By TPS People

When To Outsourcing to an Offshore Software Development Company?

January 6, 2021

5 min reads

Technology is transforming how companies carry out their operations. Businesses are racing to adopt emerging technologies. Thus, the need to approach effective practices becomes a necessity.

According to Gartner, more than 80% of companies plan to expand their outsourcing budget by 5% in 2020. And 37% of small businesses are already doing software development offshore.

Offshore Software development is a smart decision that companies should consider to maximize their productivity in a cost-effective manner.

This proven approach has led to many successful projects as it allows a business to focus on its core competencies.

Software outsourcing helps companies to get a competitive advantage in a technologically driven marketplace. Before outsourcing your project development to an offshore software company, get some insights on when a project is recommended to outsource, as well as how to seek a trusted partner in software development.

When to outsource a project to an offshore software development company?!

1. When You Have A Tight Budget

According to Deloitte’s 2016 Global Outsourcing Survey, the top motivation for enterprises to outsource is cost-cutting.

In fact, the average hourly rate for hiring a senior software developer in the US is $100 – $170, a developer with similar experience and technical skills can be hired for $40 in Asia, according to The Scalers. Also, by delegating to a software outsourcing team, companies can diminish their labor-management costs, including recruitment costs, insurance, training, leaves, etc.

Besides, the cost of equipment and other supplies is also a significant saving for companies to take software outsourcing into consideration.

For small and medium businesses, hiring in-house for a single project may not be a good option as the cost may strain the budget while limiting efforts aimed at minimizing costs.

Offshore development offers a cheaper alternative, providing you an opportunity to work with talented software engineers on your project while staying within your budget.

2. To Speed Up Development Time

The current competition demands businesses to leverage every opportunity. Hence, accelerating and reducing time to market becomes more critical than ever. While in-house recruitment requires a mundane hiring process with researching, onboarding, or training, the available assessment to a pool of well-versed IT talents technologies allows a business to accelerate implementing the project without wasting time. A trusted software outsourcing company can enhance productivity without compromising quality.

3. When You want to stay focus on business strategy

Typically, a software development process demands a lot of time and resources. It requires full attention and focuses on the core objectives. An in-house technical team may require your time on management. By working with a software development outsourcing team, a business can free up energies to focus more on the core business idea and activities such as brand building and research and development to provide value-driven services to its customers.

The available access to well-versed IT talents on a large scale allows clients to implement their projects efficiently while having more time to focus on their core competencies and business solution to gain competitiveness in the market.

Moreover, to client companies that are not in the IT industry, the software outsourcing team offers significant benefits as it offers companies expert consultations and an approach to most cutting-edge technology to be innovative and ahead of the curve.

4. When You are In Need Of The workforce Flexibility

Hiring a full-time employee to work for a short-term project does not seem a good strategy.

Software outsourcing allows businesses to have a flexible workforce. Instead of sustaining long term employment and getting to pay full-time in-house programmers all year round, companies can hire an outsourcing company and access qualified developers for the project only when needed. It benefits businesses in the workforce flexibility, especially when it comes to a low season when the project gets done, or the company has to work on a spare budget.

When not to outsource a project to an offshore software development company?!

1. The project is the core value proposition of the business

Before going outsourcing, the most important thing to consider is whether the project is the core value proposition of the business, or is it just a part of a certain need. Knowing the critical business aspects helps you determine the segments you shouldn’t outsource.

In general, it is more likely to develop the solution in-house if the project is the unique point of the business, and you definitely do not want the idea to be known by others before its launching.

It does not mean that you definitely should not adopt outsourcing the core solution. In fact, many outsourcing vendors are shifting toward building partnerships with business owners, not only taking project development. Technology firms can consult solutions and business strategies with experience in the field.

2. When You Have Expert Competencies

If you have in-house knowledge, skills, and resources to execute proper software development that matches the required innovation and quality standards, it is not advisable to outsource.

3. When the development process is not transparent

Whether you keep the process in-house or outsource it, at last, you are accountable for all the outcomes of the project. The responsibility entails that you monitor the progress of the task on a regular basis.

Outsourcing isn’t feasible if the offshore software company is unwilling to give access to documents related to your project.

To ensure the success of the development process, it is advisable to make all the information about the project transparent. Moreover, you should need to keep up with the development process to ensure everything works smoothly.

4. When outsourcing cost is too expensive

Cost-effectiveness is one of the major advantages of offshore development companies. But if the outsourcing company offers an expensive quote than average, you should look for other reliable offshore development firms that offer better services at a genuine cost.

Be aware of the general rate of outsourcing costs in different areas.

How To Choose The Right Offshore Development Company

The thousands of offshore development companies make it difficult to pick the best fit. Essentially, offshore development goes beyond skills and competencies. Here are some considerations to make.

1. Outsourcing Location

In the years to come, Asia Pacific would become the most promising destination for the outsourcing industry. According to GLSI 2019 by Kearney, 5 top outsourcing locations, including China, India, Malaysia, Indonesia, and Vietnam are all in the Asia Pacific. This movement would provide IT, service users, with more options when choosing IT outsourcing service providers. With the high-skilled developers and recognizable reasonable cost in comparison with other areas, the Asia Pacific including Vietnam software outsourcing would promisingly turn out as the destination for clients of IT outsourcing services and more specific software outsourcing services.

2. Security Policies

Maintaining privacy becomes a troubleshooting experience for enterprises because nowadays, data becomes a new asset. Handing over business data to a 3rd party software outsourcing team could risk businesses to encounter data leaks, especially leakage of confidential and sensitive information, which alerts a concerning matter.

Therefore, security should be taken into high consideration when businesses plan to outsource a software project. Select a prestigious partner who has insights into information security and all necessary measures to ensure the protection of their customers’ data. Compliance with data security should also be well discussed.

ISO 27001 is a certificate for information security management systems. Businesses can shortlist partners with the certificate to prevent the possibility of data leakage risks.

For further insights on ISMS, let’s explore the article: Cybersecurity in software outsourcing

You may also like: TPS obtains the ISO/IEC 27001:2013

3. Scope Of Knowledge, Skills, And Expertise

The quality of software development greatly depends on the quality of the software outsourcing service provider. A high-quality technology vendor can boost productivity and drive positive growth to businesses. Thorough research and a good selection in advance streamline the entire development process.

How to choose a trusted software outsourcing vendor? The below checklist can give some clues:

Software provider’s credentials and certificates: Technology partners’ background is crucial for the evaluation. Research for their businesses’ experience and expansion. Certificates and awards can indicate prestigious vendors, especially the ISMS certificate should be a must to ensure your business data privacy.

References in your industry: Partnering up with a vendor who has experience in your industry may ensure the development process will be streamlined. Clutch, GoodFirms are good reference sources to seek for trusted partners.

Reference: Your Team in India, Forbes