Software outsourcing is a growing trend today. Businesses across all industries have found value in partnering with experienced software development companies to breathe life into their designs. However, realizing the benefits offered by software development services is not as clear-cut or straightforward as some companies may assume.
Numerous pros and cons must be weighed before partnering with a software development company and then throughout the relationship. Failing to do so could mean facing major problems, including cost overruns, loss of control, lack of security, and more. This blog post will explore the pros and cons of software development outsourcing to provide a high-level view of the situation and guide you forward.
The Pros and Cons: A Snapshot
The table below highlights the pros and cons of software development outsourcing.
| Pros | Cons |
|---|---|
| Access to Critical Talent | Miscommunication |
| Compliance | Cultural Barriers |
| Reduced Development Costs | Loss of Project Control |
| Focus on Core Competencies | Security Risks |
| Flexibility and Speed to Market | Legal Considerations |
Of course, understanding the pros and cons of software outsourcing here is critical to avoiding pitfalls while being able to leverage the skills and capabilities of a software development company.
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The Pros of Outsourcing Software Development
We’ll begin our discussion with a closer look at the pros of outsourcing your software development needs to the right partner.
1. Access to Critical Talent
One of the most important benefits (and most common underlying reasons for software development outsourcing) is access to critical talent. Organizations without key IT talent, those that lack their own in-house development team, and those that want to avoid the costs of hiring their own IT talent in the first place will find that outsourcing ensures they have access to top talent.
The IT world is facing a serious skills shortage. However, that shortage is not across the board. Some nations, including the United States, are seeing a shortfall of qualified IT specialists in key areas. In contrast, other countries, notably those in Latin America, have a surplus of certified software developers and other IT professionals.
By outsourcing your software development needs, you can reduce costs, save time, and avoid the challenges presented by localized IT shortages.
2. Compliance
Hiring IT professionals is a time-consuming, difficult task. You must jump through numerous hoops, many of them compliance-related. When you choose to outsource your software development to a trusted partner, you avoid hiring-related compliance issues that can add time, frustration, and cost to the process.
Compliance here can mean many things. You have obligations when it comes to protecting employees that engender increased costs and hurdles. However, you also have compliance requirements that apply to customer/client information, how you use and protect data, and much more. Compliance-related issues can add an immense burden, but outsourcing to a software development partner will lighten the load.
3. Reduced Development Costs
On the surface, this benefit might seem contradictory. After all, if you’re paying an outsource software developer company, aren’t you still incurring costs? Yes, that is true. However, you must look deeper to see the reality here.
How much would you pay an in-house software developer if you were to hire them as an employee? What costs would you incur in the form of benefits? Insurance? Taxes? When you work with an outsourced software development company, you don’t incur those costs.
Not only that, but you can leverage the difference in costs of living in different parts of the world to your advantage. The cost of living in most US states is pretty high. In comparison, the costs of living in Latin America are much lower. That translates to a lower hourly rate for comparable software development skills, and cost savings for you.
4. Focus on Core Competencies
While cost savings are a significant motivating factor in why companies choose to outsource their software development needs, it is not the only one. In some cases, it is not even the most critical reason. For many companies, the most valuable benefit of software development outsourcing is the ability to focus on what they do best.
If software development isn’t what your business does, then any time you spend focusing internal resources on designing and developing software takes you away from your core competencies. Not only does that represent time and money that you cannot recoup, but it can also mean lost market share, dwindling brand recognition, and a reduced ability to compete against aggressive rivals.
Not only that, but you can leverage the difference in costs of living in different parts of the world to your advantage. The cost of living in most US states is pretty high. In comparison, the costs of living in Latin America are much lower. That translates to a lower hourly rate for comparable software development skills, and cost savings for you.
5. Flexibility and Speed to Market
Finally, working with the right software development company can also provide you with significant flexibility and increase your market speed. Flexibility here means the ability to identify the top talents in the industry without having to worry about the costs of hiring them for a permanent position. What could you achieve with access to industry-leading talent?
A top team will also increase your speed to market. How much time might you spend developing your app or software with your in-house resources, or if you were forced to piecemeal a team together? Not only would you have a lengthy development timeline, but you’d have holdups during the hiring process, revisions and change requests, the need to find workarounds, and more.
Of course, there are also some potential downsides to software outsourcing. In the next section, we’ll discuss the cons you should know.
The Cons of Outsourcing Software Development
While outsourcing your software development needs can offer quite a few benefits, there are a few drawbacks to consider.
1. Miscommunication
Miscommunication occurs for any number of reasons during an outsourced software development project. It could be due to language barriers. Or, It could be a loss of information in project scope and sequence documents. It might be due to time zone differences and their complicating effects on client/provider communications.
You can reduce miscommunication in several different ways. One of those is ensuring that you’re working with a nearshore partner, eliminating language and time zone barriers. Another is to ensure you’re working with a top-rated software development company that understands its responsibility to deliver to your expectations and requirements and take that responsibility seriously.
2. Cultural Barriers
Cultural barriers represent genuine threats to your project’s success. These are quite obvious in offshoring/farshoring situations in which a company outsources a business process to a provider in a country not just on the other side of the world geographically, but also where professionals come from a radically different culture. Nearshoring is a better solution here, as it avoids the high costs inherent with onshoring while avoiding the cultural barriers that often occur in offshoring.
3. Loss of Project Control
How much control must you have over a software development project? This metric can vary drastically from project to project and hinges on proprietary information, the need for data protection, and more. The challenge here is finding a software development company that can match your needs in terms of project control.
For instance, one company might only offer full project management solutions. At the same time, another might provide you with the flexibility required from project to project, from staff augmentation to full project management capabilities. With the right partner, you never need to worry about loss of control or a lack of flexibility over time.
4. Security Issues
Today, data is the single most valuable asset most organizations possess. Attackers know this and are increasingly targeting not financial assets but data. What data? Consumer health records, customer credit card data, personal consumer records, company information, industry trade secrets – you name it, and there’s a market for it.
Most software development projects require sharing at least some sensitive information with the development company. However, not all development companies have the proper safeguards in place to protect that information. You must vet any software development company based on their security protocols and steps.
5. Legal Considerations
Laws regarding information access, security, and other essential topics vary significantly from one nation to another. It is vital that you understand what laws apply to companies in the nation where you’re nearshoring and that those closely mirror the laws in your own country. In the case of significant differences, you will need to work with the outsourced development company to find ways to deal with those issues.
Is Software Development Outsourcing Right for You?
As you can see, there are both pros and cons to software development outsourcing. However, the benefits definitely outweigh the drawbacks. With that being said, a lot is riding on your choice in a software development company. Nearshoring with a trusted provider that understands the importance of security, legal compliance, and project control is the best route forward.
At Softrizon, we bring years of experience to the table, as well as a deep understanding of industry best practices, leading-edge technologies, and more. Whether you’re seeking a way to augment your current in-house staff or want a full project management solution, we can help. So, get in touch with us today to schedule your free consultation and learn more about our capabilities regarding custom software development.
