7 Reasons Why Outsourcing Software Development

Crypton Studio
8 min readApr 14, 2021

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According to the Technavio report, the total value of contracts in the IT outsourcing market is expected to grow to more than $ 409 billion by 2022. But despite the impressive numbers, many still have concerns about outsourcing. In this article, we have collected 7 reasons why you should outsource your software project, what benefits you will get, and what to look for when choosing a development partner. Let’s get started!

Why do companies outsource?

The emergence of outsourcing software development companies was driven by market demand. Since 2000, the world has taken a course towards digitalization, and the introduction of technologies has become a necessity. In whatever field the company operates, it needs technological solutions to be interesting for its customers, competitive and profitable. Now, during the lockdown due to the pandemic, technology has become even more important and has finally convinced business owners that ignoring technological progress only slows down business development. However, not every company can afford to maintain a staff of developers. That’s where outsourcing comes in.

Outsourcing of software development allows you to transfer the tasks of creating software solutions to a third-party company that has the appropriate experience and takes over the entire process. Before considering all the advantages of outsourcing, I can say that it is effective both in terms of costs and in terms of the quality of the result. According to a study conducted by Deloitte back in 2016, among the most common reasons why companies outsource software development are the following.

Over the years, these reasons have hardly changed. Outsourcing of development services continues to close the issue of reducing the cost of software development, allowing you to focus on the main business goals, entrusting technical tasks to another company without involving your own specialists. And that’s not all that outsourcing software development companies do for business.

Cost-effectiveness of outsourcing

The main reason why companies outsource software development is because of the cost-effectiveness of this option. Reducing development costs opens up additional investment opportunities for other business areas (marketing, HR management, office expansion, etc.). In addition, software development is not cheap. According to a GoodFirms study last year, most technology companies offer general-purpose software projects for between $ 20,000 and $ 40,000. So, how does outsourcing help reduce costs? Here are a few ways.

First, the difference in salaries around the world. It is well known that developer rates in Eastern Europe and Asia are lower than in the US and Western Europe. Having the opportunity to work with developers around the world, you can choose the best partner for price and quality, while reducing the budgets for creating software. Let’s estimate that if the development of your application takes 4 months, working at US rates, you will pay the developer at least $ 50 per hour of his work, and for example, a developer from Russia will receive 2 times less. I think you understand what cost-effectiveness is.

Secondly, working with an outsourced development team, you only pay for the services of specialists, avoiding the operating costs of the office, providing jobs, vacations, sick leave, and so on. In addition, you save time and money on hiring new employees. When hiring your own staff, you need to find developers with the necessary expertise, conduct interviews, and not start working right now, transferring the project requirements to an outsourcing company.

Moving forward focusing on the core business

You know that the business of a company implementing a software solution, or a startup working on creating a new product, is not limited to the software development process. You also need to work on promotion, sales, business development, partnership, in other words, do everything to make the main activity of the company profitable. Outsourcing software development frees up time. By entrusting the technical part to another team, you will be able to follow the process, focusing on the main goals of your company. I don’t think you want to go out of business for six months or more while you’re busy developing software. By outsourcing a project, you do not burden yourself with additional responsibility, and you do not overload your internal team with tasks that do not correspond to its experience.

Access to world-class developers

Another great advantage of outsourcing is access to an infinite talent pool. You can choose developers from all over the globe, without being limited by geographical boundaries. A large selection of professionals will allow you to create a team of developers with the experience most suitable for your project, at competitive prices. Whatever technology you want to work with, outsourcing will give you access to more profitable solutions. For example, blockchain is one of the most trending technologies of recent years. Read about how to get started with the implementation of the blockchain in our article. How much will a blockchain developer cost you? According to the real-time calculator Arc, the hourly rate of a freelance blockchain developer in North America is $81–100, while the average rate of blockchain developers from Eastern Europe is $61–80.

The more competitive the market is, the more likely it is to find a lot. When you turn to outsourcing, you choose which region to work with. According to SharpMinds, the approximate number of IT specialists in outsourcing departments in 2019 looked something like this:

There are many different annual rankings designed to determine where the best developers live. You can follow them when choosing a software development partner or follow the recommendations of your partners. One way or another, using outsourcing services, you expand your capabilities. In addition, working with an outsourcing team frees you from unnecessary legal work. You do not need to draw up employment contracts, think about taxes, your outsourcing partner will take care of everything.

