Programming outsourcing has become enormously popular among various companies operating in different parts of the world including the U.S, Canada, Europe, and more in this technically-driven world. According to many business owners, it is a great way to develop top-notch software solutions along with saving a number of business resources, budget costs as well.
Outsourcing plays an important role in bringing impeccable benefits to your business, but there are also some challenges and issues that must be addressed and resolved when it comes to managing outsourcing partnerships.
In this article, we have addressed them in order to help you efficiently in evaluating whether programming outsourcing is a perfect choice for your company along with various other factors that you should know about Programming outsourcing such as its cost, pros & cons, and more.
First initiated by IBM and FDS, outsourcing software development and other IT services have been a strategic approach adopted by product managers, CTOs, and even entrepreneurs to fill in any technology gap. It’s not a new approach. Businesses have been embracing outsourcing since the early 80s.
There are a lot of positives indeed. Not only does outsourcing enable them to embrace disruptive technologies but also helps them ensure business continuity despite any operational disruption. By involving an external IT company with loads of experience and specific expertise, any organization can leverage technology in its software and gain an upper hand in the market.
Today, organizations of all sizes are looking to build new outsourcing relationships or to strengthen the existing relations with offshore IT companies to fight the unexpected turns brought in after the pandemic. But many still have their inhibitions and questions about outsourcing.
What Is Outsourcing?
Well, in simple terms, outsourcing means delegating your business operations to a third party to add expertise. In this kind of process, i.e., software development outsourcing, you analyze your business operations and identify the part of software development that requires expertise. It could be a particular feature of the software or the complete software development as well. Then, you find a technology partner or a software development company to join hands with. They analyze your requirements and start with the development process.
Outsourcing has become an increasingly popular solution for businesses throughout the world. There are many advantages of outsourcing to India and businesses are certainly ready to leverage them. Some of the most common reasons a business may choose to outsource software development include:
- Reduce time to complete a project
- Gain access to additional talent
- Free internal resources for other purposes
- A shift in company focus or objectives
- Decrease and control operating costs
Why Do Companies Prefer Programming Outsourcing Services?
Companies hand over their core business operations to a specialized third-party vendor to streamline them, increase profitability, strengthen market positions, and improve customer experience. They prefer entrusting a service to a third party to save time and budget costs and dedicate more resources to strategic business functions.
What are the Key Factors to Successful Outsourcing?
Before selecting a software and web development outsourcing services provider to handle your project, you must consider the following key factors to success:
- Choose the Right Partner
It is vital that you select an outsourcing company that has the skills and experience your project requires. A prospective partner should be able to show you similar examples of successfully completed projects and identify an acceptable solution based on your needs.
- Consider Their Methodology
There are a number of different methodologies – or approaches – used to complete development projects. Two popular choices are Agile and Waterfall. Give consideration to the methodology this prospective partner intends to use.
- Choose the Right Platform
Consider the technological platforms used by the partner you are considering. For instance, if you need a mobile commerce application developed, does this team use Magento? Or are they utilizing another platform or framework you aren’t familiar with?
- Set Clear Expectations
Take nothing for granted, and do not be afraid to reiterate your expectations. What you want from this project, and its necessary deadlines must be clearly communicated in no uncertain terms. Mention everything in the outsourcing contract you form so that there is no room for any unsaid assumptions.
- Analyze the Value Proposition
Value, by definition, is the relationship between cost and quality. Keep the bigger picture in mind. You need to choose a partner that is able to able to deliver the quality you need, without exceeding your budget – and vice versa.
What are the Pros and Cons of Programming Outsourcing?
Here are some of the pros and cons of computer programming outsourcing that you must take into account before opting for the same:
Pros of Programming Outsourcing
Cost is one of the main factors that are taken into account during the decision-making process. As compared to creating software in-house, software programming outsourcing can cut development costs by nearly 50% percent. Additionally, salary taxes, equipment, office space, and other expenses are covered by the outsourcing partner. Also, if you decide to go with programming outsourcing, no big upfront payments are required, which makes this option all the more attractive.
Programming outsourcing not only saves costs, but also the precious time of your in-house team, or building one from scratch and leading the project yourself. With programming outsourcing, you can find a team with the right tech skills and experience, explain what problem you need to solve with the software solution you want to build, and just monitor the development process from time to time.
When you outsource coding projects, you do not have to spend time and resources on managing the team. Most outsourcing companies offer high flexibility, allowing you to scale your team up and down as the project requires. This also allows you to save budget costs.
- Improved Focus
Instead of worrying about the internal resources, outsourcing enables you to focus on your major business needs aimed at fulfilling strategic goals.
- Less time-to-market
Outsourcing is a great way up the speed of your software development. With the availability of ready-to-use infrastructure and experts provided by your outsourcing partner, you can reduce time-to-market significantly. Plus, when you hire the right experts for your project, your skills may also contribute to reaching the end result faster.
- Access to advanced technologies
With programming outsourcing, you can get access to professional outsourcing providers with developers who have expertise in the latest technologies, like Augmented Reality and the Internet of Things. Software solutions with the latest tech can elevate the efficiency of different operations, surprise customers in new ways, and significantly cut costs in the short and long term.
Cons of Programming Outsourcing
- Communication Restrictions
Miscommunication is the biggest drawback when you outsource coding projects. This can be the result of cultural differences, language barriers, the continuous poor internet connection that does not allow for long meetings. Still, most outsourcing providers already solved these issues by educating their employees and taking care of technical issues.
- Risk of data theft
If you are outsourcing programming, you need to share confidential information and ideas with your third-party vendors. Even if they have signed the NDA, you still do not have a full-proof guarantee that your data is secure. Nevertheless, reputable vendors who have been operating on the market for many years will not risk their reputation and the success of your project.
