Outsourcing Software Development – Benefits & Risks for App Owners
What are the reasons to outsource your software development? What are the risks you should be aware of, and how to avoid them?
Building an in-house development team is more expensive, time-consuming, and challenging than ever. Talented software engineers are highly sought-after on the market and smaller companies often find it hard to compete with large organizations or specialized software development agencies.
That’s one of the main reasons why so many of them decide to team up with outsourcing partners and delegate the process of building applications to external teams.
In our previous post, we compared two variants – in-house vs. outsourced software development. And now, in this article, we take a closer look at the trend for outsourcing software development to analyze its strategic benefits and the most important risks together with tips on how to avoid them.
Read on if you’re still not sure whether outsourcing the development of your app to an external provider is a good idea.
What is outsourcing in software development?
A company looking to develop a new mobile or web app can choose from two basic options: hiring software developers to build an in-house team, or outsourcing the entire process of development to another company. (Of course, there are more solutions. For example, you can build your in-house team and additionally hire outside specialists whenever your project needs extra support).
According to Gartner, a leading research and advisory company, IT outsourcing is “the use of external software development service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes“.
Why outsource software development?
Software development outsourcing is increasingly popular these days because it enables companies to take advantage of the technology at a reduced cost, greater flexibility, and higher efficiency.
By teaming up with an external provider, you get to benefit from all the experience and skills their teams have gained while realizing development projects for clients across various industries. By outsourcing software development, you can:
- reduce development costs,
- accelerate your time-to-market,
- benefit from external expertise, assets, intellectual property, and more.
5 key benefits of outsourcing software development
Outsourcing software development comes with many benefits – here are the most important ones:
✔ Reduced costs
Recruiting talented IT experts is time-consuming and costly. Once hired, an in-house development team generates a range of costs – from the costs of attracting and recruiting candidates to the overhead expenses related to the office infrastructure, workstation, holidays, or sick days.
By hiring a dedicated development team managed by an external company, you can enjoy access to top talent and expertise without having to worry about the costs that are part of employing specialists full-time.
Outsourcing allows scaling a development team up or down quickly to help your business stay nimble and respond to the changing business requirements.
Doing the same with an in-house team takes much more time and generates higher costs. Moreover, scaling an in-house team down would mean firing employees, which could potentially ruin team morale and the company’s reputation as an employer
Building an internal team of software developers takes a lot of time. In our experience, you need around three months to source, attract, and hire top talent. This means that an entrepreneur would have to wait several months before the team is assembled and ready to start working on the app.
By outsourcing the development process, business owners can accelerate their app’s time-to-market because a specialized provider can set up a team of tech experts in just one or two weeks.
✔ Battle-tested processes
IT outsourcing providers offer access to teams that have worked on multiple projects and written a great number of applications. As a result, an outsourced team comes with a well-defined process and workflows that keep everyone productive and speed up the development process, ensuring top quality at every step of the project.
✔ Access to top talent
As IT companies expand, they become part of increasingly ambitious and demanding projects. That’s why they hire top specialists in their fields. They need an expert workforce to meet the demands of their clients. By outsourcing your app development project to such an agency, you gain access to skilled engineers who have been vetted by the company and their skills have been battle-tested in many different projects.
Even if you hire a team that includes 10 employees out of 100 people hired by your provider, you can be sure that your team takes advantage of the provider’s entire intellectual capital. People in your team will surely be reaching out to other company employees for feedback or advice. This type of internal consultation is very valuable, and it doesn’t even appear on your bill when going for outsourced services.
5 risks of outsourcing software development every app owner should be aware of
Here are the key risks of outsourcing software development you should know before teaming up with an external team.
Please note that choosing a reliable and trustworthy outsourcing company helps to avoid all the risks we mention below.
✖ Messy code and documentation
Sometimes outsourcing clients switch one development team for another or decide to continue working on the product on their own. In such a scenario, code quality plays a crucial role. The risk is that the previous development team doesn’t create appropriate project documentation or produces a solution that is not easy to scale.
As a result, transferring your project to a new team can be riddled with challenges, or even impossible – then you have to rewrite your app from scratch what generates unplanned costs.
✖ Business risks
IT companies aren’t immune to the common risks all businesses face. Just like other companies, they can fail, go out of business, or be forced to reduce their scale of operations dramatically. Partnering with a software development agency that experiences such a challenge poses a massive risk to your project because you might end up alone with a half-finished product.
✖ Lack of control over the team
Many business owners think that by outsourcing software development to another company, they will lose any control over the project. This fear is in part justified. Delegating the important task of building software with a high business value seems so risky because many things can go wrong and you might have limited or no ability to fix them.
But in reality, development teams that follow standard best practices like the agile methodology of project management, guarantee frequent communication and feedbacking opportunities during retrospective meetings.
