Looking for top software development talents? They are just a few clicks away.

Software Outsourcing Guide: How To Make It Work For Your Business?

Dec 22, 20219 min read

Robert Krajewski

Co-founder and CEO of Ideamotive. Entrepreneur, mentor and startup advisor.

software outsourcing guide ogimage

The rising competition within the technology industry has caused more and more businesses today to focus on improving their workflow through IT outsourcing – the process of hiring external service providers to deliver specific IT services, manage critical processes and launch innovative solutions to effectively enhance business performance. One of the widely used yet prospective branches we’ll analyze today is software outsourcing. 

 

By the end of 2021, the overall value of the IT outsourcing market is expected to reach around $413.72 billion, according to Statista. In the past 5 years, the market revenue of IT outsourcing services has already increased by 11,57%, and these numbers will only grow in the upcoming decade. According to the 2021’s report of the State of CEE IT Outsourcing and Offshoring, the leading ICT areas include AI, robotic automation, IoT, and AR/VR solutions. 

 

In this article, Ideamotive’s best experts will uncover the essential insights to know about software outsourcing, its core challenges and prospects, and how to prepare your business for the successful implementation and use of all of the IT outsourcing opportunities. 

Let’s dive in! 

The Main Concept of Software Outsourcing 

If you’ve landed on this article, you surely know what is outsourcing in software engineering. However, before we start analyzing the case studies, numerous approaches, and challenges of IT software outsourcing, it’s important to understand the core idea of this approach, what companies it fits best and how you can ensure its success.

 

According to Ideamotive’s recent study, the main driver of software outsourcing implementation for around 59% of small and medium businesses still remains its cost-efficiency. Companies start delegating the software development to improve the processes and eliminate the time needed for its delivery. This approach enables hiring the best tech talents on favorable terms regardless of their location. Moreover, depending on the goals of your organization, IT software outsourcing requires involving not solely the top software engineers but also:

  • Quality Assurance specialists (QAs)
  • UI/UX designers
  • Graphic designers
  • Project manager (PM) 
  • Top software consultants and more

However, there are no actual limits on which IT services to outsource. This means you’re free to delegate the services like software design and development, IT project management, user and employee training, hardware setup and installation, 24/7 end-user support, and more.

 

To ensure the successful implementation and use of software development outsourcing, it’s critical to create a powerful outsourcing strategy your employees can always focus on. This becomes much easier if hiring the leading software programmers that possess the advanced skills and have a lot of practical experience within the scope you’re interested in. In addition, their assistance can lead to the creation of the winning strategy of processes delegation, as well as resolve the major challenges of your business.

 

Although outsourcing poses numerous benefits, it also comes with its flaws. Thus, it’s important to analyze both, pros and cons, to make a well-informed decision of whether or not outsourcing is the right approach for you.

 

Pros of Outsourcing

Cons of Outsourcing

Access to a wide talent pool

Lack of control over product development

Chance to leverage the specific expertise

Need to share sensitive information with third-party

Reducing development costs

Language and cultural barriers

Accelerating time to market

 

Flexibility

 

Ability to focus on business development

 

Challenges the Software Development Outsourcing Resolves

After you know the major insights of IT software outsourcing and how it actually works, it’s time to find out what challenges the product owners and CEOs can resolve with this approach. 

Limited Budget

First of all, one of the most popular drivers for employing the software outsourcing approach is a company’s budget limitations that restrict investments into recruitment and infrastructure development. The outsourcing approach enables hiring the most talented developers with advanced IT skills at a reasonable price. For example, depending on experience and technology, the development rates of CEE countries like Ukraine range from $30-$60/hour, while in the US you’ll pay from $65-$130 for the services. So, if you hire software developers from CEE county, your company can save from 40% to 70% of total costs. 

Tight Timeframe

Additionally, outsourcing may be a great solution for companies that have a tight schedule and don’t have time for building their own in-house team for a single project. In this case, it’s much better to find a remote software development team that is ready to engage with the project from day one and can deliver the product in the shortest time frame. 

Talent Shortage

Another significant problem software development outsourcing can resolve is the talent shortage. According to McKinsey, around 87% of companies say they either are experiencing gaps now or expect them within a few years. With the outsourcing approach, companies can easily find the tech talents that perfectly meet the company’s goals and project requirements, regardless of their work location. Also, this can eliminate the time and costs needed for the employee onboarding process, without sacrificing quality. 

