Different ways of outsourcing software development work

These days many businesses are looking at ways to cut down on costs and be profitable, especially with the changing economic environment around the world. One of the methods that companies adopt to save on unwanted costs is outsourcing; whether it is staffing needs through the hiring of dedicated offshore developers or a dedicated development team, technological needs or IT support, outsourcing has proven to be a very cost-effective and efficient method for businesses to get their required work done, at minimum expense.

Outsourcing dedicated software developers is the practice of hiring a third-party company, team or individual to handle a specific part or all of the software development activities that would otherwise be handled by an in-house team. This could involve anything from developing a single software application to managing an entire software development process.

Benefits of Software Outsourcing

There are several reasons why companies may choose to outsource their software development activities to dedicated software developers. These include:

1. Cost savings

   Outsourcing can often be more cost-effective than hiring and maintaining an in-house development team, particularly if the company is located in a region where labour costs are high. When outsourcing, you pay only for the team you require and for that specific period of time, whereas having an in-house team means continuous costs.

   There are several ways in which businesses can save on costs by outsourcing their software development:

   • Lower labour costs: One of the primary reasons why businesses outsource software development is to take advantage of lower labour costs in other countries or regions. This is particularly true for companies in high-wage countries, where software developers can command high salaries. By outsourcing to countries with lower labour costs, companies can significantly reduce their development costs.
   • Reduced infrastructure costs: Maintaining an in-house software development team requires significant investment in infrastructure, including hardware, software, and office space. By outsourcing, businesses can avoid these costs, as the outsourced team is responsible for providing their own infrastructure.
   • Increased efficiency: Outsourcing allows businesses to tap into the expertise and resources of specialised development teams, which can often result in faster and more efficient development processes. This, in turn, can reduce development costs even further by minimising the amount of time and resources needed to complete a project.
   • Flexible resourcing: Outsourcing provides businesses with the flexibility to scale their development resources up or down as needed, without the fixed costs associated with hiring and maintaining an in-house team.

   Of course, it is important to carefully consider the costs and benefits of outsourcing dedicated software developers before making a final decision. Factors such as language and cultural barriers, quality control, and the potential for communication breakdowns can also have a negative impact on the final cost savings of outsourcing.

2. Access to specialised expertise

   Outsourcing certain activities means you gain access to more resources. This includes:

   • Access to a wider talent pool: By outsourcing, businesses can tap into a global talent pool of software developers who possess a wide range of skills and experience that may be difficult or impossible to find locally. This can enable businesses to find experts in specific programming languages, technologies, or industries, and help them build better software and applications.
   • In-depth knowledge of the latest technologies: Specialised software development companies are usually up-to-date with the latest technological advances and industry best practices. This can help businesses access the latest innovations in software development, which can help them create better products, save time and money, and remain competitive.
   • Faster development times: Companies and individuals who have wide ranging project experience in software development can apply this expertise to help businesses achieve their development goals faster. This can help businesses launch their products or services more quickly, which can be a major competitive advantage in the world of business. The faster you can bring a product into the market, the more profitable it is!

3. Scalability

   Outsourcing allows companies to easily scale up or down their software development efforts as needed, without the fixed costs associated with maintaining an in-house team. Outsourcing software development can provide businesses with scalability benefits in a number of ways:

   • Flexibility to scale up or down: One of the key benefits of outsourcing software development is that it enables businesses to quickly and easily scale up or down their development resources as needed, without the fixed costs of hiring and maintaining an in-house team. This can be particularly beneficial for businesses that have fluctuating demands for software development services, as they can avoid the need to hire new staff or lay off existing employees.
   • Rapid deployment of new resources: Outsourcing provides businesses with access to a large pool of experienced software developers who are available to start working on a project immediately. This can help businesses rapidly deploy new development resources without having to spend time recruiting, training, and onboarding new employees. In addition, changing a resource as and when needed is easy and less time-consuming, and there is no training period for new staff.
   • Faster time-to-market: By leveraging the scalability benefits of outsourcing, businesses can develop and launch software products faster. This is because outsourcing provides businesses with the ability to quickly scale up their development resources as needed, allowing them to complete development projects quickly and get their products to market faster.
   • Reduced risk: Outsourcing can help businesses manage risk by allowing them to quickly and easily adjust their development resources as needed. This can help businesses avoid the risk of overstaffing or underutilising their in-house development team, which can lead to cost overruns and missed deadlines.

   By leveraging the expertise of an outsourcing partner, such as Sanmark Solutions, businesses can quickly and easily scale their development resources as needed, enabling them to deliver high-quality software products faster and more efficiently. Read more on the benefits of outsourcing software development at How To Effectively Outsource Software Development (rezaid.co.uk)

What are the different outsourcing models available to businesses?

There are different ways of outsourcing software development work. Businesses should consider their specific goals, requirements, budgets and other criteria before making a decision as to what type of model would suit them best.

Here are some of the most commonly used outsourcing models and their pros and cons.

