Table of Contents
While the economy is driving towards globalization, many organizations desire to gain a competitive advantage while minimizing cost, improving efficiency, and improving customer service.
But, is it possible to implement these goals when your company is working a restricted budget? If you wish to find a solution to this issue, then the right answer is software development outsourcing.
It is important to understand outsourcing deeply before you hire offshore developers.
This post walks you through every aspect related to outsourcing.
Table of Content
- What is Outsourcing?
- Global Outsourcing stats
- Why do companies outsotheurce?
- What benefits outsourcing has to offer?
- Different outsourcing price engagement models and their types
- What does successful outsourcing take?
What is Outsourcing?
In simple words, outsourcing is what you do best in-house and delegating the rest of the tasks that aren’t your core competency to the best offshore development company.
Outsourcing Stats You Should Consider
According to statistics, the IT outsourcing industry is valued at $66.52 billion in 2019 and the major part is covered by software development and maintenance.
- Firstly, Deloitte saw an increase from 20% to 49% in the total companies preferring outsourcing in order to become more innovative.
- Secondly, as per Gartner’s 2017 and 2016 CIO Agenda Reports hiring skilled specialists is the major issue among organizations and this is the reason why most of them are unable to accomplish their objectives.
- Thirdly, as the Harvard Business Review states, “Full-time employees are the most expensive and least flexible source of labor.” This is one of the reasons why smart business owners are making strategic use of resources and take the help of outsourcing companies to fill the gap, meet demand, and maintain certain projects.
Let’s find out why companies outsource?
Reasons to Outsource
- Getting products to the market faster
- Focus on core competency
- Bringing in domain knowledge
- Meeting customer expectations
How Companies Benefit from Software Development Outsourcing?
a) Cost Efficiency
Outsourcing your project is not rocket science. Your business has to make more than it spends to maximize the profit.
One way to do is to meet business needs at least cost possible. Outsourcing will certainly work for you.
According to Deloitte, most companies outsource for cutting their development cost.
The in-house staff certainly costs more to the business. Besides their regular salary, the hiring process, cost of software tools, employee benefits schemes makes the employees more expensive. All these expenses keep on increasing with time as the team expands.
During development outsourcing, the company offers full-cycle development at a genuine price helping you maximize profit.
Indian developers are known for delivering high-quality services at attractive rates.
This clearly means that all the business needs are met without hitting the decided budget and compromising the proficiency level.
b) Flexibility and Faster development
Flexibility is another perk. Taking the help of mobile app developers and successfully releasing an app can be challenging if you are unsure about their abilities.
The delays in time to market affects the business relations with customers.
This is where outsourcing comes into play. It gives the company flexibility to scale up or down the offshore team as per the project’s needs.
The software programmers you hire know how to tackle emergency situations like allocating new resources to meet tight deadlines.
c) Focus on Core Business
You will agree with the fact that software development is a time-consuming process.
Taking out time to focus on the project development leaves no room for core business activities that generate revenue.
The top software engineers work remotely and dedicatedly when they know they have to become the extended version of the organization.
You focus on your core business and rest is taken care of by the top outsourcing firm.
This includes technical needs like development, managing resources, maintaining quality without wasting the recruitment time.
d) Right Expertise & Skills
Outsourcing software development company provides a skilled tech specialist that has deep expertise in the technology stack.
Starting from iOS app developers to UI/UX designers, you get a complete package for the success of your project under a single roof.
Finding this type of talent and then hiring them on a full-time basis can be a daunting affair.
You can pick the right offshore dedicated team that has proven experience and has the right engagement model that fits your budget.
Offshore development offers plenty of potentials especially when it comes to tight deadlines. Do you want more hands working on the project?
One of the best ways to speed up the process is to hire an offshore web development team that has the ability to work within your timeframe.
To stay competitive, it is important to be updated with the latest software innovations.
This issue of technical ability is sure shot way to improve productivity without compromising quality on quality standards.
When you know the benefits of offshore development, it is recommended that you should know about engagement models.
Engagement Models and their Types
An engagement model is a structured design that decides the basis of the collaboration between you and the software development company.
The model focuses on the requirements and interest of the customer while ensuring the level of control, flexibility as well as responsibility.
There are three most popular engagement models in software development
- Fixed engagement model
- Time and material model
- Dedicated developer engagement model
1) Fixed Price
This is used when a company has a certain goal and the objective is simple, “create and launch a software product.”
This means you define the scope of the project and the offshore development agency builds the required solution.
There is the availability of the necessary documentation following specifications and strict implementation of the plan.
Ask the hired developers to follow this approach when you know the requirement will not change in the future.
Specifications: Well-informed requirements help you to get what you need.
Deadlines: The deadlines and the process is approved in advance. So, the project is completed well-on time and is delivered quickly.
