Software outsourcing - what is it? Benefits for your business
Google, Apple, Buffer are some of many tech giants who outsource software work to external development teams. But is outsourcing a fit for your purpose? Let's compare it with working with an in-house development team and highlight possible scenarios for your business.
From a growing trend a few years ago, software outsourcing has now become the 'to be or not to be' in the entrepreneurship reality of today. But while a huge number of tech industry's giants utilize external software houses to develop their web and mobile apps, some business owners may still be wondering if it’s a fit for their purposes.
The web is full of content encouraging founders to outsource, as well as the one which may scare them off. Success stories about boosted productivity are countered by the ones about miscommunication, cultural/time zone differences and, eventually, sunk capital.
There are a number of factors to take into account when deciding whether to outsource and choosing your software development vendor (more details in our previous article: How to find a good software house. But we have to define what software outsourcing is in the first place.
What is software outsourcing?
As opposed to hiring an in-house development team, outsourcing software is letting an external team do the entirety or part of work on your mobile or web app. This software outsourcing definition has broadened over the years. Nowadays, you can not only outsource programming work to a team of coders fluent in a particular technology, but also a wide array of services, such as UI/UX design, project management, software estimation and A/B tests.
If you are an entrepreneur, and are thinking about developing your web or mobile app, you probably may have already asked yourself: "To outsource or not not to outsource?". Yes, that is the question.
Pros of software outsourcing
There are various benefits that result from outsourcing work to an external dev team. The most important reasons which make businesses decide to delegate software development to a third party include:
cost savings - which is the most common case. Hiring people for your in-house dev team takes time. And time is money. Before things start to click between them and before you get them on the same page, and fully understand your business goals, months are likely to pass. What's more, hiring personnel to recruit them, buying hardware and software, as well as healthcare and insurance generate costs. Outsourcing web or mobile app development reduces these costs from your list of expenses.
talent supply - when your in-house development team lacks expertise in a particular technology, it's no use training them from scratch - especially when your budget and deadlines are tight. Choosing an external agency with a reliable development team, as well as design and quality assurance pros will fetch you "a proven development process so you can focus on your core competency".
flexibility - there are different stages during the development of a digital product. There are periods when the process keeps twenty people busy, as there are months when you need just two of them. Regardless of that, when keeping an in-house team, you need to pay salaries to all the people you have hired. Teaming up with an external software house enables you to scale your team up and down according to your needs.
help for non-technical founders - as businesses are run by different people, it happens frequently that their founders have no technical background. By outsourcing the development process, they can expect someone to translate their business objectives into technical terms.
intellectual capital - software firms with a solid portfolio offer much more than just writing code. By outsourcing services to a good one, you get access to their internal processes, project management ways and tools. So it's always an opportunity to enrich your own company's culture.
Pros of in-house development
Saying that outsourcing software is the only way to go for a company in need of IT services is, obviously, not true. There are cases when it's better to take your time, build your dedicated team from scratch and let it grow. Why?
In-house teams may have a deeper comprehension of your vision of a product. Time spent working together results in a more detailed insight of your business goals among your tech team's members.
immediate control over the development process. Whenever an incident occurs, there is an opportunity to address it straight away without waiting for a third party to take action, which may be delayed due to time zone differences for instance.
But, as David Semerad from STRV points out in his article published in "Forbes", in-house teams usually have a broad know-how, and it's nearly impossible to solve all problems whenever a specialized skill sets are required.
Outsourcing software teams or in-house teams. Which one is better for your business?
To make a good decision, consider your project's scope, budget and timeline. Do your own research. Check referrals such as Clutch company profiles. Don't only trust websites, but listen to the accounts of your potential software partner's other clients.
At Prograils, we have worked with both big, established companies and startups, as an outsourcing partner. Even if the timeline of our partnership within some of these projects had been at first limited, they evolved into long-term commitments as we took over the maintenance duties after deploying the product. This allowed us to come up with various scenarios for our clients. Let me highlight four possible pathways.
Kickstart your startup
When you own a startup with a promising product idea that has just managed to collect some venture capital, you probably don't want to invest your budget in hiring an in-house team. You simply can't say if your product will gain traction (keeping my fingers crossed, though). This is when teaming up with a software vendor makes much sense. Your startup may lack personnel skilled in particular technology, let alone the expertise in project management team and Q&A. Whereas turning to the third party software service provider generates costs, it's way better to allocate your money in an experienced dev team than to build your in-house team from scratch.
When your company decides to implement a mobile app or any other digital solution, you might need a supply of people with a defined skillset. Your in-house team may not necessarily be familiar with coding in specific technology or may lack expertise in some other areas. This is where outsourcing comes in handy.
Evaluate your staff and list which additional skills are required to meet your business objective. Staff augmentation by outsourcing an IT partner is an extension of your already existing team. Needless to say, it allows for knowledge and skills transfer between both parties.
Augmenting staff can, though, raise concerns among your current workers. A common thing is that whenever outsourcing is first introduced into a company, workers are afraid of their jobs. As a business owner, you have to make sure to encourage both sides to cooperate. One of the proposed solutions is that a committee be formed by their representatives to analyze problem areas and solve them.
Outsourcing a side project
If some activity is not a core part of your business, and your people are not prepared to take full responsibility for it, reach out to an outside dev team armed with knowledge, skills and experience to handle it properly. This enables you to focus on your core competencies.
Going full in-house
The situation when you aim at big results, hundreds of thousands of users, long-term growth and international goals with your product that's not yet on the market is probably the one in which you should think about hiring an in-house dev team. Big projects demand communication on a daily basis. Having all your people under one roof is a perfect environment to let them focus on a common goal.
As sky-high results demand solid foundations, it is reasonable to take necessary time to select the people who really meet your requirements, and who are a good cultural fit. Thinking of long-term cooperation, make sure they understand your idea as fully as possible. Having a team that works toward a common goal is pure gold. Delaying or omitting this phase may cost your business a fortune in the future.
On the other hand, there are plenty of examples showing that tech giants are totally fine working with remote teams. See the article's intro for some of them.
Software outsourcing. Conclusions
Both software outsourcing and hiring an in-house team have their pros and cons. The answer which strategy is better for your business is rarely black and white. As in most cases, it's a good old: 'it depends'. To get an accurate answer, examine your project's scope, budget and deadline.
Moreover, experts say you should not be afraid to ask your external IT partner big questions: how stable they are? how will they protect the personal data? etc.
While outsourcing work to software houses is often done to reduce employment costs, business owners should not take it for granted. You should still invest time to make sure that your partner understand your business objectives to properly translate them into technical terms. At Prograils, we believe that the client and the dev team should work closely together. Read our Playbook for more details about our development process.
Finally, it's possible to mix both - an outsourced team and your in-house tech personnel by the way of software projects, and scale your staff up and down according to the current needs.
Over the last 7 years, Prograils have been a software outsourcing partner for both startups and established businesses, programming web and mobile apps in Ruby on Rails, Elixir/Phoenix, Swift and React/Native. Our service roster includes complex product design, project management and quality assurance. We are big enough to guarantee you stability, just enough to be flexible and small enough to give you a personal touch.
Have an idea for a web or mobile app and wondering whether to outsource or not? Drop us a line, we will gladly learn read about it and help you make it totally awesome!
Photo by Christine Roy on Unsplash