Software Outsourcing Definition

When you hear cloud-native, cloud -infrastructure, automated systems or multi-cloud applications, or AI, IoT, or ML, what are they? Yes, these are a modern technology that is all set to dominate the world.  Every business is racing to adopt these technologies and become a Modern software development company. As businesses are hardbound to integrate these technologies into their system, such situations probe businesses to take the help of experts , third party vendors and proficient businesses . This is called outsourced software development

1. Definition of Software Outsourcing

Software Outsourcing is the practice of selecting an outsourcing service provider of software development  that is capable of managing all the tasks involved in a software development project.

The conventional way of working in the Software Outsourcing company has changed now. In the past, businesses used to partner with other software outsourcing companies to reduce costs and now the ideology behind partnership has changed. Cost is a factor for business but other than cost, businesses partner with other outsourcing vendors to gain access to talented resources located globally.    

The existing process has become more and more innovative day-by-day as new ideas of the business process are taking place. Now companies are not just relying on any single offshore software development partner instead they believe in outsourcing services to all the relevant outsource software development partners located around the globe. In this way, these businesses can effortlessly focus on developing a strategy for their business and on the other hand outsource their custom software development and app development needs to experienced and high-skilled software development companies and reduce the risk of the overall project process. This can be one way of reducing geographical and financial risks.

In this way of the distribution of the work both the risks like geographical and financial can be reduced. The clients and outsourcing vendors have also become more matured with the growth of the overall overseas Software Outsourcing industry.

2. Why do companies prefer Software development outsourcing?

The business world has updated the way they work and today most of the companies aim to leverage the proficiency of all software development companies to get their tasks done. Software Outsourcing business has emerged to meet the mature business needs of the tech industry and has just been digitizing all the sectors across the world.

This clearly shows an upsurge in the use of software outsourcing services in the current uncertain times as well. Now, what makes businesses go for Software outsourcing for the business. Let us discuss the reasons why businesses decide to outsource. The first and foremost is the cost factor, let run through other hidden reasons as well

  • The first reason is definitely to reduced cost
  • Enhance focus on core business strategy
  • To resolve the capacity issues
  • To improve the quality of service offering
  • To align critical business needs to service offering
  • To access the intellectual properties 
  • To upscale business and revolutionize it
  • To seamlessly manage the business environment 

These are some of the expectations that businesses would like to get fulfilled when they decide to outsource their software development needs. In Software development Outsourcing the main reason for failure is either miscommunication or gaps in communications.  Communication gap can be considered as con of software outsourcing. The communication gap between these two parties leads to inaccurate needs and requirements being conveyed between both the parties. All this leads to project failure. The main industries embracing Outsourcing are banking and Financial Services, Consumer & Industrial Products, Life Sciences, Healthcare, and Technology, Media & Telecom. There has also seen a rise in outsourcing software development teams from industries such as Real Estate, Facilities Management, and Procurement.  Businesses outsource their software development needs because it offers access to a world class talent pool and cost effective web and mobile applications.

3. Software Outsourcing and its types

It is imperative for each business to clearly understand what their business wants and crisply communicate the same to the potential outsourcing partner. In current day outsourcing, technologies like automation, cloud infrastructure play an impactful role on current day businesses and have accelerated the standards of the outsourcing business landscape. There are multiple ways businesses can choose their Outsourcing partner depending on their convenience and need. There are 4 main outsourcing models you’ll need to choose from. Let’s explore each one of them.

1. Offshore Outsourcing

The Offshore Outsourcing model describes location at a faraway distance from the client’s country but this includes feasibility and cost benefits. Here in this software outsourcing model, a part of work or full work is outsourced depending on the business needs and the services offered. This model is most preferred as this suits the overall budget of the business and chooses from the gloat talented workforce located at any corner of the globe. Time Zones in this case proves to be beneficial for many businesses in remote working and their overlap can help the company to have added time benefits to complete the tasks. For outsourcing India emerged as the most suitable offshore location for many businesses.

2. Nearshore Outsourcing

In the software development industry, shore means location, and hence here near shore means nearest location and this type of Outsourcing goes as per the name- Nearshore. Nearshore outsourcing is an outsourcing model where the geographic vicinity of the location is taken into consideration. These are the neighboring countries where the tasks of projects of the country will be outsourced. For example, if you are a business located in Canada, then your nearshore locations will be the USA and Mexico. The travel time is taken into consideration in this type of outsourcing and availability. Suppose if your business wants to conduct an emergency meeting with the software development team, then the nearshore located companies can be present even at the shortest notice. Also, the most beneficial factors are the work culture is the same and they speak the same language and follow the same calendars too. So there is no bigger cultural difference. 

3. Onshore Outsourcing

In Onshore Outsourcing, the company can partner with a software development company that is located in the same country. This cannot include the same company but in different locations and that is not the fundamentals of outsourcing too. So if a company wants to contract with another company within the country it is onshore outsourcing. Here there is no cultural difference and also the contracted software development company can come anytime if there is a meeting or discussion needed for the project. 

4. Staff Augmentation

In the staff augmentation process, the software outsourcing companies temporarily lease their software developers and dedicated team to the client company for their business-critical projects and enhance their business processes and offerings. Vendors carefully select each team member based on your requirements and the expertise you need. They add these augmented staff in their house team to boost productivity, software development process and achieve business targets. 

4. Wrap up

From the overall discussion and scenario of the Software Development Outsourcing process, we can now deduce that Outsourcing is a critical need for every progressive business.  Software outsourcing can power digital transformation of businesses. With the maturity of the market, the mindsets of the clients and suppliers are also changing. Hence to pace up in this competitive era, more and more innovations of new ideas should take place. Software Outsourcing development companies are the global shapers of the future of the companies that outsource their projects to them.

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Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.

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