How do you go From Handling Everything In-House to Outsourcing Software?
Outsourcing software development can be an intimidating thought for many startups and even large businesses. However, outsourcing options can have a significant role when it comes to scaling a company in the present-day world. As such, you may be interested in developing software. There’s no denying that software solutions will allow you to grow your business more quickly than if you were to handle everything alone.
Your company would have to manage so many things during the process that it becomes almost unbearable. For example, the development of your software product or application requires a lot of separate tasks. That would mean you are taking care of research, development, and implementation. With software outsourcing, you can focus solely on your business and delegate developing software to software engineers.
Meanwhile, outsourcing can help you scale your organization, save money, and increase profits by letting professionals do all the work. If you’ve never outsourced before and would like to start doing so in a more formal way, you’re in the right place. Outsourcing is an essential business strategy nowadays. However, software outsourcing, in particular, is a complicated process requiring a lot of planning, management, and expertise.
What is Software Outsourcing? (Explained with Example)
Software outsourcing is contracting with a third party to develop specific software, which could be an application or something more complex. In addition, by using a service provider, you can be sure that the team will complete the project promptly and with an experienced team. It has become popular because it allows businesses of all sizes to close the digital skills gap.
Example of Outsourcing Software Development
When you outsource work, you hire people who live outside your country to complete tasks that employees inside your company would usually do. For example, your company needs a mobile application that will speed up your business processes and connect you with customers on a different level. Instead of hiring an entire team of in-house developers, you outsource the task to an external company that provides you with their services or, better yet, resources to complete the project.
At TNation, we’ve worked with companies who want their employees’ time spent working on things other than software development. So when you work with us, we provide you with a team of dedicated developers who will work closely with your in-house team to ensure that all project milestones are met—and we’ve found that this approach ends up saving our clients a lot of time and money!
Software development outsourcing allows you to focus on other aspects of your business while delegating specific responsibilities to others. The most common reason for outsourcing software development is cost. Some companies can only afford to hire a small team of developers but still need the product built. Outsourcing software projects allows them to take advantage of an already existing team of developers who can work on the product starting from scratch.
It’s no secret that businesses have been going global for some time now. This trend is likely to continue as more and more companies see the benefits of expanding their global reach. Hence, that is why in recent years, the software development industry has seen a dramatic increase in outsourcing. As a result, what was once a niche business model, today is widely accepted as one of the best ways for companies to grow and thrive.
10 Proven Reasons Why Outsourcing Software Development Can Help Your Business Scale
Outsourcing software development is becoming the norm as companies realize the benefits of turning to experts to build their products or services instead of trying to handle them in-house.
Most companies outsource software development to cut costs on their peripheral or non-core business services. For example, even large companies such as Google and International Business Machines Corporation (IBM) outsource some of their business processes.
Google outsources multiple roles, such as app development, software development, and analytical consulting. On the other hand, IBM utilizes its outsourcing partners in Asia for network management and maintenance of its IT infrastructures.
With the right outsourcing partner, companies can scale their business in various ways, from providing more products or services and reducing stress and burnout to increasing employee productivity and efficiency. In addition, the right strategy for finding an outsourcing partner can significantly lower your business costs by decreasing the need for office space, hiring new employees, and training them.
Free Up Internal Resources
Hiring outsourced resources can free up your internal resources so they can focus on the company’s core business. For example, as the business grows, there is often a short time gap where employees try to hold all strings together and ensure processes run smoothly. But if they get distracted by new upcoming software products, it takes time they do not have. Hence, outsourcing software development can free up that time and allow your employees to focus on core business rather than distracting themselves.
Gain Access to New Skills and Technologies
Outsourcing software development is a great way to access skills and technologies and supplement your in-house team with experienced and skilled experts. It also allows your in-house team to focus on other areas, allowing them to do their best work. Bringing in a fresh perspective and knowledge from outsourced teams can help your business get innovative and have a better quality project overall.
Increase Efficiency
That brings us to the best possible reason for outsourcing software development. Efficiency is the key to completing a successful project, and by bringing in a specialized team, you can rest assured that they will complete the project on time and with superb quality.