2) Time & Material
This is one of the most common outsourcing models utilized when it is difficult to determine the final requirements of the project. It is more suitable for small and medium projects.
Efficiency: You can change the work plan or the requirements as per convenience
Flexibility: The model ideally combines with the modern agile methodologies.
Result: You can see the result at all stages via constant monitoring of the work progress. This increases the likelihood of achieving what you want.
3) Dedicated engagement model
In this model, the dedicated outsourcing engineers work as an extended version of the already existing team. Both the teams work on the same project taking the help of agile development.
In this approach, you can form the future team having the necessary number of specialists. This gives benefits to long-term projects.
Control: The customer has full control and management over the offshore team while determining workload.
Professionalism: You approach the personnel selection of the experts, their level of knowledge, and understanding of technologies.
Less cost: There is no need to waste time and hire on recruitments of employees within the organization. You don’t have to pay for extra expenses and the hiring cost also reduces.
After gaining the knowledge about the engagement models and then choosing the one that suits you, it is time to hire developers and consider the below mentioned smart tips.
Tips to Hire the Best Offshore Developers
Outsourcing Projects Effectively
Your company has now finally decided to outsource software development so it is very important that you choose a good offshore development company.
If you have a reliable service provider, there will be many arising challenges that will be mitigated.
In the ideal situation, the developer you hire tends to bring a lot of experience as it has worked with a diverse range of projects in different countries.
In addition, your outsourcing partner leverages collective experience to tackle the hurdles that may come in the way of development while allowing seamless integration of services.
Follow the steps and know how to do software outsourcing effectively.
Make a List of Companies
To deliver the best, it is very important that you work with the best. You can begin the process of vetting one another.
Ask people who have a good knowledge regarding software development and see what company they recommend.
It is a possibility that some of them had outsourcing experience or they know someone who has. This way, you will get a recommendation from a trustworthy source.
If you are unable to do this, go for organic search online, and then hire developers.
Paid ads never give quality offshore service providers but they have the ability to guide you in the right direction.
Look for a reputable software development firm that may also be a startup that delivers exceptional results.
Depending on the project’s nature and complexity, it is recommended that you shortlist the name of 5-10 companies. Here is what you should be considering:
- Company’s name
- The engagement model and their prices
- The problem’s solution and proposal detail
- The initial evaluation of the company as per the information you have
When you organize all this in a single document, you will have an easier time evaluating companies without being bogged down by the details.
Cross-check the Reputation
Once the list is completely ready, it becomes easy for you to know in-depth about the company before you make the final decision.
Go for a Google search and see what people are saying about the company (check Google reviews). The good thing is, it is easy to gauge how popular the company is.
Have a look at the testimonials, blogs, reviews, etc. Once you go through the reviews, move a step ahead, and browse their social media platform. You will learn a lot about what others have to say.
Subsequently, customers leave a detailed evaluation of Facebook and different social media platforms after utilizing the services.
Check if the Company is Stable.
No one wants to work with an unstable company. The financial troubles could be an indication of mismanagement. When you hire offshore developers, check their competency and proficiency.
It takes considerable effort to set a strong presence on social media and have satisfied customers. So, if the development firm shows competence in this part, it is a good indication of proficiency.
Learn the Basics
It is a good idea to investigate clichés. Issues like social background affect how you interact with a company so pay attention to the project’s nature. Then find if the company has the potential of meeting international standards.
Working culture is different in every country. This may affect your schedule as some remote companies choose to adjust their schedule to fit with their clients.
Overview of their Previous Projects
A vague declaration may easily attract you as companies tend to exaggerate their accomplishments. If you are considering hiring remote developers for software development, explore their official website.
Furthermore, their work is the mirror of their skills, quality, and imagination. You have to check for robustness, user-experience, functionality, etc.
Without a doubt, you have to check if page navigation and loading speed on their website are quick. This gives you a pretty good idea about what they can do for you.
Discussion with the CTO/CIO
As a new client, the offshore company is most likely to give you the best developers.
While you discuss your requirements, you can ask them as many questions as you want to.
If you think they don’t have a firm understanding, move to another agency instead of taking that risk.
Any business, whether it is a startup or a huge enterprise, outsourcing software development offers a long list of benefits that companies are looking for. Cost-efficiency, the best talent, and productivity drive exceptional results.
Most importantly, whatever your stance on collaborating with the business process outsourcing company may be, there is no denying it provides you with the fruits of labor.
Especially for the companies that are unable to keep up with the market demands, have in insufficient domain expertise, or simply on a tight budget.
But before you hire offshore software developers, it is important to do your homework and not blindly jump to any conclusion.
However, look for the right agile partner having the right expertise and set of tools that understand your company’s culture. It will be worth when you deliver on time while fulfilling customer’s expectations.