Entrepreneurs across the world are applauding the merits of outsourcing. But a few among them have stories of terrible experiences with outsourcing. This mixture of reviews from the entrepreneurs often leads to confusion; should you hire offshore developers or in-house development team?
Well, it’s a crucial decision to make, especially when you are an early startup working on a shoestring budget! So, in order to clear out your confusion, let’s list down the benefits to set up an offshore development team.
1. It’s Cost-Effective
Cost is one of the most important factors that most of the companies consider while outsourcing. According to the Deloitte 2016 Global Outsourcing Survey, 59% of companies consider outsourcing as a cost-cutting tool.
Let’s understand it with the help of an example. Considering you are a startup and want to develop a product, here’s the list of resources you need to fulfill your business objective
- Team of designers and developers
- Quality Assurance Testers
- Project Managers
- Infrastructure (Hardware and Software)
Now, to hire these resources in-house, you will need an HR team. Let’s make another list of the next steps:
- Creating and adding job descriptions on different platforms (LinkedIn, Indeed, Social Talent, etc.)
- Conducting interviews
- Screening potential candidates
- On-boarding employees and training
Sounds like a hell of a task? Don’t worry. By planning to outsource, you can easily avoid the above process.
Just find out trusted & reliable technology partners and share your requirements. Your outsourcing partner will take care of the rest. Apart than the hassle, there is one more reason;
According to the different sources, the average salary of a developer in the USA is $100 – $150/hour. Whereas in Asian countries like India, the average hourly wage of developer rages from $20 – $40/hour. It clearly signifies that if you outsource to India, you can develop your product in one-fourth of what it is going to cost in the USA.
Considering the cost of infrastructure, hiring expenses and hourly rates of developers, you can reduce your development cost up to 60%. Hence, outsourcing not only saves your time but a huge capital that you can utilize on your business growth.
2. Short-Term Commitments
It is the most underrated benefit of outsourcing. The ability to bring an expert on board, without long-term commitments is of great advantage. Outsourcing allows you to hire developers based on three engagement models:
- Hourly Model
- Time and Materials Model
- Dedicated Team Model
You can hire developers based on the hourly model. It will help you avoid any long-term commitments and pay only for the work done. Whereas, hiring an in-house team is a long-term commitment that is bound to a fixed monthly salary and other employee benefits.
Let’s understand it with the help of an example. Sometimes a need may arise to add a specific skill set in between your project. Considering you are aware that you need this resource for just two months, there’s no point to hire a new developer to your in-house team.
Instead, just get in touch with a company that provides IT staff augmentation services. Hire a resource on an hourly basis and complete your project without spending a huge amount.
Recommended Read: Hybrid Approach – IT Staff Augmentation & Outsourcing
3. Core Competency:
Global outsourcing survey of 2016 by Delloite states that approximately 57% of companies believe that outsourcing enables them to focus on core business.
“Do what you do best and outsource the rest” – Peter Drucker
When you follow this approach, you are actually accelerating the growth of your business. Especially in established companies, when you introduce a dedicated offshore team, the burden on your in-house team gets reduced, hence, increasing their work productivity.
So, why not choose to outsource in the early stage and focus on your core business functions?
4. Risk Mitigation:
A lot of people forget to mention this benefit of outsourcing. In case they do, no one pays attention. However, it is one of the most significant advantages of outsourcing.
Types of Risks Involved in the Software Development Project:
- Schedule Risks
- Budget Risks
- Operational Risks
- Technical Risks
Wondering how outsourcing can help you mitigate the risk? Let’s clear out this confusion. Offshore software development is bounded by a contract. This contract includes the time & cost estimation as well as deliverables.
The benefits of working with an offshore team, make outsourcing worth giving try. Who knows, while working with offshore developers, you may find long-term players, that will be focused on the success of your business.
Hiring a local developer may seem awesome in the first place, however, some real issues exist while doing so. From recruiting the right talent to explaining your needs & getting the best out of the developer takes a lot of time and efforts. This may distract your focus from core business functions, leading to a lot of confusion and the project losing its flavor.
A general recommendation is to evaluate the overall situation via SWOT analysis ;
Getting a better perspective is possible only by conducting a self-evaluation of the situation. Outsourcing does take away a lot of the planning & execution part from your workload thereby freeing your efforts at focusing on tasks that demand your attention!
Did a SWOT analysis give you a signal for outsourcing? If you are planning to develop your software offshore, then you should definitely drop us your requirements at email@example.com. Our experts at Your Team in India can surely help you strategize your project in the best possible way!