Rely on proven experience

Software development outsourcing companies work with a variety of industries and projects, so they have a multi-faceted experience that can be useful to you. Experts can help you choose the best features for your product, advise on the technology stack that meets your requirements, and find ideas that you may not have guessed. It will take years and investment in training to nurture such an experience in the company. When you turn to outsourcing, you get it and you can be sure that your project is in the hands of experienced professionals.

Some projects require specialized knowledge and skills that you can’t get from a single specialist, but that a trained team can provide. For example, not all IT companies have specialists who work with technologies such as blockchain, AI/ML, and cloud computing. If a company doesn’t implement these technologies on a consistent basis, you can’t expect a better solution. The global marketplace gives you the opportunity to find a team with exactly the experience you need, no matter how many miles between you.

Improved flexibility and scalability

One of the best things about outsourcing software development is flexibility. Again, you don’t need to hire full-time developers. You can build a team depending on the workload and current tasks, paying for the time of those specialists that you need at each individual stage of the development process. In addition, you can choose a collaboration model that meets your requirements. Outsourcing companies usually offer three options for cooperation, which differ in the degree of flexibility and control:

A fixed price is a model based on a pre-defined list of requirements, budget, and delivery dates for a software product. Working on this model, you outsource your project, agreeing in advance on all aspects of cooperation, and see the result at the end.

Time and materials provide you with more flexible conditions. According to this model, you discuss approximate deadlines and the maximum budget and pay for development services in the “pay as you go”format. You can also make changes to the requirements and participate in the control of the development process.

Dedicated teams are a great option if you want to lead the development process yourself or if you need to expand your internal team with specific specialists. The services of specialized development teams are used by companies around the world, as it is more cost-effective than the constant maintenance of their own staff.

As you can see from the table, depending on the type of your project, you can choose the model that will allow you to get the most profitable results. If you want to expand your project through outsourcing, you can do it in the shortest possible time, saving money on hiring the right specialists. You don’t have to worry about finding a developer with the knowledge you need, the outsourcing company takes over the task, while you can focus on other business issues. This gives you the flexibility to develop your product, keeping your efforts to a minimum and freeing up time for other tasks.

Better risk management

Launching a new product is always risky. Will potential users like your app? Or can this software solution provide your company with the expected results? Outsourcing helps reduce these risks for several reasons. First, you do not hire your own employees, which means that you do not incur additional costs. If the product fails, you will lose less by using outsourced development services. Secondly, by developing the product yourself, you are fully responsible for yourself and the quality of the product depends only on you, while the outsourcing company assumes the quality risks. By choosing an experienced software development partner with sufficient experience and examples of successful projects, you can be sure that your software will work as intended. Experts also note that the distribution of tasks between different companies reduces the risks associated with the launch of a particular software product.

Why Russia is the best option for software development

Now that you know the main advantages of outsourcing software development, it’s time to talk about one of the most popular areas of outsourcing. Russia is among the top ten countries in software development outsourcing according to various ratings. SkillValue recognized Russians engineers as one of the best in the world in terms of price-quality ratio (Russia ranks fifth with a score of 93.17%). Talented developers, affordable prices, convenient time zone and geographical location make Russia an attractive partner for companies around the world.

In Russia, there are more than 20 higher educational institutions that teach programming, which annually produce thousands of novice IT specialists. Here you can find a developer of any senior level, as well as a master of any technology. According to the entrepreneur, in 2018 there were about 165,000 developers in Russia, and by 2025 their number is expected to increase to 125%. Russians engineers are well versed in the most popular technologies, including AI/ML, blockchain, big data and others. This way, you can be sure that you will find a team here that will meet your expectations regarding experience, price, and the desired technology stack.

Here are some more reasons why outsourcing to Russia:

In Russia, there are more than 1,600 technology companies offering various services related to software development (According to the IT industry in Russia. 2019 Market Report)

The culture of Russians is similar to the business culture of the West, so you will not have any misunderstandings or other cultural barriers.

Summary

Among the most common reasons why companies outsource software development are to reduce development costs, freeze time to achieve core business goals, and address capacity issues.

Outsourcing can help reduce development costs by half, because there is no need to maintain your own staff and because of the difference in developer rates in different countries.

Outsourcing allows you to select the best developers from around the world, with the best experience and competitive prices.

You get additional flexibility in scaling your project depending on the stage of development and can choose a collaboration model that meets your requirements, such as a fixed price, time and materials, a dedicated team.

Russia is one of the most popular outsourcing destinations, thanks to favorable pricing, talented developers, and a viable IT market.

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Crypton Studio
Crypton Studio

Written by Crypton Studio

Exploring the potential of blockchain technology through development and real-world applications. Join us on this journey! https://crypton.studio

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