As those firms consider this work as challenging, rewarding and fascinating at the same time. They work with the perfect mixture of latest technology along with business management practices. This mashup is way convenient and cost-effective for companies. If we will go into the figures, in 2002, the growth from outsourcing was $160 billion+. And it was predicted at that time, that the worldwide outsourcing market is expected to grow to $400billion and more by 2020.
What is outsourcing?
Well the term, outsourcing is pretty self-explanatory. And it is defining itself as the process being engaged from the outside of the main company. Organization hiring external sources or different firms to create their IT services is defined as Outsourcing. In the process of outsourcing, there is no restriction on the size of the resources of the external organization. Neither does it put any kind of restriction on the location of the external firm which is hired for development of software.
As we are talking about outsourcing, it does not put any kind of limitation on the way of working of the external firm either. Organizations agree if the firm is working in parts and one segment is willing to produce the software and handle it over to other members to deploy and maintain the system afterward.
Software Development Outsourcing:
Software development outsourcing is the process in which the organization hand out the specialized business process to the new firm. This external firm consists of if individuals who have the capacity to tackle different tasks when it comes to IT. As this world is moving forward every second and demands are changing every now and then. Sometimes it becomes difficult to tackle all the issues timely. So moving to an external firm is probably the best step you can take.
In today’s business world, you need to be extra efficient in order to make the mark and stay in the competition. And business managers are supposed to tackle the competitive environment by using multiple strategies to increase the productivity of the company. Techniques can be like automation, business process re-engineering, and standardization.
In order to get the best for the company, the main goal is the satisfaction of customers. And with the purpose of tackling that, the manages have to make the strategies accordingly which will provide the team flexibility. And that approach in return allows the team to provide the customers needs an instant response and make changes according to the new demands, immediately. That helps the business go in the flow. And opting outsourcing is also considered as one of the strategies of the manager to meet the desired goals.
External firms for software development:
Well in traditional approaches, the external firms were just coding and making the software for the organization. But nowadays, outsourcing team is involved way more. In the present format, outsourcing team helps you in properly analyzing the business idea first and then moving forward to teams with designers and project managers to make the best and properly functional software for you.
Types of outsourcing services:
Topic is the basis of differentiation between the types of outsourcing, there are two main components. The very first one is the locality of the firm which you will be outsourcing for the procedure.
Firstly, offshoring is an important and most used approach. It just basically means that the firm which you are opting for software development is overseas. It the most cost-effective technique used by the businesses. In this manner, India becomes the biggest and the hottest outsourcing region for all around the world. But this approach has its own pros and cons. And the main purpose of keeping the price as low as possible is fulfilled here. But sometimes the quality of work is way more important than any other thing.
And here the second approach comes handy. It is a near-shoring. In this second approach, the main business is from central and eastern Europe. It just doesn’t only cover the Europe side but also covers the American and middle eastern side in a very appropriate manner. This approach offers world-class programmers which help in producing the best for the company. And their language is mostly English too which helps a lot in the process as well.
The second category of difference:
The second category of division of the difference between the types of outsourcing is actually what you are outsourcing. For example, in the first type, suppose you are a developed business with in house developers and you have the basic team for software development. So your purpose of outsourcing would be hiring a developer to tackle the main agenda only. And you will not be going for the whole team or firm for your software development. This approach is known as body leasing.
On the other hand, the option is the whole executive team. It consists of developers, designers, coders, testers, scrum master, UX/ UI designer, QA/QAA handler, and project managers. In this approach, business doesn’t have any house built in a development house and organization is completely depended on the external help.
In outsourcing project execution, the whole process which usually starts from gathering the requirement and creating the rough visuals to actual development and then further maintenance is completely in the hands of developers from outside. This technique is mostly known as project outsourcing.
Why to go for outsourcing software development?
Well, there is not one single magic wound available to turn the tables around and make the whole deal just about your profits. But If you start taking the steps right and especially smart moves, then having the maximum profits’ dream can turn into reality at any time. Here are some main reasons which will help you make your mind in deciding why to go for outsourcing software development.
Saving of money:
Well in order to look for the success of the business, the work starts from the very basic in house things. Like the main budget of your organizations. Outsourcing does not just help you in making the best possible software. But hiring help from outside for one specific purpose is way more convenient and cost friendly than creating a whole department and hiring individuals on permanent basics.
Outsourcing helps in cutting down almost 70% of the budget. As in North America and Europe, this technique has helped a lot and changed the perspective of upfront investment. And this actually makes the developments projects way more attractive.
When you are hiring an external team for the development, it is pretty obvious that their main focus would be achieving the goal as soon as possible. Because that is the reason why the whole team is here in the first place. That is beneficial not just for the organization. But they also grantees you the shortest time to market delivery which helps in improving your brand image in the market. And it also boasts your stand in competition.
In house experience:
Well if you are hiring the project team from outside the company, it is obvious you don’t have the developers on board. Outsourcing just doesn’t only help you in making the large projects. But also plays an integral role growing globally to get the maximum out of the world. These outsourcing firms help you in terms of the skilled and qualified team which helps you grow rapidly in front of the world.
