Top advantages and disadvantages of outsourcing software development

15 Oct

6 Dec

So, you think about extending your software development team. Maybe you want to invest in your in-house IT team. Should you better deal with outsourcing companies? Well, you’re not alone. Many IT businesses face such a difficult choice. Some of them prefer the second option. Why? The outsourcing market is expected to reach $5.50 trillion by 2028, with a compound annual growth rate of 22.9%.

It is always better to make an informed decision. This short guide gives you the essential – the pros and cons of outsourcing software development. With it, you’ll have everything to make a smart choice for your business. Ready? So, let’s start!

Reasons to Employ Outsourcing

Why do IT companies turn to outsource? They want to save resources on hiring new employees and renting an office. Moreover, the owners consider other reasons as well.

1. Access to various specialists

Two typical scenarios in this case are:

Rapid growth. Your business is skyrocketing, but you don’t have enough specialists in your team.
Urgent and important project. You don’t want to lose money but can't spend a couple of months expanding your staff.

Sounds familiar, right? Of course, you can find new developers. But this requires a lot of additional time and resources.

2. Access to expertise outside the company

Technologies develop even faster today. To keep up the pace and retain your competitive edge, you need to use the latest digital advancements. Sometimes, professionals in your team may not be experts in a certain tech stack. So, where to find them?

Train your development team. You can invest in upskilling of your employees. It’s an expensive and time-consuming process.
Deal with an outsourcer. Such providers usually have seasoned developers in the stack you need almost immediately. It's usually a cheaper way to access new expertise than the previous one.

Each of the options can be beneficial to your business. You can even combine them.

Major Benefits Of Outsourcing Software Development

Outsourcing can help your business with your various projects. But how? Let’s have a look at the benefits it can bring.

1. Saving money and time

Developing your application with your team or outsourcing can take approximately the same amount of time. It is true if you have a fully staffed team ready to do it.

But what if you don't have the right specialists for a new project right now? Then you follow one of two paths:

Extend your in-house IT team

Determine the need for new specialists
Open vacancies on different channels
Conduct interviews
Hire and onboard employees
Create your project

Opt for outsourcing

Find an IT service provider with the required capacities
Sign an agreement and transfer the technical requirements
Create your project

Usually, it takes significantly less time and money than creating your in-house team. Thus, you get your solution ready earlier and cheaper.

2. Advanced experience

If you’re afraid to take new projects in which your development team has no expertise, don’t be! You can simply outsource these tasks to professionals with specific knowledge.

Today it is easier than ever to find the right expert for any tech stack, practically anywhere. The number of developers worldwide is projected to reach 28.7 million people by 2024, an increase of 4.2 million from the number seen in 2020. Sounds great, right?

3. Focus on the main thing

What’s next on the list of advantages of outsourcing software development? Letting a contractor deal with small projects. Decrease your burden of dealing with unsignificant yet time-consuming tasks.

You still receive income from the ongoing projects.
Your management and engineering team get time for more important issues or more high-value projects that will add to your portfolio.
Your business can focus on strategic results.

It is also a way to diversify your proposition and thus get more big clients.

4. Accelerated market introduction

You urgently need to make a project with a tight deadline. Don't even think about giving it up. Why? After all, there are companies that have experience in rapid development. We feel that you need facts. And here they are.

We at Halo Lab built products from scratch. For instance, have a look at Bücherregister, a solution for book collectors. Our team created it in just three months – from an idea to a well-functioning product:

One month for branding
One month for product design
One month for development

5. Support

Your development team has created a good app. But now, you don't have the capacity to support it. What to do then? You can delegate these duties to an outsourcing agency. Its specialists provide constant updates and technical maintenance for your application.

This is how the benefits of software outsourcing look like. They can help take your business to the next level.

Main Risks of Outsourcing Software Development

Perhaps you now think that everything cannot be so smooth with outsourcing. You're right. After all, as in every case, you need to consider the risks. Here we’ll cover the main ones.

1. Business risks

You can’t just hire any company in the market – you need to make sure first that it is professional and reliable. And, no less important, whether it can live up to your expectations. For instance, meet deadlines, create a properly functioning product, solve any issues that may arise.

Here’s how you can check your potential software partner.

Have a look at a company’s portfolio: its clients, project scale, and technologies used.

NB: look for relevant expertise. If a company has created amazing online stores, it doesn’t mean it can design an excellent CRM system. Search for projects similar to yours in scale and complexity.

Study the reviews – opt for reliable and verified ones, for instance, on Clutch.
Ask a company about the project roadmap. They should clearly explain how an app will be developed. If they can’t walk you through the steps, they might not have a clue about it. Otherwise, they’ll describe the stages up to the first release and further on.
If the first three blocks are checked, but you’ve still got concerns, have a call with a company to discuss them.
Ultimately, you might give a contractor a ‘trial’ small project to test its capacities.

2. Poor Communication Between Parties

The outsourcing company itself manages the development process that you transferred to it. That is, you have no direct influence on the outsourced development team. Consequently, you may have communication problems with the contractor.

You can avoid this. How? Discuss the following with the outsourcing company:

How often will they update you on the project status, why, and in what format? (If the schedule proposed doesn’t fit you, you can negotiate another one.)
Who are the contact persons and what channels of communication would be best for regular updates and urgent messages?
How does a contractor communicate with companies from a different time zone? (This one is widespread. If a contractor gives clear answers and offers various solutions, it shows its experience).

3. Data leaks

One of the other outsourcing software development risks is data leaks. Detractors can harm your project. We understand that this disadvantage could make you doubt whether it is worth cooperating with an outsourcing company.

Still, you can avoid unwanted data leaks. But how?

Set the process right from the start, signing detailed agreements with parties’ responsibilities
Specify data confidentiality contract points.
Sign security protocols and NDA.

Bottom line

Don’t rush into decision picking a reliable outsourcing agency. Choose carefully. Find a reputable company that offers each client they sign a dedicated team. Here’s a short recap of must-do’s when selecting a contractor:

Check its portfolio and market reputation.
Look for experience in projects similar to yours in size and tech stack.
Discuss your concerns, workflow, communication schemes at the very beginning.
Getting ready to sign a contract, think through potential risks and mitigate them.

Let's Try Outsourcing

Now you have an idea about typical outsourcing software development pros and cons. Also, you see the ways to mitigate the risks. The key point to remember is that an outsourcing company can help your business save money and time. The crucial thing you have to do is find a reliable outsourcing company.

We at Halo Lab create web and mobile apps with impressive designs from scratch (By the way, you may have a look at Halo Lab reviews as well). Our development team has a high level of expertise in a wide range of industries: