcing

Having a third party do your work makes life easier only to an extent. That being said, there are certain obstacles IT firms must learn to circumnavigate when outsourcing. We broke them down into three categories: product-related, time-related and company-related challenges.

1. Product-related challenges are particularly relevant when we place first-time orders. Money being one of the high-leverage factors in decision making, sometimes work gets outsourced to a less reputable address in order to cut costs. Saving on the one end, companies grow the product-related obstacles on the other end. The question of quality is not automatically answered if work is delegated to someone who only handles that niche of tasks. Different firms – different quality standards. Our suggestion on overcoming the product-related obstacles is two-fold. Primarily, do not establish money as the only element in for consideration on who gets your project. Also, when outsourcing business to new partners, allow for sufficient time to pass before you award them a task of strategic importance. It is highly advised to build trust step-by-step, in order to get as much insight into their process as possible. That allows for educated conclusions about quality and correspondingly compensate for the lack of insight into the process carried out outside your firm.
2. Time-related challenges impose both everyday obstacles and project-level concerns. Daily communication can be inhibited by the factor of time-zones, different national holidays and cultural distinctions regarding availability. These factors must be taken into account in advance, and communication planned out in the manner that will not yield unpleasant surprises. In terms of project-level challenges, the question with most weight is if the deadline will be met. This time-related challenge is also cured by sufficient communication and the level of personal organization that follows through each segment of work, communicating about its completion with the other side.
3. Company-related challenges spring from different identities of two companies in question. Perhaps the cultural difference is large enough for the two companies to completely miss each other’s priorities and fail to complete the project. The language barrier also plays a major role in this. What if the company we are about to outsource our software development to has completely different values and does not care about the same things as us? Is our sensitive data safe with them? These questions must be answered prior to signing anything. Company-related challenges are not black-and-white in the way time-related challenges are, where a milestone can either be met in time or late. Many elements of successful cooperation can be impaired if there are obstacles of this kind and mere communication does not always help as it does with progress checking. However, there is nothing illegal or unethical in running some open-source intelligence (OSINT) on a potential partner. A short time on the internet spent in a productive manner can mean a lot when there are questions on a firm’s credibility. As far as these issues go, investment in prior research goes a lot further than any subsequent effort to save what can be saved if a wrong choice was made.
   To summarize, strategically build trust and partnership in order to overcome any product concerns for your big projects. At the same time, stay on top of communication in order to have your deadlines met neatly, as well as do extensive preventive research on their corporate identity to gain a clearer picture.

Available methods

The basic ways to outsource software development range between on-shoring, off-shoring and near-shoring. On-shoring is outsourcing to a domestic company, registered in the same country as your firm is. Companies that prefer on-shoring enjoy the advantages of geographical proximity, same language, culture, economic and legal environment. While on-shoring may sound convenient, the cost it inflicts is very dependent on the local price of labor. If that price is unfavorable, off-shoring becomes a viable option. Off-shoring is the procedure of outsourcing projects to a foreign country outside your region. As nothing is ever black-and-white in business, many turn to near-shoring as a sort of a compromise. Near-shoring is outsourcing to a neighboring country, allowing firms with specific needs to find what works best for their situation.

Summary

Having taken a closer look at the purpose of software development outsourcing, our analysis demonstrated that its benefits extend across both time-to-market and cost cutting through streamlining your own company. We also investigated the potential challenges along this path and provided guidelines on overcoming them whether they are product, time or company-related. Finally, we provided a layout of options for those who choose this model though introduction three key principles of outsourcing. The intent behind this overview is to bring you one step closer to an informed decision. One thing is for sure: outsourcing this type of work has become a trend in 2021 for a solid reason.

As an outsourcing software development company based in Serbia, Revel helps you increase your productivity and shorten time to market by building high-performing and cost-effective dedicated teams.

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