According to Investopedia, outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure.
What is Software Outsourcing?
Software outsourcing is basically hiring a third-party software contractor to do technology-related work. With that being stated, software development outsourcing will help businesses minimize costs, enhance customer service and maintain product quality in an effective manner. It also focuses on core competencies given a limited budget. So that outsourcing software development can be a fantastic way to improve your company’s performance.
Not only was outsourcing chosen as a cost-cutting measure, but it was also recognized as a business strategy in 1989 and became an integral part of business economics throughout the 1990s. The process of outsourcing business functions is also called contracting out.
Outsourcing as a Business Strategy
The current business environment requires high-efficiency in order for a business to stay competitive. As a way to stay ahead of the competition, managers today must use multiple strategies to increase productivity, and this can mean implementing things like automation, standardization, and business process re-engineering. In addition, they restructure entire organizations with the goal of making them lean and flexible to allow quick response to customer needs and changes in the business environment. Thus, outsourcing is one of the ways that managers use to meet these goals.
Cost reduction. For a business, minimizing expenses is one of the surest ways of enhancing growth. Keep in mind that hiring the cheapest software developer doesn’t always translate to enhanced services, and for this reason, you have to find a balance between quality and affordability. Outsourcing helps you don’t have to buy equipment and other supplies means that the overall cost is drastically reduced. It is the goal of offshore software developers to offer these services to companies at a reasonable price.
Time-saving. Software development takes less time when you outsource some of the tasks to another company. Collaborating with an external company enables you to conduct the project much faster and efficiently. The time you spend on finding an appropriate IT company to outsource your work is shorter than the recruitment process. In addition, some business owners keep their staff up-to-date with the latest software innovations and leaving this issue of technical ability to the software outsourcing company as a way to stay competitive.
Flexibility. Hiring new developers for short-term projects is inefficient. This is ideal in situations where your business hits a low season or when you are running specific projects on a limited budget. It is important to take into consideration the downtime, which generates costs related to the maintenance of the additional employee such as hiring, training, and maintaining new developers.
Focusing on essentials. Or in a situation where your developers are overloaded with work, software outsourcing can help to manage software development so that your staff can then focus on key business functions. Since your offshore contractor will be handling all the hard work. As a C-suite, you will have more time to focus on the implementation of essential tasks.
Fresher perspective. The routine during daily-work might minimize creating thought-provoking solutions and out-of-the-box ideas. Outsourcing is a chance for your business to grow in many directions, which would not be possible with your capacities. Working with highly-qualified developers enables you to improve your performance, provides you with new knowledge, and reach a broader audience around the globe.
With the advantages, outsourcing is no longer an only buzzword for low-cost labor, it has become a key business strategy for both small and medium business enterprises. Outsourcing software development is one of the most effective strategies to stay competitive, offer not only the economic sense but also a promise on better efficiency.
Outsourcing or In-house Team—Which You Should Choose?
Business owners can appreciate the opportunity to hire an outsourcing company only when needed. Because of every company, the right time to outsource is different. Some businesses have in-house developers to handle daily activities, but may need outside help to undertake new projects that don’t warrant another full-time employee. When you and your current developers are unable to manage the day-to-day business of your company and build the business satisfactorily, it may be time to consider outsourcing. But be careful, just because you can outsource a task doesn’t mean you should. For the sake of business, you should think outsourcing out to be in the right place at the right time.
ICTS is a Vietnam-based software development boutique that focuses on cutting-edge technologies. We provide mainly 3 service packages: custom software development, mobile app development, and offshore development center at competitive rates while ensuring global-level quality assurance standards.