Lack of Specific Expertise

Last but not least an important challenge the product owners and CEOs can resolve with software outsourcing is the specialists that feature specific expertise or tech skills that are hard to find locally. For instance, there are some projects the company intends to complete, but the in-house team does not feature deep knowledge or sufficient experience in certain technologies development. However, this problem can be effectively resolved by finding talented yet experienced development experts beyond the company. 

 

These are only a few of the major challenges that can be easily resolved with implementing IT software outsourcing. As you can see, this approach can be a winning option to greatly enhance the workflow, achieve the company’s goals and complete a wide range of different projects in the most efficient way.

But, to ensure your organization can make the most of the software development outsourcing processes, it’s also critical to build a solid strategy of its correct implementation.

The Strategic Approach in Software Outsourcing

 

Successful outsourcing requires companies to strictly follow a certain implementation strategy that keeps them focused on taking the right steps and making the best decisions.

Deloitte’s statement “...outsourcing initiatives succeed by design, not luck”

provides an accurate yet complete description of the importance of applying the strategic transformational approach for any company within any industry. 

 

To make the most of this process, let’s now analyze the core success factors you should definitely consider when developing the software outsourcing strategy for your company. 

 

Infographic

Define Your Goals

Once it comes to developing an effective outsourcing strategy, the companies shouldn’t get solely focused on the traditional cost-centric approach and ignore the others like flexibility improvement or rapid process turnaround. In fact, it can miss lots of different opportunities and your business may take competitive advantages further. 

 

The definition of clear outsourcing goals throughout the organization is simply a must for evaluating the progress, success and developing accurate KPIs once the outsourcing is implemented. This can ensure the company’s outsourcing operations feature lower cost, faster turnaround, and greater flexibility as well. 

Define Tasks for Delegation

The delegation of the tasks provides companies with more opportunities to focus on the tasks that will help to improve the business performance, enhance the planning and develop an effective strategy for successful business growth. By entrusting joint, time-consuming, and industry-specific tasks to remote software developers, you can gain better efficiency on other important tasks that require full attention. 

 

Of course, not all the tasks can be delegated to the outsourcing team, that is why it’s essential to make regular audits defining the specific assignments that are either out of the expertise of your in-house team or do not require your level of skills to be done.

 

At the beginning of the outsourcing process implementation, it’s a good idea to start with delegating less important tasks first. You can also start with checking the developers’ work after it’s done and provide feedback on which aspects they should pay more attention to. This way you’ll ensure all the tasks are delegated properly and feature the appropriate level of quality and efficiency for your business. 

Determine Your Technological Profile

As software development outsourcing is usually set up remotely, it’s important to check whether or not the vendor fully meets your technological goals and requirements before starting cooperation. For this reason, Ideamotive’s professional outsourcing experts suggest making a list of resources your project needs, what outsourcing goals your company is to reach, and other important details. 

This way, you’ll be able to inform the potential vendors about the projects you want to develop and provide more details about the outcomes you expect to get in result.

Establish a Good Job Climate

Finally, to create the most productive yet efficient workflow between your in-house developers and outsourcing team, you should unify the interaction with both by providing detailed information and the latest updates of the outsourcing goals, eliminating the cultural gaps and ensuring both teams possess the accurate project information and most effective tools for their assignments.

Ensure Smooth Communication

Additionally, it’s a great idea to utilize identical communication apps like Microsoft Teams, Slack, or Outlook for interaction between the in-house team and outsourcing developers. This can greatly help in the information/document sharing process as well as benefits the security and data protection. 

How Can Software Development Outsourcing Help You as a CxO or Product Owner?

To ensure that IT software outsourcing can really help you to get the company to the new level of development, you should now analyze what benefits you’ll get as a CEO or product owner when hiring software engineers. Let’s now briefly review the major advantages of implementing the outsourcing approach to the business within any industry. 

Access to Deep Knowledge and Experience

One of the most notable benefits of software outsourcing is involving the tech talents with a list of unique experiences and skills that can enhance the capabilities of a certain company. For sure, this significantly enlarges the number of different processes your software engineers can create, and also enables the effective skills development of your in-house team. So, your company can easily implement innovative technological solutions as well as save up the time and costs for the employee training process. 

Access to Superior Tech Talents Worldwide

For the software onboarding process, the location of your remote employees is not that critical as it is for the in-house workers. This means you can now look for professional software programmers that can perform various assignments from nearly any part of the world. 