Experienced providers have processes in place that ensure close participation in the project, to the point where clients get to feel like part of the team. Moreover, outsourcing companies often invite clients to visit the project team on-site and offer extensive reporting to keep everyone in the loop.
✖ Time differences and communication problems
Another potential risk comes from teaming up with a provider located far away, in an entirely different time zone. Managing a project with an offshore team sounds challenging, but experienced providers are prepared to deliver optimal services regardless of their client’s location. Besides, if you choose an office-based team, you’ll only have two time zones to manage – yours and the provider’s.
✖ Lack of engagement
An in-house team is motivated to make the product succeed, there’s no doubt about that. You can monitor the team’s morale and intervene when necessary. But what happens when you hire an external team? Will team members be just as enthusiastic about your product and business idea?
These are common questions among entrepreneurs who are considering to outsource software development.
📌 TIP: The solution to this problem is teaming up with a provider who offers dedicated teams where each team member works exclusively on your project. Proactivity is a key feature to look for among the company reviews you should browse when choosing an outsourcing company.
How to avoid these risks and launch a fruitful outsourcing collaboration?
First of all, choose a reliable, experienced, and professional IT outsourcing company. You probably wonder, how to do that – we write about it in the next paragraph. But before we answer these questions, let’s see what else will help you to avoid risks of outsourcing:
- Pick an outsourcing company located in a country where there is no war or crisis. Make sure that it has been in operation for several years and is well-established on the market. If you’d like to meet the team in person, choose a company in a location that you can easily reach (preferably located in a city with an airport).
- Make sure that your project documentation is accurate and code quality is high. If you have doubts, consider hiring another company to perform a code review.
- You can protect your project from the moment of signing the contract with your provider – for example, by adding clauses that oblige the company to deliver specified materials upon contract termination or not to terminate the contract before an agreed time period.
- To address the risk of data leaks, sign an NDA and find out how the company protects its assets against common cyber threats.
- A joint kick-off meeting will help you get to know the team better (and vice-versa), build a sense of commitment, and feeling that you’re on the same side. Once you start the collaboration, visit the team at their office if it’s possible, and work with them in the same room for a while.
- Make sure you will get frequent updates from your partner (e.g. during Scrum meetings); they will give you control over the project and budget, but also facilitate communication. What’s more, ask your provider for reports to keep you up to date about the project’s progress (e.g. the team can configure for you a Jira dashboard where you will see reports showing summaries of worked hours, team’s progress, or the predicted release date).
- Learn what the provider’s development process & Quality Assurance looks like, and how they address all the risks we mentioned in this article.
How to choose the right outsourcing software development company for your project?
If you’re thinking about how to start working with an outsourcing company, here are a few tips to help you choose the best provider for your project.
✔ Use review sites
Check the company profile on specialized review platforms such as Clutch.co or The Manifest. Read the reviews paying special attention to projects that are similar to yours – for example, realized for a client operating in your industry.
Check whether the company has ever worked with a client from your country or from many different countries. Successful offshore collaborations are a sign that the company has developed a solid process for handling time differences.
✔ Check out the company website
Take a closer look at the company’s website, especially the sections related to the provided services and the portfolio. Again, it’s worth checking whether the company has delivered projects in your industry or to clients from your country.
Don’t forget to visit the section about the company/team. This is where you can usually learn about their culture, values, and people on board. See their office, events, and initiatives. It can be also an important source of knowledge for you when choosing a software development partner.
✔ Set up a call
Once you find a provider who looks promising, schedule a meeting and ask them about the details of their software development process.
For example, ask about the Quality Assurance process and its key components such as automated tests, manual tests, and code review. Review the provider’s communication practices, team composition, project management methodologies used to deliver projects, and experience in working with clients from your location.
Would you like to learn more about choosing the right outsourcing partner? You can find some great tips in this article.
Why outsource your app development to Droids On Roids?
At Droids On Roids, we have been supporting businesses all over the world with our IT skills and experience for 9+ years. Our teams have delivered more than 130 mobile & web projects for clients across various sectors and operating in many different countries (US, UK, Norway, Netherlands, Switzerland, UAE, Australia, and more). Learn more by seeing our Company Presentation.
Over time, we have developed and fine-tuned our QA process to provide our clients with high-quality software products. We work in Scrum and are ready to take the entire app development process off your shoulders, helping you to focus on your business.
Get in touch with us if you’re looking for an experienced IT outsourcing provider.
Outsourcing your app development – summary
As you can see, outsourcing app development comes with many different benefits, but also several risks all business owners should be aware of before jumping on the IT outsourcing bandwagon. However, by choosing your provider carefully, you’ll be able to avoid these risks and launch a fruitful partnership that will take your business to the next level.