Offshore outsourcing

This is the most traditional model of outsourcing software development work, where companies outsource work to another company or team (or even individual) located in a different country. This generally means lower labour costs, since they will hire a team from a country that offers the best rates. Dedicated offshore developers typically manage the entire project, from initial requirements gathering to final product delivery.

Offshore outsourcing software development work can have both advantages and disadvantages, and some of the most common ones are given below.

The pros:

• Lower labour costs: Offshore outsourcing can provide access to a larger pool of skilled software developers at a lower cost than hiring locally. This can help businesses save money on salaries, benefits, and other associated costs. In general, highly considered countries include India, Sri Lanka, Pakistan and other Asian countries, where the talent pool exists but at lower costs.
• Access to specialised expertise: This model can provide access to specialised expertise and knowledge in a range of areas, including specific programming languages, technologies, and industries. In addition, they may be more aware of the latest developments as they are constantly moving in discs within the industry.
• Faster turnaround times: By leveraging the time zone differences between countries, dedicated offshore developers can provide businesses with round-the-clock development services. This can help businesses accelerate development timelines and get products to market faster.
• Increased flexibility: There is greater flexibility to quickly and easily scale up or down their development resources as needed, without the fixed costs of hiring and maintaining an in-house team.

The cons:

• Communication barriers: Communication can be a challenge when working with an offshore team, particularly if there are language barriers or cultural differences. This can lead to miscommunication, delays, and other problems.
• Quality concerns: Quality can be an issue when outsourcing software development work offshore, particularly if the outsourcing company has poor quality control processes or the development team lacks experience or expertise in a particular area.
• Time zone differences: While time zone differences can be an advantage in terms of faster turnaround times, they can also be a disadvantage if not managed effectively. This can lead to delays in communication and collaboration, and can make it difficult to manage the project effectively.
• Intellectual property concerns: Intellectual property theft is a concern when outsourcing software development offshore, particularly if the outsourcing company is located in a country with weak intellectual property laws.

In order to overcome these challenges, it is important for a business that is looking to outsource their software development work to research and hire an experienced and reputed company like Sanmark Solutions.

Nearshore outsourcing

Similar to offshore outsourcing, nearshore outsourcing is when the outsourcing company is located in a nearby country, often in the same time zone or with a similar language and cultural context. They can provide many of the same benefits as offshore outsourcing, but with the added advantage of easier communication and collaboration.

Nearshore outsourcing software development work has its own set of advantages and disadvantages, which are as follows.

The pros:

• Cost-effective: Nearshore outsourcing offers significant cost savings while maintaining a higher level of quality than offshore outsourcing. Because of their proximity, the cost of travel, communication, and collaboration is lower.
• Time zone proximity: Nearshore outsourcing offers the benefits of an offshore model, such as access to a wider pool of talented developers, but with the added benefit of being in a closer time zone. This allows for better communication, collaboration, and fewer issues with work delays.
• Cultural and language similarities: Nearshore outsourcing has the benefit of shared language and cultural understanding. This means that communication is easier and cultural gaps are narrower, leading to better collaboration and more effective work processes.
• Access to specialised expertise: Just like offshore outsourcing, nearshore outsourcing provides access to specialised expertise, but with the added benefit of cultural and language proximity. Nearshore outsourcing partners are usually experts in specific technologies, verticals or business domains, allowing for a more tailored approach to outsourcing.

The cons:

• Higher labour costs: Nearshore outsourcing is more cost-effective than in-house hiring but could be more expensive than offshore outsourcing. Because of the closer proximity, labour rates may be slightly higher.
• Limited availability of skills: Nearshore outsourcing providers may not have as large a talent pool as offshore companies, limiting their ability to find the right developers for the project.
• Limited scope of work: Nearshore outsourcing may be best suited for a limited scope of work, such as a short-term project, rather than long-term or complex projects that require a larger team.
• Intellectual property concerns: As with offshore outsourcing, there is still the risk of intellectual property theft when outsourcing nearshore.

Onshore outsourcing

This model involves outsourcing software development work to a company located in the same country as the business. While the labour costs may be higher than with offshore or nearshore outsourcing, onshore outsourcing can provide advantages in terms of easier communication, access to specialised expertise, and reduced risk.

This model is also known as domestic outsourcing, and has many advantages as well as disadvantages. These include:

The pros:

• Communication and collaboration: Onshore outsourcing provides the advantage of being in the same time zone, with no language barriers, making communication and collaboration more seamless.
• Cultural similarities: Cultural similarities and common business practices can lead to easier communication, fewer misunderstandings, and a stronger team dynamic.
• Higher quality: This model offers higher quality than offshore outsourcing, as companies have a greater level of control and the ability to maintain higher quality standards.
• Intellectual property protection: Companies may feel more secure in protecting their intellectual property when outsourcing onshore, as domestic outsourcing companies are generally bound by the same laws and regulations as the outsourcing business.

