August 13, 2024
Outsourcing is already a popular practice among the biggest names in software, with many offshoring a substantial portion of their operations. Now, smaller developers are doing the same – and other companies around the world are catching on.
The IT outsourcing market in the US is predicted to be worth $435 billion in 2026, and growing. What motivates companies to consider outsourcing as part of their business model? Additional capacity, executing on larger business goals, saving money and accessing skills not available in-house are some of the benefits. Outsourced software development can bring a lot of value to your team in the form of specialized app development, quality assurance, expert developers and the ability to focus on core competencies with your internal team while having a dedicated team for external projects. These outsourcing pros are one of the primary reasons outsourcing has become such a popular choice among software companies.
Outsourcing software development has its pros and cons. While it offers cost savings, specialized skills and flexibility, it comes with challenges and potential pitfalls. If outsourcing partnerships are not effectively integrated with on-site teams, leading to low employee morale, poorly written code and missed deliverables, they will ultimately lead to a low return on your investment. These issues come from a lack of quality assurance in the initial choice of an outsourced developer. While your outsourcing team can bring so much value, outsourcing providers don't work for everyone.
Before you even start to look at outsourcing companies, we need to look at the good and the bad, as well as whether outsourcing can help your next software development project.
Advantages of Outsourcing Software Development
By outsourcing software development, companies can tap into specialized app development or general software expertise. This opens up new opportunities for creating innovative and cutting-edge applications that offer a competitive edge in the market. Outsourcing allows organizations to gain access to a wide range of skills and knowledge that they may not have internally, whether due to costs or to a lack of local available talent. This can include quality assurance, where dedicated teams with extensive experience and expertise ensure that the software meets the highest standards of functionality and performance.
Software development outsourcingis expected to grow 70% in 2023 and 34% specifically for app development through outsourcing companies. This growth in software development outsourcing can be attributed to several advantages that companies can benefit from. Let's take a closer look at the pros of outsourcing software development:
| Cost factors | Although cost is no longer the leading driver for most organizations considering outsourcing software development, cost savings are certainly an expected outcome. The average rate for an engineer is far lower in Latin America, Eastern Europe, and Asia than in the United States, the United Kingdom, and Australia. | The Accelerance Advantage: We work with developers worldwide. Our certified partners must meet more than 200 criteria to become part of the Accelerance global network, so you can be assured of quality work. |
| Finding the right skill set | Due to domestic talent shortages in the U.S., Western Europe, and Australia, outsourcing allows companies to fill gaps in their teams without having to sacrifice quality. It also allows organizations to leverage fractional skill sets they may not have the ability or need to hire full-time. | The Accelerance Advantage: We work with more than 30,000 software engineers in 40 countries across the world, so you’ll always be able to find qualified developers for any project, large or small. |
| Saving time | Finding and interviewing candidates, negotiating compensation, and onboarding a new employee takes time – only for some to leave a year or two later for a new opportunity. Working with an outsourcing partner allows you to delegate a lot of the recruitment process, enabling tech leaders to allocate time and energy to more high-value initiatives for the company. |
The Accelerance Advantage: We do all the legwork to vet developers, so you can focus on your business. Outsourcing shouldn’t create more work for you – it should make custom software development easier. |
Potential Disadvantages of Outsourcing
| Communication | Outsourcing can run into problems if there is a cultural misalignment with the partner company and/or the development team has poor English skills. Time-zone differences with a limited workday overlap can also lead to a breakdown in communication when expectations are not appropriately set. In-house project managers who are responsible for an outsourced team can help with that, and well-aligned partners are used to managing the challenges of working across time zones. | The Accelerance Advantage: Communication issues can kill a project. Accelerance ensures all certified partners speak fluent English and are culturally aligned to work with Western companies. |
| Company morale | The vast majority of the time, outsourcing is not designed to replace in-house employees but is used in parallel with ramping up headcount internally. However, some staff may view outsourcing as a threat, which can lead to a decrease in productivity and reluctance to integrate an outsourced partner into the team. Clear communication from leadership and management is essential in outlining the role outsourcing will play and how it will impact individual team members. | The Accelerance Advantage: We view outsourcing as a means to accelerate development, not replace existing hard-working employees. Thanks to competitive rates – often lower than boutique domestic outsourcing firms – you can add more capacity without significant increases in overhead. We also coach leadership on how to communicate the benefits of outsourcing and create buy-in from internal teams. |
| Quality | Concerns over code quality are valid. A lot of dev shops around the world hire low-level talent ill-equipped to work with clients, or pitch an “A team,” then transfer the project a few months later to less experienced developers (a strategy known as “bait and switch”). | The Accelerance Advantage: All the certified partners in our global network have a proven track record and scalable practices in place to maintain the high quality of their work and resources. |
How Do I Weigh These Factors?
Just because what you know of outsourcing may not be what you're looking for does not eliminate the option of outsourcing as a whole. And just because your potential outsourcing partner has a disadvantage in one area does not make them a bad company.
The outsourcing industry is diverse and can be tailored to fit into various company workflows. It provides a range of benefits, from cost savings and efficiency gains to access to specialized skills and global talent, allowing businesses to adapt and thrive in an ever-changing business landscape. Your company and its functions are unique, and so outsourcing can cater to individual needs. Outsourcing companies and systems that work for one company may not work for another, but that does not make outsourcing a bad option.
A great way to decide whether or not to work with an outsourcing company is by examining your internal goals and how much the advantages and disadvantages mean to you. If the development process is not one that you need to be fully hands-on, outsourcing could be a good option for you. If specialized skill is your priority, you could outsource your software development. But if communication is nonnegotiable and you don't want to have any issues, an offshore team may not be right for you. It all depends on your project requirement and your team's goals after all.
Need Advice?
Here at Accelerance, our trusted advisors have worked with our clients to connect them to specialized talent worldwide. No matter what your project, issue or goal is, we can find the right fit for you. Talk to us, and see how we can help you on your outsourcing journey. Join over 15,000 people who get the latest tips from industry insiders each quarter.
