Software development outsourcing is a concept that has thrived in the last few years. It enables businesses to get access to the best software development services at reduced operational costs. The global software delivery models of outsourcing software development services are a bit complicated as both parties can face language and cultural barriers. But to resolve this issue, organizations have started offshoring companies that are either available in the nearby location or firms that have employees who are fluent in the English language and have less or no time zone differences

Besides, offering software development services at a lower rate is a key strategy for outsourcing companies to remain competitive in the market. They offer an effective transition to help organizations to access a vast talent pool of software developers and IT experts. In this blog, we will discuss everything about outsourcing software development and how it helps organizations to have better services at lower rates. 

1. What is Software Development Outsourcing?

In simple terms, outsourced software development is a virtual set up in which an organization chooses to collaborate with an external software outsourcing partner to perform all the tasks of a custom software development project effectively, which may be challenging to perform by in-house teams.

Setting up a business by hiring a large pool of talented professionals equipped with knowledge of advanced technology stacks, affording their high pay scales, and renting a brand new infrastructure to cater to different businesses is not a cost-saving approach

. In addition, there are accelerating operating costs, lost focus on core business goals and a trembled business foundation. Hence, delegating these business needs to experts seems to be a wise call.

Unlike before, Software Outsourcing has also come a long way from its inception. In 2020, Software Development Outsourcing has grown immensely, not just to provide what businesses need but to meet the emerging needs of the tech market and optimize the way business runs in almost all sectors. Outsourcing software can help businesses save time and money.

Outsourcing is a good practice of performing certain challenging tasks that takes up most of the business time and may not give fruitful benefits in the very first instance. 

Talking to the statistics, in 2019, the global IT outsourcing market had a value of USD 333.7 billion, and it was expected to grow by 4.5% CAGR and reach USD 397.6 billion by 2025, during the forecast period (2020 – 2025).** This clearly shows that the growing business needs change because of the inclination they possess towards application innovation and digital transformation. Certainly, software outsourcing has become a key differentiator for most organizations. (** Reference)

2. Significant Benefits of Software Outsourcing Services

2.1 Cost Savings

When companies create all the operations internally, the cost of development is very high. This is why by partnering with an IT software outsourcing company, businesses can get the best product at a lower rate. This shows that instead of hiring experts to service the IT department of the firm, hiring a specialized IT outsourcer is profitable. The outsourcing team can offer high-quality services at reduced rates and helps in saving other expenses like infrastructure costs, software & hardware installation costs, and much more.

2.2 Flexibility

Businesses of any size or from any industry take up multiple responsibilities and fudge constantly between numerous tasks to maintain a balance in business. In an attempt to manage all these acts of hiring, training, and managing; the core responsibility of custom software development projects remains ignored. Leveraging the potential of outsourcing your software development, businesses can focus on core competencies of business while the experts handle the custom software development process and digital transformation goals of the business. With complete liberty of choosing the engagement models, technology stack, software development, and resource scalability; the enhancements in custom software development can be easily modernized.

2.3 Risk Sharing

A software outsourcing company is an addition to the business’s core offerings helping them succeed with their proficient resources, advanced technology knowledge, and substantial experience. A good software outsourcing service provider is a flagbearer of business success as well as failure, it will stand against all odds and help them rejuvenate their business in case of any unfortunate loss.

2.4 Focused Strategy

Most organizations do not regard the recruitment of software developers from overseas as their prime competencies or revenue generators. Hiring a software development outsourcing company can help you leave these complicated operations to external service providers. This creates a huge diversion and frees up time to strategize the schedule to focus on important tasks integral to a business.

2.5 Time-Saving

Gone are the days when cost savings was the only agenda behind outsourcing your software development projects. It is one of the vital aspects contributing to making software outsourcing decisions but there are several other factors too. Apart from cost-saving, time and offering top-notch deliveries at a reduced operation cost is also a task of outsourcing. Nearshore software outsourcing companies in India maintain the same time zone and business stature as well as offer high-end technology services maintaining standardized methods of development.

2.6 Improved Service Quality

Upskilling is another important aspect for a business to progress and outsourcing this process has become simpler. Professionals at custom software development companies are proficient enough to develop a robust software solution that undergoes standard quality parameters. After thorough testing and trials, the developed app will be of improved quality backed up by stronger architecture and a great user experience.

2.7 Faster Time to Market

Though they say there is always a scope for improvement, no one appreciates errors, especially when they are time-consuming and repetitive. In this fast-paced market where time is money, businesses always want to lead the software development market with digital innovation and creativity. Software development outsourcing companies help businesses achieve a competitive advantage by developing unique apps with speed and agility.

2.8 Sourcing Top Talent

There are few small-size companies that have all the required resources but as software subscriptions and licenses are very expensive, the majority of the companies prefer to outsource software development services. Software outsourcing providers offer the same services to small firms as they give to larger organizations. Besides, the software outsourcers offer their services for both short and long periods of time with the use of all the latest technologies.

2.9 Futuristic Approach

The conventional outsourcing method is now outdated with the onset of the current-day software development outsourcing approach. To stay ahead in the competition, businesses must develop software and apps that are future-ready and can strongly resist any technology changes. Thus businesses won’t require to update frequently and yet use the latest technology for their businesses.

3. The Need For Outsourcing in the Software Development Business

Now more and more businesses are impelled to outsource their software development services to experts and leverage the advantages of outsourcing to meet the increasing demands of the IT business space.

Thorough understanding of business needs and analyzing other business markets, here are the following reasons why businesses should outsource;

  • Reduce development costs
  • Accelerate time-to-market
  • Address Business-critical needs
  • Drive transformational change
  • Solve capacity issues
  • Uplift service quality

Software project outsourcing has covered mostly all the business verticals such as Financial Services, Healthcare, Technology, Media and Telecom, Life Science, and similar. It has been continuously growing and has a huge impact on other growing industries as well. Software Outsourcing has numerous ways to engage businesses for their tailored outsourcing needs.

4. Last Thoughts

With the advent of newer technologies, it has become a new norm for businesses to approach outsourcing for faster progress. Software outsourcing deals with rising technologies and trends such as the Internet of Things (IoT), AI/ML, 5G connectivity, and blockchain and there is a constant battle of delivering the best. Every business can harness these advantages of software outsourcing and accelerate change within the organizations with the skills of your partnered outsourcing firm.

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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