Benefits of Outsourcing a Software Development Team

Outsourcing software development is becoming increasingly common. Businesses worldwide are turning to third-party vendors to provide essential solutions and reduce the pressure on their in-house teams. 

IT outsourcing spending was around $519 billion in 2023. This figure is expected to grow as more companies outsource their development needs. 

But why do so many businesses outsource software development in today's digital age? And what benefits does it offer? 

In this blog, you will discover the top benefits of outsourcing a software development team and the steps to hiring a reliable outsourcing software development team. 

A quick roadmap 

• Introduction 
• Software Development Outsourcing: Introduction 
• Benefits of Software Outsourcing 
• Deciding if Outsourcing is Right for Your Business 
• How to Find a Reliable Outsourcing Software Development Company 
• Conclusion 
• FAQs 

Software Development Outsourcing: Introduction 

What is software outsourcing? 

Software outsourcing involves hiring an external company or individual to handle your software development projects instead of using your in-house team. This could mean delegating specific tasks or handing the entire software development process to a third-party vendor. 

How does software outsourcing work? 

When outsourcing software development, you manage the external team like your employees. But there are a few differences.  

The outsourcing vendor handles legal matters such as taxes and infrastructure concerns like workspace and equipment. Your main responsibility will be to find a reliable outsourcing partner and establish a clear cooperation agreement. 

The top three reasons businesses choose to outsource are: 

• Reduce Project Costs 
• Focus on Core Functions 
• Solve Capacity Issues 

Benefits of Software Outsourcing 

Software development companies often have reasons to outsource their work. Despite their reasons, their targets are almost the same: to tap into a wide range of benefits they otherwise would not have access to if they conducted their projects in-house.  

Here are the top benefits of outsourcing a software development team. 

Achieve better results at lower cost 

Although cost is no longer the sole motivation for outsourcing software development, it remains a significant benefit. Engineers' average rates are much lower in Asia compared to the USA, the UK, and Australia. As per Glassdoor, the average cost per hire in the UK and the USA is almost $4,000. Many companies choose to outsource software development tasks because of these cost advantages. 

According to Deloitte’s 2022 outsourcing survey, 57% of executives' primary motivation for outsourcing is to reduce costs. Outsourcing software development saves you money on salaries, equipment, and office infrastructure. As you need not hire an in-house team.  

Plus, the outsourced company takes care of some financial burdens, making it more cost-effective. If your company is from the USA or the UK, hiring an experienced team is expensive and competitive. Contracting with an offshore outsourced team can mitigate this, benefiting from lower hourly service rates. 

For instance, India is one of the most cost-effective countries for software development outsourcing. Reducing costs frees up funds for other business areas, such as personnel, hardware and software upgrades, office expansions, and increased salaries. 

Keep up with emerging technologies

Digital transformation pushes organizations to adopt advanced technologies to stay competitive. The latest development frameworks, project management tools, and technologies always evolve, making it tough for in-house teams to keep up. 

According to Gartner, the average cost of downtime for small to medium-sized businesses (SMBs) is approximately $137 per minute. This highlights the financial impact of relying on older technology. 

Outsourcing gives you access to teams that are experts in the latest development technologies. You can gain a competitive edge using cloud computing, DevOps automation, artificial intelligence, and more. Thus, your company stays relevant and can meet your customers' ever-changing demands. 

Shorten Time-to-market 

Setting up an in-house development team can be time-consuming. In contrast, outsourcing allows you to engage a team of skilled developers and get your project off the ground without delays.  

For example, at Prioxis, we start working on your project within 48 hours of onboarding. 

A faster market entry provides more opportunities to grow your business, reduce product risks, and strengthen your brand's position in the marketplace. Additionally, working with offshore developers allows you to take advantage of time zone differences. The time difference allows for continuous project progress, speeding up completion. 

Finding the Right Skill Set 

Due to domestic talent shortages in regions like the U.S., Western Europe, and Australia, outsourcing fills skill gaps without compromising quality. It also allows you to use fractional skill sets you don't need full-time. Outsourced software development connects businesses with top specialists globally. 

Working with professionals on a project basis can lead to innovative solutions. Developers can bring fresh perspectives and identify opportunities to enhance the product, contributing to its success. 

Increase Project Flexibility 

A product development cycle can last longer than expected. It can also need more resources than you anticipate, or vice versa. Market trends, customer expectations, and project scope can affect the work process. When working on complex software projects with extensive requirements, you must have control over staffing decisions. 

Outsourcing simplifies scaling. When projects call for extra expertise or resources, you can outsource the extra work to one or more vendors. This flexibility allows you to respond to changes efficiently.  

You don't need to spend money on recruiting, hiring, training, and integrating new employees into the company culture. You only have to look for a software company with the necessary professionals. The company takes care of equipment and software. You interview the candidates and assign them to work on specific projects or products. It’s quicker, easier, and more cost-effective. 

You can outsource extra work to one or more vendors when projects need extra expertise or resources. Thus, you can scale up staffing levels when workloads increase and scale down when projects are completed.  

Decrease Your Project’s Risks 

There is a built-in risk in developing and releasing new products, even if market research states a high likelihood of success. These risks can be particularly challenging for startups and SMEs exploring new directions without a proven formula for success. 

Outsourcing software development to other companies can mitigate these risks. These companies already have a high-quality project management system, an established workflow, and experience creating successful applications.  

For example, a healthcare company in Finland handed over the development of Kunto, a healthcare app, to Prioxis. By outsourcing the project, they created a healthcare app that uses smartphone data to track patient recovery.  

We integrated electronic health records and data from Google Fit and Apple platforms, resulting in a comprehensive and intuitive app. By outsourcing, the company reduced risks, saved costs, and improved patient care.  

Deciding if outsourcing is right for your business 

The outsourcing industry is diverse and flexible, offering many benefits. Yet, what works for one company might not work for another.  

Here’s how you can decide if outsourcing is right for your business: 

Examine Your Goals: 

• What are you hoping to achieve? 
• How important are cost savings, efficiency, and accessing specialized skills to your business? 

Weigh the pros and cons: 

• Pros: Lower costs, better efficiency, and access to a vast talent pool. 
• Cons: Communication issues and dependency on external teams. 

Consider your need for hands-on involvement: 

• Outsourcing might be a good fit if you do not want to be involved in every step of the development process. Hiring a dedicated team is a great option, even if you want complete involvement. 

Look at your need for specialized skills: 

• Outsourcing can provide the skills you need if your project requires specific expertise. 

For more details check out: Guide to Hire Dedicated Development Team in 2024  

How to Find a Reliable Outsourcing Software Development Company 

If you're looking for a software outsourcing company, check out platforms like clutch, Design Rush, and Good Firms. These platforms have vast directories of software development outsourcing companies. The directories also highlight their services, client reviews, and industry rankings. These platforms are great for comparing many service providers at once. 

You can also check out platforms like Dribble and Behance to view their previous work. 

By browsing these profiles, you can get a good idea of their expertise, work industries, and services. Reading recent reviews will also give you insights into the quality of their work and how satisfied their clients are. 

Conclusion 

Outsourcing software development offers you the flexibility to adapt and thrive in a constantly changing environment. By examining your goals and weighing the pros and cons, you can determine if outsourcing is the right choice for your software development needs. 

If your in-house team is struggling to build a software application, partnering with a dedicated software development outsourcing company is what you need.