- Company Morale
If you choose to outsource programming projects instead of delegating them to in-house development teams, the morale of the latter can take a significant hit. They may wonder why the company did not invest in their training and hire experts from the outside or fear losing their positions to them.
How to set up your outsourcing strategy?
Increasing productivity, improving product quality, and saving costs are only a few of the benefits outsourced software development has to offer. You won’t successfully outsource IT development without thorough planning, though, so having a solid outsourcing strategy is the first step toward hiring a vendor to cater to your needs. But how can you create one? Here are a few things for you to consider:
- Define Your Goals
Reducing cost is a common reason to outsource, but it’s not the only good reason to do so. Don’t limit yourself to searching for a vendor based solely on price. Capitalizing on advanced technologies, streamlining processes, and reducing the risk of business expansion are other benefits of outsourcing. Your goals should be realistic, well-balanced, and achievable.
- Define Key Tasks
While some companies are known for coding excellence, others offer stellar consulting services. To find a perfect outsourcing fit, it’s critical to define exactly which tasks you want to outsource.
- Determine your technological profile
Since software development outsourcing usually takes place in a remote setup, it’s crucial that your vendor has a technological profile suited to your needs. To this end, we recommend making a list of the resources your project requires. And don’t forget about security and data protection features since data leakage is not uncommon.
- Establish a good job climate
Foster good relationships between your staff and outsourced employees: inform them of the outsourcing goals, avoid rumors, and close any cultural gap between your team and your vendor’s team. Make sure your company is actually ready for changes.
What are the Programming Outsourcing Contract Details?
Now that you found your perfect software development vendor, the next important step is to sign the software development outsourcing contract.
Like an agreement for any other service, a software development contract includes general terms, termination conditions, dispute resolution, and so on. There are some specific sections to include for IT outsourcing, though:
- The services. This section should describe in detail the services and the project scope that you expect your outsourcing partner to deliver, as well as the process for making changes to the scope.
- Project time and cost. Here, you should specify hourly rates, development phases, milestones and their deadlines, responsibility for delays, payment schedules, and the like.
- Acceptance testing (AT) is a test conducted to determine whether contract requirements are met. This section states which party is responsible for the testing, how long it takes, and how the results are communicated.
- Intellectual property rights. The end product is the customer’s property; it does not belong to the developer. Make sure the contract clearly states that.
- Confidentiality. This section specifies which information is considered confidential, and the responsibility for, and ramifications of, its disclosure.
Signing the contract makes your relationship with the software development vendor official. Now, your partner can start writing the code for your product.
What are the Factors That You Must Consider Before Opting for an Outsourcing Company?
Deciding to outsource is an exciting venture for most businesses. It gives you the ability to bring in additional expertise and often complete the projects you want to work on more quickly. However, outsourcing can also come with many obstacles and risks. That’s why choosing the right partner or vendor is so important, as it is a significant factor in the success of your project. Here are the three main factors that you must consider before choosing a programming outsourcing company:
1. Avoid and understand common pitfalls before you start outsourcing
Outsourcing has many different benefits. 57% of companies feel that outsourcing lets them focus on their core business, and 47% use it to solve capacity problems. This practice is becoming more and more common. To truly take advantage of benefits like this, you must be able to understand and avoid pitfalls. Here’s what you need to be aware of:
According to the 2017 Global Software Services Report from SourceSeek, nearly one-quarter of software development projects fail because of a lack of communication or clear goals. Communication is absolutely critical to keep software projects going. Before deciding to outsource, take the time to get clarity on goals and initiatives for your organization. This will set you up with the right knowledge to communicate effectively with the company you outsource your project to.
- Setting Expectations
According to the State of Software Development report, the number one cause for software teams’ delivery problems is unrealistic expectations. When choosing a software development company, you should have expectations in mind. It would then be best if you had a conversation about expectations with the vendors you’re considering to ensure that they can meet them. If everyone is on the same page, your project is much more likely to go smoothly.
Many organizations choose to outsource software development as a way to cut costs. Research from Deloitte shows that 59% of businesses use outsourcing to reduce expenses. Often, this is a benefit of outsourcing, but it shouldn’t necessarily be your priority. Be mindful of your budget and understand that it’s more important to choose a software outsourcing company to deliver the quality you need. Vendors that can offer both value and quality are the ones that should be on the top of your list.
2. Understand the Program outsourcing options
Now, let’s talk about methods for outsourcing your projects. There are four different ways that your organization can approach this:
Onshore outsourcing (also called local outsourcing) is the process of either working with an internal team or working with local talent to complete your software project. This outsourcing method gives you maximum visibility into the project. However, it also typically comes with higher costs and a smaller talent pool.
In offshore software development, organizations outsource all project tasks to a third party or team of developers in another country. While offshore outsourcing can work, communication and quality are more significant concerns than they would be with other methods.
Nearshoring is similar to offshore development in that it requires outsourcing to another country. However, the difference here is that the location you outsource to is near your own. Typically, this approach is cost-effective and gives your organization access to a larger talent pool. It serves as a great balance between onshore and offshore options and often allows you to maximize the benefits of outsourcing.
While this is less common, some organizations also offer a hybrid model. A hybrid model combines these different approaches to outsourcing. This is a fit for some projects, but blending multiple models can also add a complexity level that isn’t always ideal.
Each approach requires different considerations. The right outsourcing partner for your organization will depend on your specific project and needs. Some software outsourcing companies will specialize in one or two of these different methods.
We hope that you will find this article helpful. After going through this blog, you will be able to understand the entire concept of outsourcing any computer programming. We understood that there are a number of organizations and individuals that can leverage the advantages of programming outsourcing in a number of ways mentioned above. Please provide your positive feedback in the comment section below.