The cons:

• Higher labour costs: Onshore outsourcing can be more expensive than offshore outsourcing, as labour rates are generally higher in developed countries, and could be similar to hiring your own in-house team.
• Limited talent pool: Onshore outsourcing may limit access to a wider talent pool, as there may be a shortage of software developers in certain regions.
• Higher operational costs: They may have higher operational costs than offshore companies, which can result in higher rates.
• Limited availability: These companies may have limited availability, which may result in longer wait times before starting the project.

Dedicated development teams

https://www.freepik.com/free-vector/_13749076.htm In this model, the outsourcing company provides a dedicated development team of software developers to work exclusively on a project for the outsourcing business. The dedicated team may work on-site at the outsourcing business or remotely, depending on the needs of the project. The pros and cons of this model of outsourcing include:

The pros:

• Tailored expertise: This type of outsourcing allows companies to access specialised expertise that is not available readily or in-house. The team is carefully selected based on the specific needs of the project, ensuring that the team has the right skills and expertise for the successful completion of the job.
• Flexibility: This model offers flexibility in terms of the number of developers assigned to the project, as well as the length of the engagement. Companies can increase or decrease the team size based on project requirements, as and when required.
• Control: The company has a higher level of control over the team, which means they can have a say in the selection of the team members, the work process, and the project management approach. The business can generally go through CV’s and select the team.
• Cost-effective: Such teams can be cost-effective compared to hiring an in-house team. The outsourcing partner is responsible for recruiting, training, and managing the team, which saves time and money.

The cons:

• Communication and cultural differences: Dedicated team outsourcing can lead to communication and cultural differences, as the team may be based in a different location and may have different communication styles.
• Time zone differences: Time zone differences may affect these types of models and result in delays in communication and may impact the speed of the project’s progress.
• Intellectual property concerns: Companies must ensure that the outsourcing partner they choose has strong intellectual property protection measures in place to avoid theft or misuse of sensitive information.
• Dependence on the outsourcing partner: Companies tend to become too dependent on the outsourcing partner for the project and its completion, which may impact the company’s ability to take control of the project at a future date.

Staff augmentation

Software staff augmentation is another popular outsourcing model and involves outsourcing software developers on a short-term basis to augment the in-house needs of the development team. The outsourced developers work under the direction of the in-house team and are responsible for completing specific tasks or projects.

Staff augmentation also has many advantages and disadvantages such as:

The pros:

• Access to specialised expertise: Software staff augmentation allows companies to access specialised expertise that may not be available in-house. This can help the company to accelerate project development and launch products quickly.
• Scalability: Staff augmentation offers scalability, as companies can add or remove developers to their team as needed, depending on the workload or the specific project requirements.
• Cost savings: This is a highly cost-effective model, since companies will only be paying for what they need, when they need it. Companies can save money on recruitment, training, and benefits, as well as reduce the overhead costs associated with in-house staff.
• Control: There is a higher level of control over the staff and the project, which means they can have a say in the selection of the team members, the work process, and the project management approach.

The cons:

• Communication and cultural differences: There may be communication and cultural differences, as the remote software developer may be based in a different location and may have different communication styles.
• Integration issues: Integration of the remote developer with the in-house team can be challenging, as the remote developer may not have the same level of familiarity with the company’s culture and work process.
• Intellectual property concerns: Companies must ensure that there are strong intellectual property protection measures in place to avoid theft or misuse of sensitive information.

To know more about the different types of outsourcing methods out there and why many companies use them, you can read[ Software Development Outsourcing: Choosing the Right Model

Distillery](https://distillery.com/blog/types-of-outsourcing/).{: target=”_blank”}

What is the best method for outsourcing software development work?

There is no one-size-fits-all answer to this question, as the best method for outsourcing software development work depends on the specific needs of the business. The choice of outsourcing model depends on several factors, including the nature of the project, the budget, the time frame, and the level of control that the company wants to retain.

For example, if the project requires a high level of expertise and a dedicated development team, then a dedicated team outsourcing model or dedicated offshore developers may be the best choice. On the other hand, if the company wants to scale up or down the team size, staff augmentation may be a better fit. If the project is more straightforward and the company requires more control over the work process, then a project-based outsourcing model may be a good option.

Ultimately, the best method for outsourcing software development work depends on a variety of factors, including the company’s budget, project requirements, long-term goals, and preferred level of control. Companies should take the time to evaluate their needs carefully and research the different outsourcing models available before making a decision. It is also essential to choose a reliable outsourcing partner with a strong track record of delivering high-quality software development work. To learn more about outsourcing software development, read How to Outsource Software Development: 10 Simple Steps (netsolutions.com).

If you are looking to develop software or application but don’t have the resources to do it yourself, then you need the expertise of Sanmark Solutions. We have a large pool of IT talent within our company from which we will be able to offer you the best talent suited for your specific project. Whether you are looking for project managers, scrum masters, software developers or more, we have a wide range of expertise and experience to share with you. Contact us today for a customised solution to your IT staffing needs!

Feature image credit: https://www.freepik.com/free-vector/_4911001.htm