The world is still recovering from the COVID-19 pandemic. Therefore, a great number of businesses choose the option to outsource their projects, as it’s an excellent way to partner with competent specialists remotely. Statista states that IT outsourcing market revenue by the end of 2021 amounts to $413.72 billion. So we may indicate that such services are demanded nowadays.
This article will describe how to outsource digital product development to avoid pitfalls, what are the essential steps and benefits of this process, and how to calculate the final cost of such services.
The Concept of Outsourcing
The process of software creation outsourcing refers to the project completion and delivery by the company of IT specialists which works remotely. Developers work as an in-house team and cooperate with you distantly via diverse communication channels.
Existing Models of Outsourcing
We can divide models by the two main groups: based on the location and on the cooperation conditions:
- Onshore (situated in your country)
- Nearshore (cooperation with the adjacent region)
- Offshore (the vendor is located away)
- Project-based (the need for more tech competence)
- Specialists model (customer’s team augmentation)
Comparison of Outsourcing and Outstaffing
These two models have certain peculiarities, depending on which businesses make their choice. Let’s briefly outline them:
Outsourcing implies a delegation of the entire project and its distant fulfillment by the company. This option is more costly and requires fewer responsibilities as well as involvement from the client. Businesses are also free from purchasing essential software, hardware, and covering all the other project-related expenses.
When it comes to outstaffing, this option refers to employing IT experts from the software development company, so in this deal, the company of the customer serves as the employer of the specialist. Despite the lower cost of outstaffing, all the underlying expenses for the project completion lay on the client’s shoulders and may significantly affect the final price.
Outsourcing allows rapid product deployment as well as reduction of development outgoings due to the fact that you pay only for the scope of work done with no other extra investments required from your side. In case you need an expert knowledgeable in specific technology’s implementation and do not have much time for employing and verifying tech skills, you should choose outstaffing.
Most Popular Regions for Outsourcing
Regardless of whether you select an onshore, nearshore, or offshore software development company, you should keep in mind the list of the best regions to outsource to:
Eastern, as well as Central Europe, are the most popular regions, vendors of which provide cost-efficient services with a remaining top-class performance. Countries like Ukraine, Poland, Hungary, Romania, and Bulgaria are full of talented and experienced developers who will build sophisticated and on-demand software solutions for business expansion.
When to Apply to Outsourcing Companies
Let’s single out some circumstances under which project outsourcing will be maximally beneficial for you:
- Limited budget. As it was mentioned before, with outsourcing, you pay only for the number of assignments completed. As a result, you minimize the development expenses since there’s no need to cover monthly rent, salaries, hardware buying, etc.
- Strict deadlines. In case you have several projects currently in progress at the same time, outsourcing teams will take over all the development as well as management responsibilities, meeting all the set deadlines. Thus, you’ll have an opportunity to focus on the other ongoing projects.
- Employment issues. Such companies have a team of certified proficients with great competence in a wide range of technologies. Despite the project complexity, outsourcing companies have developers with relevant expertise for each specific case.
- Security solidity. Each leakage of data results in a loss amounting to $4 million. Thus, it’s highly significant to ensure a top-class safety system for your product. Outsourcing teams are experienced in implementing potent protection, which is another crucial benefit you’ll receive.
Outsourcing Companies’ Benefits
Let’s now conclude the main advantages outsourcing provides:
- Cut down expenses. Depending on the company’s location, you may choose the optimal and affordable hourly rate and begin accomplishing an excellent software solution.
- Scalability. The global market offers a vast pool of experts who can bring the most sophisticated and complex ideas to reality and build solutions for various domains.
- Flexibility. Regular reports and high progress management ensured by outsourcing allows allocating sufficient amounts of financial as well as human resources and use them reasonably.
- Trustworthy reputation. A qualitative product developed by a team of professional and experienced software creators will deliver higher user satisfaction and help the product quickly reach a broader audience.
Challenges of Outsourcing You May Face
Every cooperation model has drawbacks, and outsourcing isn’t an exception. So let’s see what the main drawbacks you may experience when practicing this option are:
Issues in communication
When selecting a software development partner, you should pay attention to the team’s English level. Another problem, which is time zone difference, maybe successfully overcome with modern tools like Google Meet, Slack, Zoom (for holding meetings), Figma, InVision, (visual part completion), etc.
With outsourcing, the choice will have to be completed distantly with no physical meeting, which may be challenging. To make a proper choice, you should explore the vendor’s ratings, reviews, and previous clients’ feedback on resources like Clutch or GoodFirms.
Within the cooperation, the concept and idea of the project should stay private not to be stolen. To avoid this major issue, many outsourcing companies offer signing an NDA (Non-Disclosure Agreement).
You should select a team of specialists with relevant expertise for your domain as well as technologies required to implement your ideas. As a result, you should come up with a set of hard and soft skills your perfect partners should possess.
Actions to Complete Prior to Contract Signing
Below you may find a list of tips to complete in order to choose credible and experienced outsourcing IT company:
- Check several resources containing the company’s feedback, rates, and reviews
- Negotiate your product’s concept, requirements, and business goals thoroughly, and explain what are your expectations from the team
- Request a portfolio from the potential tech partners to define whether they have a relevant development background
- Learn and investigate the documents and contract conditions scrupulously prior to signing
- Schedule meetings and choose convenient communication channels so that it’s simpler for you to keep up with the progress
Outsourcing Software Architecture: Main Stages
After going through all the pre-cooperation steps, here are the integral phases the outsourcing team performs to complete the project:
- UI/UX design
- Software development
- Quality Assurance testing
- Launching and support
Calculating The Outsourcing Software Development Cost
In this question, there are certain cost-determining factors that are concluded in the one final formula which will answer the question stated above:
- The team composition required for your project
- Hourly rate of the chosen specialists
- The scope of work and product complexity
To understand how much it will cost you to complete the project with an outsourcing company, you should multiply the hourly rate of chosen developers by the number of hours required to fulfill the project complying with all of the set requirements. Yet, it’s a pretty challenging task, so we highly recommend applying to competent Business Analysts who will gather all your requirements and ensure the rough estimate containing the deadlines as well as costs.
According to a row of profitable benefits outsourcing provides, many businesses have already taken advantage of this opportunity. To succeed in the challenging process of selecting a credible partner, you should primarily make a choice among the top outsourcing destinations described above and study the company’s rates and reviews. Therefore, you’ll get the maximum profit of outsourcing and expanding your business with a cost-efficient yet, top-quality solution.
Yuliya Melnik is a technical writer at Cleveroad. It is a web and mobile app development company in Ukraine. She is passionate about innovative technologies that make the world a better place and loves creating content that evokes vivid emotions.