Improve Quality
Quality is not something that can be optional if your business depends on the software you are trying to build. Hiring a dedicated team of developers to work on your software development projects can help you improve the quality and speed of your product. People often need to remember the end user is the one that matters, and if your application fails to fulfill their needs, they will find another solution.
Improve Customer Satisfaction
Developing software is a complex process, and many companies need help to keep up with all the intricacies of product development, mainly if they specialize in something other than software. However, outsourcing your software development can give you access to experts with practical experience building similar software. A team that knows the audience and what they are looking for can increase your chances of breaking through the market barriers. That can lead to increased customer satisfaction because you can provide better products.
Accelerate Time to Market
One of the significant benefits of outsourcing software development is that it allows you to rapidly prototype and launch your product. Developing software in-house can take weeks or months to get a functional product out the door. However, with experienced teams that already know specific projects, your chances of meeting that goal can be much faster than you initially expected.
Reduce Costs
Outsourcing software development can help your company scale while saving time and money. That is because you have a dedicated team from a nearshoring service provider to do the work for you. In other words, you don’t have additional costs that follow developing software, such as hardware, software licenses, and trained staff for ongoing maintenance.
Quickly Respond to Market Changes
As your business grows, you will find that you need to make changes quickly to stay competitive. However, it can be difficult if you lack the time and resources to complete these tasks independently. For this reason, it is often better for companies to outsource software development to gain more efficiency and productivity. As a software development company, we offer services for all stages of product life-cycle management with agile development practices tailored to your needs.
Increasing Flexibility and Scalability of Project
As a software company, we know efficiency and scalability are crucial to success. There are thousands of factors influencing the outcome of the software. Hence, more often than not, you will need more team members at some point and fewer at others. Imagine if you had to go through that process on your own. Instead, outsourcing software development gives you a chance to have a skilled team at all times and scale it according to your needs.
Increase Revenue
If your company is looking for a way to increase revenue, consider outsourcing software development. Summing up the above, having a knowledgeable team that can quickly adapt to market changes and provide quality software solutions will give you a competitive advantage and create more innovative products. In addition, it’s known that successful software can bring more customers, scale the business and help it grow.
How To Outsource Software Effectively – The Guide
Many niches outsource their services. Outsourcing software is generally a subcategory of outsourcing IT functions, and these can be divided in:
- Infrastructure outsourcing (service desk, data center, network services, security operations)
- Application or software outsourcing (new web or mobile app development, legacy system maintenance, testing, QA services, software implementation, and management)
The outsourcing market is global, and it’s growing every year. According to Gartner, the software development market will reach 11.3% growth in 2023. The rapid growth is backed by the fact that we live in a globalized world where everything is connected via the Internet.
In addition, since the audience is there, businesses are using the opportunity to reach out to them. That is why outsourcing software development has many benefits for such organizations. The main benefits include the following:
- Access to skilled resources
- Increased efficiency
- Cost savings
- Improved customer experience
And, of course, there are also some challenges associated with outsourcing:
- Choosing the right partner
- Legal side of it
- Lack of communication and collaboration
However, using the best practices while considering outsourcing can help your business seamlessly flow into the outsourcing partnership. Before outsourcing your software project, you must view all the aspects involved. So, let’s break down the standard outsourcing pricing models, types of software development outsourcing companies, and how you can prepare for outsourcing.
3 Software Development Outsourcing Company Types Every Business Should Know
Before we go into detail about what you, as a business, should or should not do while outsourcing software development, let’s reconsider types of software development companies based on their geographical location.
Hiring Onshoring Company
Onshoring is a frequent solution when the company hires a smaller firm to outsource specific tasks. The simplest example is external contractors performing certain tasks. Onshore means a company hires an external company within the same country to participate in the software development process.
Hiring Nearshoring Company
Nearshoring is a term used to describe the practice of moving a company’s operations to another (neighboring) country. Nearshore companies can offer talent pools that are in shortage in many countries worldwide. In addition, many companies hire nearshoring partners because of the lower cost rate, excellent English language knowledge, similar cultural backgrounds, and slight time difference.
Hiring Offshore Company
Offshore outsourcing means transferring business operations to distant countries across the globe. For example, during the past years, western firms have outsourced software development to foreign countries in the east. The reason was cutting costs on salaries, and the eastern countries have different rates.