The flexibility of labor:
Outsourcing comes handy in so many ways. Like the organization does not have to look into hiring the whole new team and worrying about the benefits. You just have to hire them for the services and it is not your headache to rank them in case of labor size changes. So there is no hustle in outsourcing the team for software development for your company.
Skilled and qualified IT professionals:
You must don’t have many people in your company who have a command on IT. As it is not a common field and every other person is not an IT professional. But you don’t have to worry if you are actually hiring the team to work for you.
The whole team would be of professionals and all of them would be masters of their fields. And it will be their guarantee that the project will be done on time and professionally as well. In that manner, you will have your hands on the best and brightest IT and technology professionals. It will be their duty to produce the best for you later on.
In the world of millions of businesses and thousands of organizations, it is quite a big deal to make a stand here. So having a focused strategy just doesn’t help your outsourced team. But it also plays an integral part in giving you an advantage in the technological race later on.
A definite help in legal work:
When you are going to some outsourcing company, it helps you with legal paperwork as well. They take care of all of this on their own and give you time to focus on more important things. So you don’t have to worry about going through the procedure of hiring multiple employees at the same time.
Have you decided to work with international talent instead of the local help available? Because you’re not really impressed with what IT professionals of your area are offering. Then you don’t have to be worried at all because outsourcing does not know borders and they just focus on the right talent for the right job. And they will help you in finding what you are looking forward to and ease your human resource problem by finding you the man or team you are looking for really easily.
Well, technology is growing every second. There is new innovation every day in some device or some apparatus. So it is practically impossible to be completely technologically up to date all the time. Because in that way you will be focusing on technology only. And all of your budgets will be invested in the devices only.
So outsourcing is the right approach here. It will allow you to work with new technology with the ease of not buying everything. This is the perfect way of meeting innovative people and has interaction with diverse technology at the same time.
Minimization of risk:
Outsourcing companies can choose the best team for you. And that team will be obligated to produce possible software for you. And that just minimize the risk rate to the lowest amount and helps you focus on the positive side only.
Pros and cons of outsourcing software development:
Almost every business in the modern world has software development needs. And there is no point of thinking the other way around. The only thing to ponder on is whether to outsource the team for software development or not. Well just like any other thing, outsourcing also has some pros and cons which will help you in deciding ultimately weather opting to outsource approach is the right strategy for you or not.
Pros of outsourcing software development:
Basically, all the main points which can count as the pros of outsourcing software development has already being discussed. Explanation in detail regarding the main reasons to go for outsourcing is already explained. For example the importance of control over cost, time, access to a relevant set of skill set, attention to core issues only, flexibility, quality of work and broader expertise. In short, these are the main positive aspects of hiring an outsource company or getting help from the external team for development of software.
Cons of outsourcing software development:
Here is a brief overview of some of the main shortcomings which you may face if you end up selecting outsource approach.
As outsourcing goes beyond borders and it gives you the plus of selecting any developer from any country of the world. That developer might have the right skill set for you and maybe his price will be a huge plus in selecting him as well. But the main issue raises with the difference in language and time zones. If that developer or team is unable to understand you in the first place, what good it is going to bring your way?
And time zones play an integral role as well. Just assume your time slots of work are 9 am to 5 pm and its night in your developer’s country, have you think that through? Like how you will conduct meetings, how they will give you a review of their work and how they can get your feedback timely? All of these questions define one of the biggest shortcomings of outsourcing.
Risk of hidden fees:
Why companies opt for the option of outsourcing? To save the money in the first place. But sometimes, the outsourcing companies give you an overestimation or underestimation of the process. And when the final billings come in, there is no chance of backing out. It happens mostly in offshore companies. As they change the billing by adding fees of additional consultation, traveling, mobile phone calls or even meetings. This way the final cost if unpredictable and the companies have some hidden costs which organizations can’t run away from. Because they are halfway through the process already at that point and the only way is to pay whatever outsource firm is asking.
In general cases, the testing phase of outsourced is way more difficult than the in house. Because in the outhouse, the team is unaware of machines for which they are building software. And once you enter the testing phase, it is the duty of the organization to find the defaults and flaws before implementing it officially. Even though it will be hard for the vendor to solve the problem for you but at least it is worth a shot. Issues can also happen in the testing phase because of poor communication as well. Maybe the vendor is not capable of understanding your jargon and terminologies.
Morale of the company’s employees:
Hiring a whole new team for a project can shake the morale of the permanent employees. They might get the feeling that either they are not important enough for the organization. Or maybe their jobs are at risk. As people from outside are coming to take care of their company. Well, organizations need to make a clear stand in this one and tell the employees about the current situation. And fill them in if there is a possibility of job insecurity.
Turnover of external firms:
IT companies don’t really look for consistent employees, they always see the client come and go. And that is the approach of outsourcing companies. Clients only approach them in time of need. And this formulates the mindset of IT companies. And that mindset might scare the consistent client off.
Summing it up, these are some main pros and cons of outsourcing software development. And now it is your duty to decide whether you as a business owner wants to outsource the company for your benefit. However, you need to analysis the project first too. And after all of the research, it will be your decision either you want to work with an external team or you want to stick with your basic in house team.