 

Needless to say, that in post-Covid time onboarding also saves up lots of time, costs, and effort for hiring and onboarding a remote team of developers. They also feature flexible working schedules and are always ready to work either in-office or from home regardless of the pandemic situation, which is exceptionally important for the on-time deliverables.

Optimal Balance of Skills and Rates

Having reviewed the State of CEE IT Outsourcing and Offshoring Report 2021, it becomes more than obvious that investing in the tech talent pools of CEE countries can be a winning option for the companies that are looking for valuable workers at the most reasonable price. By hiring tech talents from Ukraine, Belarus, Poland, or Romania, you’re more than sure to get first-class IT services at a lower cost as these regions have great potential of the workforce, attractive prices, and fees, and possess enough expertise in delivering various software projects within the different scopes. 

Ability to Gather the Best Professional Team for the Project

With having no limits in location and getting the highest quality of software, outsourcing helps to engage the world’s top developers in your project. This aspect can greatly impact the project outcome and help to enhance its features and overall performance, which results in higher ROI!

No Need for Micromanagement

By entrusting the time-consuming and industry-specific tasks to the offshore developers, you can make your business more autonomous. How? You’ll let the workers do what they’re paid for, encourage their ideas contribution, and, of course, minimize your participation in their assignments! As a result, the business becomes less dependent on you, when you’ll get some more time for other important processes and tasks. 

Effective Communication Within the Team

The outsourcing approach mostly implies online communication with your workers using different working applications and cloud solutions from Google, Microsoft, and more. The core advantage of this interaction is that no one will be out of the loop during the development process and can always reach the team on calls or through email. 

Application of the Agile Methodology

Overall, the agile methodology enables streamlining the development projects and scale indefinitely. The more software engineers with diverse skills you involve, the more sources of different ideas and approaches you can implement into the project as a result. Moreover, the open communication with the offshoring and nearshoring teams enables creating a solid foundation for tackling multiple tasks that can significantly improve the product quality. 

How to Find the Software Development Outsourcing Company for Your Project?

While looking for cost optimization in outsourcing vendors, it’s pretty easy to lose quality. However, being aware of the average developer rates in different countries, it’s more than possible to find the middle ground with hiring a cost-efficient, flexible yet powerful team of programmers.

 

For this purpose, you should analyze the offers from different companies with evaluating their potential based on certain criteria, critical for your project or company, including:

  • Software developers’ tech ground 
  • Rankings in global IT destinations
  • Time zone difference
  • Level of English proficiency
  • Company’s tech resources and competency
  • Cultural differentiations

For most companies based in Europe, the US, and Canada, the CEE region is one of the most promising outsourcing areas with high-quality tech services at a comparatively low price. As an example, hiring a Junior Software Developer in Poland may cost between $1,000-$1,800 per month when in the USA you’ll pay more than $7,200 per month. 

 

As you can see, nearshoring or offshoring the software developers from the tech countries like Poland, Ukraine, Belarus, or Romania can be a great opportunity to improve the quality of workflow while saving on the overall project development costs. 

Conclusion

To sum up, software outsourcing businesses help companies to enhance their workforces, improve the flexibility and quality of their products as well as optimize the range of software solutions they offer on the service market. Once your company is ready to implement this model, it’s essential to analyze the core idea of software development outsourcing and build a strong step-by-step strategy that will help your team to focus on the main objectives, implementation, and maintenance of this approach. 

 

If you’re interested in uncovering some more details about IT outsourcing, feel free to review our latest online webinar from Ideamotive! Being one of the leading outsourcing experts in the IT industry, our team is always ready to share the innovative solutions your business can start implementing today!

 

Are you looking for outsourcing/offshoring experts to improve the company’s workforce? Reach out to us. Our best experts have deep expertise in organizing dozens of different software projects and are ready to support you at every stage of your business development, from the idea and strategy to the actual design, implementation, and maintenance of software products. We will provide you with the most powerful team of dedicated developers that can perfectly match your technology, industry, company culture, and team dynamics.

Robert Krajewski

Robert is a co-founder and CEO of Ideamotive. Entrepreneur, who with passion spreads digital revolution all around the internet. Mentor and advisor at startup accelerators. Loves to learn and discover new business models.

View all author posts
Newsletter 9-1
Ideamotive Newsletter
Your bi-weekly collection of hottest tech news

CEE IT 2022

The State of Central & East Europe IT Outsourcing and Offshoring 2022 Report

Belarus • Poland • Romania • Ukraine

Read now

Looking for exceptional tech talent to join your team?

Our broad network of battle-tested software developers, designers, managers, and business consultants is here for you.