Is Outsourcing Software Development Good for Your Business?
Outsourcing software development is a dynamically growing business activity across the globe. Statista shows that the outsourcing industry has grown from a $45.6 billion to $92.5 billion market during the period 2000 -2019. This shows that software outsourcing as a development strategy will continue to grow and is here to stay (forever!).
In this blog, you will find out everything you need to know regarding outsourcing your software development to another company. Before trying to review the ‘what’ and ‘why’ of software development outsourcing, let me set the backdrop right. By backdrop, we mean the unique situation that makes software outsourcing a prudent and reasonable decision. By the end of this write-up, you will have a clear idea as to why hiring dedicated business developers through outsourcing is a great choice.
What is outsourcing? Meaning and significance
If in case you have some confusion about the meaning of outsourcing, here it is: as per Investopedia, “Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company's own employees and staff”.
It becomes software outsourcing if the services are software-related. In other words, if an organization hires an external software development agency to effectively perform the whole or part of their software development project, it is known as software development outsourcing.
Outsourcing can be onshore or offshore. If the organization that hires external software developers/software development services resides in the same country as the vendor (the company that provides software developers) it is known as onshore outsourcing. If this organization is from a different country, this arrangement becomes offshore outsourcing.
Offshore outsourcing is the preferred mode of business practice if you want to take advantage of lower labor costs in foreign countries. As per a report by Statista, software development is the most outsourced IT service in the world.
Now, let’s explore some of the realities that necessitate companies to consider outsourcing software development, especially offshore outsourcing.
Facts to Know Before Outsourcing Software Development
Outsourcing software development is an ever-growing business strategy thanks to the following facts. These are a few of the background scenarios that make outsourcing a viable, imperative, and profitable option that your businesses should consider with immediacy.
1. Software development is crucial for all modern businesses
Stating the importance of software development in this super-digital world is like stating the obvious. Software is not just something that makes your computer hardware perform vital tasks. It’s a key ingredient to make your work smart and efficient. It is an essential business asset that finds innovative working ways, sets clear objectives for business growth, leverages marketing automation, meets/exceeds customer expectations, brings feature-rich and innovative products to market, and so on.
Business organizations resort to custom software development to build tailor-made software that matches well with their exact business and customer needs. It is a definite fact that custom software development is crucial for your business.
2. Not enough software development skills to meet the growing needs
Most of the discussions on outsourcing software development stem from this fact: the demand for software skills doesn’t match with the global requirements for software development. There has been a sudden surge in the demand for software engineers thanks to the digital transformation happening to businesses at a rapid scale. There is a strong tendency to create software solutions for every possible kind of problem which leads to an overpowering need to hire these talents.
Software developers with diverse skillsets and technology proficiency are needed to provide solutions to different software problems in every kind of industry such as technology, manufacturing, health, retail, education, etc. As per CNBC News, there are about 920,000 vacant positions in IT. As per an ICIMS study, it takes 50% longer to hire professionals for tech positions when compared to other roles.
Below are the three factors that contribute to the acute shortage of software talents.
- Sheer lack of talent in your region both in terms of numbers and niche expertise & experience
- The far too great demand for high salaries by developers. This makes it difficult for companies to get and keep them.
- Constantly growing technology needs that make specialists difficult to keep up with the demand.
Companies are encouraged to hire resources from third-party vendors who are from other countries where talents are easily available.
3. Software talents are unevenly distributed globally
When you consider outsourcing software development, be informed that software talents are unevenly distributed. Though software talents shortages are stark for some regions, there are many other regions that can offer a smart pool of developers and technology specialists. The European market is facing a serious talent crunch when it comes to specialized development skills. Read 4 Major Challenges in the European Tech Startup Scene to get more insights.
There is a growth in the number of European software development professionals. But this number is in no way sufficient to close the gap. As the supply of talents increases by 7%the demand is increasing by more than 10%. According to a projection by the US Bureau of Labor Statistics, the demand for software developers, QA analysts, and testers will increase by 22% between 2020 and 2030.
There are some countries that own some of the finest software development professionals to meet the demand of European and US demand for software solutions. India, Ukraine, China, Poland, the Philippines are some of the countries that are the best choice if you are considering outsourcing software development.
These countries become the best thanks to the existence of a large talent pool of skilled tech workers. Besides this, lower costs, an advanced IT market, a fine educational infrastructure, and the ability to communicate in your preferred language (English) become other decisive factors. If you want to check all these boxed in a go while choosing a smart software development outsourcing provider, Bridge Global would be a great choice. We have strong custom software development skills that will help you develop software solutions of any complexity and scale.
4. Pandemic induced factors
The current global pandemic has generated a multitude of factors that motivate companies to partner with software outsourcing providers.
The revolutionary scale of digitization –Pandemic has churned out an ever-growing demand for software professionals thanks to the rapid rate at which big and small companies resort to digital transformation. Greater digitalization means greater demand for IT professionals.
Not only big enterprises but SMEs and start-ups are also testing waters – The COVID-19 scenario has induced SMEs and start-ups to foray into software development outsourcing. They consider it worth the efforts to grow without relocating their team and in maintaining a steady cash flow.
Remote working has shifted importance to expertise rather than proximity – The ‘new normal’ has induced many companies to shift to a work-from-home or remote working model. As the opportunity for personal visits to onshore offices has come down, companies largely prefer offshore outsourcing when they consider outsourcing software development. Many companies don’t bother if you work from India, Ukraine, the US, or Sweden. What ultimately stands out is expertise, the extent of software services you offer, and the quality of delivery.
A sudden spike in modern technologies- The pandemic has brought forth technologies such as AI, IoT, cloud services, Blockchain, etc. to the forefront. Professionals in these niche areas can be easily hired from other countries, and hence outsourcing software development becomes handy.
Why Is Outsourcing Software Development Perfect in This Scenario?
Your organization cannot lag away from the emerging technology trends. You need to keep pace with the innovative software solutions to engage your customers daily. Strengthening your in-house team by hiring dedicated developers or outsourcing your software development projects to an external team is the ideal decision. Collaborating with a third-party software development services provider who will manage all the tasks involved in a development project can be a ‘dream come true’ situation.
Whatever your need is - improving an existing system or developing a new system from scratch – outsourcing software development can be beneficial in the long run. It gives you access to knowledge, technology, and skills that may not otherwise be available internally at the company or from your geography.
It can be a great solution to all your struggles including, rising costs, mounting consumer expectations, growing cyber threats, and the ongoing global pandemic.
Another great benefit that you can accrue from outsourcing software development is that you can embrace innovation at a quick pace. According to the Harvey Nash/KPMG CIO SURVEY 2019, about 67% of the CIOs have reported a lack of skills as the main reason that prevents them from keeping up with the pace of change. Outsourcing your software development to another company can bring a lot of relief to this situation.
Another great advantage that you get from outsourcing software development is that it helped you to meet the rising needs for DevOps and agile practices. Moving fast with small teams who work closely together to get the job done is the trend many global enterprises are adopting now. They are implementing DevOps and agile into their organizations with this end result in mind. Partnering with an offshore agile software development company is a great move.
How Can We Help?
It’s a well-heeled deal to get to work with an offshore outsourcing provider who provides software talents with the right attitude and aptitude. Don’t’ you feel so? If yes, we have a talented distributed agile team of software developers who can meet your exact technology needs with ease. Our developers have immense experience in popular and niche technology covering web, mobile, cloud, etc.
If you are considering outsourcing software development and your need is getting a whole package of services that includes industry expertise, technical competence, security capabilities, solid global client base, and active social presence, call us now to hire developers.