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Pros and Cons of Outsourcing Software Development

Konstantin Mirin
20 Jan 2021
6 min
Pros and Cons of Outsourcing Software Development

Why has outsourcing software development become such a widespread practice? You guessed correctly — it brings you together with some of the most proficient experts in their field. But you probably know that already since you’re reading this post. Keep it up if you want to discover what software outsourcing is and what the advantages and disadvantages of outsourcing software development are. Let’s dive in!

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    What is Software Outsourcing?

    Software outsourcing is the practice of transferring software design, development, and support services to a specialized vendor. The contractor can be entrusted with the entire system (full outsourcing) or its individual components/services (partial outsourcing).

    What we love most about outsourcing is that you can outsource literally anything: from developing an entire enterprise solution or an all-encompassing platform to building an MVP or a tiny mobile app. On top of that, you can outsource specific phases of the software development life cycle (SDLC) like discovery, engineering, testing, or maintenance separately, as well as additional IT-related services like marketing, project management, and business analysis. Heck, even CTO duties can be outsourced today.

    Pros and Cons of Outsourcing Software Development - photo 1

    Advantages of Outsourcing Software Development

    Outsourcing had its ups and downs: the market size of outsourced services was $45.6B 20 years ago, peaked at $104.6B in 2014, and went down to $92.5B in 2019. But as the global lockdown hit, even the most traditional companies started looking at outsourcing as a way to contract outstanding software professionals, regardless of their location. Outsourcing also helped many enterprises continue business operations even when their earnings dropped. All thanks to the competitive rates outsourcing vendors usually offer. 

    You must have already heard about the famous software outsourcing perks of cost-saving (thanks to the low cost of living in the countries that outsource most often) and access to the global talent pool (because you’re not limited to your local talent anymore). But there are less obvious reasons why it’s a good idea to outsource software development:

    • Expertise in multiple domains. An outsourcing team can be experienced in a domain in-house engineers aren’t even planning to learn since it’s not directly connected to the product they’re developing. For example, if a large application needs to be monetized, but in-house engineers don’t understand how AdTech works (and aren’t planning to), outsourcing the expertise of experienced AdTech engineers is an excellent solution.
    • Time-saving. This advantage is twofold. First, you save time on hiring, onboarding, and managing tech experts that will be working on your project – the outsourcing company covers all of that. Second, Thanks to the time difference, your outsourcing team can work when your in-house team is resting, giving your business round-the-clock efficiency.
    • Scaling up and down quickly. What if you only need a team for six months and not longer? What if you only need a couple of engineers to augment your team? None of this is a problem for outsourcing vendors. Outsourcing software development helps you scale up or down anytime without hassle and hard feelings.
    • Learning from the mistakes of others. A qualified outsourcing vendor has probably worked with similar clients and developed similar solutions to the ones you’re planning to develop. This means its teams have made mistakes they won’t repeat while developing your product and have gained experience that may prove to be extremely useful in your project. 
    • Focusing on core business activities. Every successful business owner will tell you how important it is to not waste time on something others can do, especially if “others” will do it better. When you outsource the aspects of your business you aren’t proficient in, like developing complex software solutions, you finally have the time to focus on what’s really important, particularly on the tasks no one but you can do right.
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    Potential Disadvantages of Outsourcing Software Development

    The bad news: outsourcing does have its downsides. The good news: we’ll tell you how to overcome them in the next chapter. But for now, let’s see what disadvantages software development outsourcing isn’t proud of.

    • In-house employees could feel threatened. When your in-house employees are watching their coworkers getting replaced by contractors, they could feel they’re next. This may undermine their morale, company loyalty, and decrease productivity.
    • Lack of loyalty. Your in-house team knows the company well. It follows the company’s principles, shares its values, and understands and supports its mission. Hand-picking candidates allows screening them to see who might actually fit your team or business best and follow its processes. But when it comes to inexperienced outsourcing teams, there’s no guarantee they will be rooting for your company just like the in-house team does.
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      • Outsourced employees could feel distant. Your outsourced team may have a hard time believing they are, in fact, your teammates, especially the one that isn’t mature yet. The distance, different time zones, even different national and religious holidays can all put a barrier between you and the new team. This makes them feel isolated, leading to lower productivity and not caring about your company.
      • Quality standards could differ. You may be thinking that “different” quality standards means they’re lower with outsourcing teams. In reality, it’s all the way around. This is partially because outsourcing teams have worked with numerous clients, each of which had raised the bar of quality. Another reason is that, since outsourcing is a service, vendors need to constantly keep the quality of their services high to maintain clients and keep up with the competition. In-house teams don’t need to do that.

      But fear not: you can overcome these disadvantages. All it takes is a little extra work.

      Software Development Outsourcing: Embracing risks & countering disadvantages

      Follow this table to discover how to handle the cons of outsourcing software development.

      ConFix
      Lack of loyaltyTry to be as involved in hiring outsourced team members as you can (or feel comfortable) to make the process close to hiring an in-house employee (minus the headhunting and shortlisting candidates)
      Outsourced employees feeling distantPut extra effort into making your outsourced team feel included. Communicate with them often, organize video chats with other teams, come visit them if you can, or invite them over. Celebrate your accomplishments together, and don’t forget to mention their part in achieving them.
      In-house employees feeling threatenedTake your time to explain to your in-house employees that you are going to outsource certain services and why. The more information they have, the less hostile they’ll be toward the outsourced team.
      Different quality standardsFirst, be strict and open about your code quality requirements. Second, select an outsourcing vendor with high quality standards and seasoned QAs. A trusted software company will be happy to share information about its standards and the quality assurance process and include it in the outsourcing agreement. 
      Pros and Cons of Outsourcing Software Development - photo 3

      The Bottom Line

      As with everything in life, there are two sides to the software development outsourcing coin. A quickly assembled team of professionals delivers your solution at a reasonable price whilst you’re focused on more important business aspects. However, you also risk working with mediocre developers who don’t care about your company and its success. The only way to make outsourcing really work is by taking the time to find a reliable partner.

      Postindustria would be glad to become such a partner for you. We can boast dozens of successful projects, so don’t hesitate to contact us today. Let’s build your next great solution together.

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