- When do you need outsourcing software development services?
- Pros of outsourcing software development:
- Cons of outsourcing software development:
In this fast-paced digital age, people are more connected to devices than ever before. No matter with what kind of device – smartphone, tablet, or laptop, – we got used to spending hours per day, along with the plethora of applications available in stores, they all have noticeably entered our lives. That’s why the number of existing web and mobile applications is increasingly growing, and the quality of these applications is only being improved.
Keeping up with the competition and following the latest industry trends, many companies consider making an app that would raise their brand awareness, increase customer loyalty, or boost sales, but not every company has enough expertise and resources to proceed with development. At such moments, there are two common options of a solution: to hire developers in-house and undertake the development process or outsource app development to an experienced third-party vendor.
According to Techanvio’s research, the market of application development outsourcing will grow by $ 98 billion during 2020-2024.
Another study by the National Outsourcing Association shows that more than 70% of companies plan to increase their outsourcing use. The NOA asked their respondents about the reasons for choosing to outsource product development. The top answers were:
- 35% – cost savings;
- 23% – improved user experience;
- 17% – rejection of outdated solutions.
But, of course, not all outsourced projects have a happy ending. Back in the year 2000, Dun & Bradstreet released a “global outsourcing barometer”, which claimed that 20-25% of all the relationships between clients and outsourcing software development companies would fail within two years.
Those numbers have significantly lowered over the past two decades – the market has undergone massive development, and the trust in application development outsourcing has greatly increased. That said, some companies are still wary of the idea: entrusting their precious applications to some strangers doesn’t sound that exciting, after all.
Looking at all these trends, we all may predict that it is likely that the demand for application development will grow even further.
When do you need outsourcing software development services?
The first popular reason is the lack of specialists. For example, the project you are working on keeps growing, but all of your employees are fully-loaded, so you need to connect additional staff to complete it. Or maybe you’re starting a new project that happens to require more specialists than you currently have. Hiring a single developer can take up to 4 months – sometimes the wait is just too long. In cases like that, application development outsourcing is a much faster option.
The second common reason is the lack of expertise within the company. Perhaps, you’re starting a new project on an unfamiliar technology stack; maybe your old project has grown so much that it has become too high-load for your company’s team to handle; maybe your website needs a redesign, but your programmers don’t have the experience to pull it off. If you’re having similar problems, then outsource product development can be a great way to achieve your goals without getting bogged down by risky experiments and amateur mistakes.
The third major reason is web app development not being part of your company’s core set of services. This mainly applies to small businesses: say, a company is engaged in website design, promotion, and advertising. For them, it would be much more cost-effective to outsource product development rather than to hire and onboard a team of programmers in-house.
Pros of outsourcing software development:
1. Saving time and costs
Hiring specialists is expensive. Working with third-party employees will save you the cost of recruiting, arranging a workspace, sick days, vacations, and other full-time benefits or overheads. The only thing you will have to pay for is a number of specific tasks.
Every app development project has a time limit. If you hire an in-house development team to work on your solution, the project is likely to take no more than a few months; by the end of it all, you’ll have to pay all members of the team, regardless of their actual involvement in the development process.
If you do it externally, there is no need to spend your resources. You’ll only pay for your application’s development – all the internal problems fall on the third party’s shoulders.
It’s also worth mentioning that nowadays, when most developers are working remotely due to the pandemic, working with third-party developers is more cost-effective than hiring an additional specialist.
2. Flexibility in the working process
There is no need to train your staff or search the market for qualified specialists. Outsourcing allows you to quickly find or change certain specialists whenever necessary. Such actions can easily lead to conflicts within an internal team, however, they’re not nearly as difficult to deal with during application development outsourcing.
Assembling an in-house dedicated team for an app development project will take about 3 months. This can often lead to delays and stir up customer discontent. Application development outsourcing accelerates the whole process, with many tasks being delegated to other trusted specialists. Contractors are especially useful in seasonal work and project development. Plus, you won’t have to stress over having employees with nothing to do after the fact.
3. Quality product
One of the main benefits of outsourcing development is getting a reliably high level of quality and speed from specialists with years of experience in the software industry. By giving your work tasks to a trusted outsourcing software development company, you can be confident that they will be fulfilled by industry professionals. It’s much safer than hiring freelancers with no proven track record.
4. Best processes and practices
The advantage of most remote development teams is that they incorporate the best practices and methods into their app development process, all the while putting a great emphasis on a customer-centric mindset.
5. A faster pace of work
Major IT companies tend to work on several projects simultaneously. Therefore, tasks are distributed among various team members to make the process as time-effective as possible. Companies that specialize in outsourcing are particularly efficient with making the development very fast, especially if they are experts in certain things (for instance, you may outsource java development or outsource dot net development).
6. Less stress and risk factors
Application development outsourcing vastly reduces the risks and stressful dynamics involved in any type of development project. Many responsibilities that would normally be on you (such as keeping track of the progress, distributing tasks, and ensuring that all deadlines are met) are taken on by the project manager of the outsource team.
That way, instead of constantly worrying about possible obstacles and complications that might arise, you can focus on more interesting or important tasks.
7. Turnkey work
Skilled IT specialists are involved with every part of development: the analysis of business processes, coding, implementation, testing, and system maintenance. The only things required from you as a client are consistent comprehensive interaction and assistance.
8. Various options for payment
A fixed model is applicable when the project requires a fixed budget. If you want to outsource app development, the development company will estimate its price before starting to work on it. The plus is that the cost becomes rapidly known and cannot be changed. As a rule, if the outsourced developer makes a mistake in accounting, that’s their problem.
Bear in mind that the cost of development does not always include testing. Sometimes it’s part of the hourly cost, sometimes it is only included in large-scale tasks, sometimes it’s paid separately, sometimes the outsource team does not have a tester, so this task falls on the client.
The disadvantage of the fixed approach is that the cost always accounts for risks, so it can be 10-30% higher.
Another detail that is worth mentioning is that you have to clearly understand the level of developer you want to hire. Any mistake could lead to further problems with hiring an additional specialist who would help with problems unsolved by a previous specialist. This is not a disadvantage, just a nuance since in this case, it shouldn’t matter to you who performs the task – you pay for the result.
Time & Material model
T&M (time and material) – payment for time and resources spent. Everything here is transparent and easy for the client to understand. This model is the fairest and closest to reality, but the downside is that not every client is ready for it. The main fear is that the current budget wouldn’t be enough for the project. But this situation is better than having problems with a contractor who uses the fixed price method and can’t do his job on time.
The advantage of T&M is that the cost of this model of outsourcing is usually cheaper than Fixed Price. Also, it is worth mentioning that if your plans or priorities are changing rapidly, the development team can quickly react to changes and adjust the work plan. The eventual problem can be in the absence of a certain budget since developers could spend more time on a project that was planned and it can lead to problems.
Outstaffing is a full buyout of specialists. For example, an outstaffing company supplies a programmer of a certain level (junior, middle, senior) to work as a staff unit in the client company. If the outstaffed employees get sick or decide to quit, the company is obliged to quickly find replacements for them – that is, in 1-5 days to avoid downtime.
The possible downside is the fact that you might hire a middle-level specialist, but some tasks turn out to require a senior expert. Then you have to be sure that your contract foresees the ability to change specialists to the ones with a higher level. If not, then you’ll have to hire additional specialists. Also, you must clearly understand all types of specialists you need to hire. Of course, you can hire additional professionals when your project is in progress, but in this case, you can lose time while this person is delving into all the details. You’ll have to hire an additional professional in this case.
For outstaffers, the risks of this work format include the possible burnout of employees and problems with their professional development. For example, a company has a lot of specialists on its team, and those who are immersed in client-side development can sometimes feel like the “black sheep” of the group – after all, they barely take part in the current projects or company life.
Cons of outsourcing software development:
1. Confusing code
Perhaps, you often change your development team or decide to abandon application development outsourcing and work on your own. Since the code is being worked on by many different people, the quality of it can seriously suffer. In some severe cases, this can lead to the app needing to be rewritten from scratch.
2. Business risks
Third-party companies are not immune to normal business risks: they can suddenly go bankrupt, lay off their employees, or even close down altogether. Therefore, despite its obvious advantages, the delegation of tasks always presents a huge risk: there is a possibility of getting a raw, unfinished product due to unexpected business problems of the contractor.
3. Time difference and communication problems
Different time zones are a common risk for those working with offshore companies. The bigger the time gap between you and a hired company, the harder it is to find a convenient time slot for both teams to communicate and resolve emerging problems.
4. Lack of control over the team
By delegating tasks to a third-party outsourcing software development company, you lose the ability to personally monitor their implementation. Of course, you will follow the process, receive regular reports, and be aware of how well the development is going. Good companies ensure that the clients who delegated their tasks to them are closely involved and engaged in the project. Still, this is not always the case.
5. Expensive for regular use
Usually, hiring a specialized development company is cheaper than setting up your own IT department. The employer saves on employee salaries, tax deductions, the need to create new workplaces, management, downsizing risks, etc. But if software development services are required constantly and especially full-time, expanding the staff might be a more feasible solution.
6. Information security concerns
Of course, there is an NDA. But even if you follow the most sophisticated security measures, transferring important data to a third party increases the likelihood of it falling into the wrong hands.
Ever since the digital transformation of society, most companies have realized that to keep up with the latest trends, they’ll need to consider application development. And when it comes to choosing how to manage a project like that, the best option is to rely on experts.
Many companies are already outsourcing development to great success. You just need to be mobile and take the big step! Of course, this method can’t be suitable for everyone. If your company is among such, then it’s better to combine in-house and offshore development teams or even not to risk at all and just hire your own professionals.
Bamboo Agile can become your helping hand in software development. Experienced professionals in various directions are here to help you with any issues you might have. If you consider outsourcing software development services to Estonian reputable companies with competitive rates, get a free consultation from us after filling out the form.