Software Development Pricing Models
There are several pricing models when it comes to IT services. However, the three most common ones are used during outsourcing software development.
Fixed Price
As the name suggests, you pay an outsourcing company a fixed price for a project, which is why it is often referred to as the project-based model.
Time and Material
It is one of the flexible models where you pay an outsourcing company a price for using the time of different software development experts during your project.
Dedicated Team
A dedicated team is the most common pricing model. Our clients often opt for this when hiring a team of software engineers. It is fast, and you can specify options in the agreement, such as allocating required specialists for a determined period and exclusively for your project.
Why Businesses Struggle With Outsourcing Software Development
Outsourcing software development has many benefits and conveniences, but like any other task, it needs a plan and a strategy. Depending on the type of company you choose as your partner, there are different factors to consider before signing the contract.
Outsourcing, as straightforward as it sounds, can be a challenge. Depending on the person you ask, it flows like a breeze, and for some, it’s becoming a nightmare. The truth is you should not take the process lightly.
At the center of every agreement is communication on all levels, which means that talking to the hired team and the management is crucial. In addition, communication should start within your company. For example, many businesses opt for software development as a quick solution to their current problem.
More often than not, not all instances in that company had a saying in the software’s actions or features. Therefore, the final product must include essential components to help the business thrive. Additionally, people have expectations, and if these need to be communicated, the reality looks completely different.
So, planning is one of the essential aspects you can take to ensure you get the product that will grow your business. But, of course, nothing is implied when you settle on features, and you must explain your requirements in the smallest detail to software developers.
The same applies to contracts. Again, there is a great deal of communication to develop an agreement that will suit both the client and the outsourcing company. There is also a clause about the time you will require the services. In the beginning, about 15 years back, these were set for more extended periods. Today, however, there is only a need if the project is naturally complex.
And finally, many of our clients have come to us as the previous service provider did not complete their part of the agreement. So that brings us to the number one reason businesses struggle with outsourcing software development – choosing the right partner.
You Need a Trusted Software Outsourcing Partner
Many companies choose the wrong software development company for a variety of reasons. However, like in any other niche, there are experts and people who need more working experience to understand the entire concept behind offering your outsourcing services.
The first thing to start with is articulating your particular needs and giving them a level of importance. For example, some companies are looking for considerable expertise, while others provide a high significance to costs. Whichever way you choose, make sure you use the list you created. There are numerous outsourcing companies, and you can easily get overwhelmed.
If you are interested in the topic, check the article on choosing an outsourcing software development company written by our CTO, Siniša Medić.
4 Commandments for Outsourcing Software – How do you Prepare for Software Development Outsourcing?
Outsourcing software development takes work. Building a relationship with a company specializing in custom software solutions takes time and effort. However, if you want to save money while still getting high-quality results, you need a solid plan. Outsourcing is an investment, and the program is crucial as in any other endeavor.
Goals
Everything starts with a goal, even software. It will resolve x,y, and z challenges within your company. That is what you need to start with and expand it to help remote teams see your vision for the code. Be open to suggestions. As software experts, they may advise on your software development project.
Budget
Many businesses, especially startups, get overwhelmed by which features they need, and they often need to pay more attention to the budget. This is something that can make or break your business. Planning the allocation is simply being ready for any possible situation in the future. In addition, it’s imperative when redesigning the software. Many companies refuse to admit that the software can be improved but are being built again from the ground up.
Document
Documentation refers not only to a final product but also to the pre-development stage. The more detailed the specification of your requirements, the fewer mistakes in building software that will improve your business. You can include the software development partner in this and get their opinion on enhancing the project’s chances of success.
Communicate
Nothing is more critical than uninterrupted communication with a software development team. During the meetings, barriers and ideas may change the faith in your project.
Ultimately, create a checklist and refer to it often during your project. Make sure you cover every detail to ensure the project’s success.
TNation – Trusted outsourcing and nearshoring partner in Serbia for a decade. We have assisted 150 global brands in building remote software development teams in Europe and North America.
We offer:
- Offshore and nearshore dedicated team
- Complete custom software product development
- Quality Assurance with rigorous testing procedures
- System administration tailored to your needs
