“Outsourcing software development can have a lot of benefits for businesses, but there are also a few risks that need to be considered.”
Since every coin has two sides, the same applies to outsourcing custom software development companies.
On the one hand, it helps businesses become more competitive and save money on software development, but it also has drawbacks.
So, let’s analyze both points of view (pros and cons of outsourcing software development).
But before we start, let’s see the current outsourcing stats:
- A recent software outsourcing statistic predicts that the industry will grow to $81.5 billion by 2023, with a (CAGR) compound annual growth rate of 3.51 percent.
- Spending on IT solutions is expected to reach around 1.2 trillion US dollars in 2021, representing a 9.8 percent increase over the previous year, owing to the economic impact of COVID-19.
Each year over 200,000 IT graduates are hired in India, making it the world’s youngest employable population.
- More than 40% of IT workers will receive training in the industry’s advanced technical stack over the next four years.
- India has the world’s largest talent pool, which draws businesses. Every year, approximately 0.5 million software graduates are hired by Indian IT organizations, resulting in 98 percent of young and skilled developers between 18 and 35.
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Pros of Outsourcing Software Development
Outsourcing software development to an offshore team has numerous advantages. One can select from a variety of companies that offer the service online. Here are some additional bookmarking reasons why you should hire a custom software development company to handle your software or app development needs.
Outsourcing Software Development Is Significantly Cheaper
According to Deloitte’s Global Survey, more than one-third of companies surveyed focus on outsourcing as a key strategy for reducing costs and improving the efficiency of their IT operations.
It is not difficult to understand why.
When hiring developers within your own company, you have to consider the additional costs of administration, office space, desks, and chairs.
By outsourcing all these administrative expenses to a third-party company, you can save a lot of money. In addition to the lower cost, you can get more flexibility in negotiations with outsourcing companies.
Enables Focus On The Core Business:
It becomes challenging to manage all aspects of software development within a custom software development company service. You have to hire software developers, project managers, designers, testers, and others. Besides, you have to manage contracts, update the list of tasks, manage resources, etc.
The outsourcing company takes all these responsibilities upon themselves. You don’t need to be involved in hiring or managing the team. One needs to think about their company’s unique competitive advantage. You need to tell the outsourcing company what exactly your company needs and let them handle all other aspects.
Access To a Wide Pool of Experts:
According to Evans Data Corporation Data’s Global Developer Population and Demographic Study, there are 26.9 million software developers worldwide, which is expected to grow to 27.7 million in 2023 and 28.7 million in 2024.
Therefore, if you want to find a specialist to work on your software product, you have a massive pool of experts from which to choose. Besides, you can select one that perfectly meets your requirements.
On the other hand, outsourcing companies have access to developers all over the world. They hire the best developers in the market, so you don’t need to worry about the quality of work.
Speed Up The Development Time:
As mentioned before, you don’t need to hire or manage the team. You can hand all these responsibilities over to the outsourcing company.
Developers within an outsourcing company work according to a well-defined process (Waterfall, Agile, etc.). They are highly experienced and dedicated solely to your project.
You don’t need to spend months finding the right team and training them. Just send your requirements for software development, let the outsourcing company prepare an offer, sign a contract, and you are ready to go. They will immediately start the development, and you will get a working product in no time.
Ability To Scale The Business Faster:
When you need to increase the number of employees within your company, you have to recruit, hire, and train new team members. Thus, this consumes both time and financial resources.
Instead of increasing the headcount at your own company, you can hire additional developers through outsourcing companies. Thus, it is a much faster and more cost-efficient method to scale your business.
By outsourcing, you benefit from a ready-made workforce, which can immediately start working on your project.
Access To The Latest Technology & Skills:
The main disadvantage of hiring developers within your own company is that they are not always updated with the latest trends. While they know how to develop software, the technologies they use may be obsolete. That creates additional costs for updating them or switching to new ones.
Outsourcing firms, on the other hand, hire the best experts in the industry. Furthermore, they are always up to date on the most recent technologies. AI, Blockchain Services, Cloud Storage, IoT, and others will be significant software development outsourcing trends in 2022.
You can benefit from their knowledge and expertise without investing time and financial resources into training them.
Universal Fit-for-All- Everyone Can Use:
Every company has unique needs and expectations for a software development project. Some companies need a language-specific solution, while others use a general platform.
Outsourcing companies provide a universal solution that fits the needs of most businesses. They are not language-specific. With them, your business can quickly adapt to any changes in the market or your industry.
Cons of Outsourcing Software Development
Outsourcing software development to companies in other countries may seem like an attractive option if you’re looking to get projects done quickly, on budget, and without the hassles of doing the work in-house.
However, there are many reasons why outsourcing may not be worth it, no matter how appealing it seems at first glance. Here are four reasons why outsourcing software development isn’t worth it.
1. Communication Issues Such As Language, Time Zone, And Cultural Differences:
At first glance, outsourcing software development to a company in another country may appear to be a good idea. Communication issues, on the other hand, have the potential to derail the entire project from start to finish.
Moreover, if you don’t speak the same language as your outsourcing team, you’ll have trouble communicating with each other effectively and efficiently. When you factor in time zone differences, it can be challenging to know the best time of day for you and your outsourcing team to communicate.
Another essential part of communication is understanding culture. It’s necessary to remember that not all cultures communicate the same way, and this means that it will likely take longer for your team to understand your business.
2. Increased Risk of Data Breaches And Cyber-Attack:
While outsourcing software development, there are a few risk factors that you’ll have to consider. One of these is the risk of data breaches and cyber-attack, which are higher when you outsource your project to another country.
When you outsource, your sensitive information is more likely to be lost, stolen, hacked, or shared with a third party without your knowledge. You may not know what security standards or policies the outsourced company has in place, which means that you won’t be able to control how your data is kept safe.
3. Lack of Control Over Your Project:
When you outsource your project, the outsourced company will control most aspects of the project. This often includes the choice of technology, team members, and working hours.
This lack of control is a significant concern for most businesses. You’ll have no say in who works on your project, how they work, and when they do it. While this may not appear to be a major issue at first, if your project fails, you will have no one else to blame but the outsourced custom software development company.
4. Different Business Philosophies Between You And Your Outsourcing Provider:
Business philosophies play a significant role in the success of any project. Some companies work to provide the best for their customers and clients, while others maximize profits at all costs.
This difference in business philosophy can lead to:
- delays and missed deadlines
- increased costs and budget overruns
- poor quality and faulty products and solutions
- dissatisfaction and lack of trust in your company
When you outsource software development, there are many risks and dangers that you’ll have to consider. By outsourcing the entire project, you lose control of most aspects. Communication can be difficult with a third-party company, and they may not always understand or care about your business needs.
The lack of control puts all the responsibility for project success or failure on your shoulders, even if the outsourced company causes issues.
While there are some benefits to outsourcing software development, such as low cost and quick benefits projects, it may not be worth it in the long run.
However, the benefits of outsourcing software development outweigh the risks when you outsource to a trusted partner. Therefore, hire trusted custom software development company service like PixelCrayons to ensure the success of your project.