Business in this new format can look like a chaise longue on an ocean beach instead of a crowded office. Many successful businessmen have transferred software development to outsourcing. Because the competitive advantage of outsourcing software development is not fully appreciated and well evaluated, it still raises too many questions with unclear answers and stereotypes like “cheap means worse.” Let’s figure out what it’s like, and what the competitive advantages and the risks of outsourcing software development are.

Reasons why outsourcing of software development is a right solution

Globalization and innovative technologies give companies the opportunity to save resources and streamline business processes. Outsourcing is one of the most common methods and modern trends. Delegating some functions to other companies on one hand, reduces costs, and on the other accentuates the development of the main lines of the business. Moreover, this is an additional way to attract external resources with knowledge and experience and to involve fresh staff without excessive obligations and risks.

Here are 5 reasons why outsourcing works and makes sense.

  1. Cost savings is certainly the main motivation of companies to implement projects partially or completely outside their home base. Software developers outside the leading industrial nations are significantly cheaper and often have the same qualifications. For example, Payscale, a global payroll statistics service, has an average annual salary of just over $5,000 for Indian software developers, and only about 10% of their employees come to more than $10,000. In the USA, the pay is about five times more.
  2. Deadlines and time pressure often lead to unfinished or defective products. If a software project takes off unexpectedly, only additional staff can help. What is important is that help is only temporary and not be long term.
  3. Specialized knowledge of specific technologies is often needed only at specific points. If you do not have the necessary specialists among your staff, attracting them through an outsourcing program can be a great solution. Companies prefer to employ all-rounders who are more flexible. The quality of service in the case of outsourcing is significantly increased if a third-party company undertakes to monitor the quality of the contract work.
  4. From the point of view of the implementation of strategic tasks, outsourcing makes it possible to concentrate resources on primary production and improve operational control.In addition, the process of introducing new technological or managerial operations is facilitated.
  5. Outsourcing helps companies maintain their compactness. It is very useful if you do not want to maintain a large staff and create a complex corporate structure. You can also use outsourcing to reorganize a business or optimize operating expenses.

How to avoid outsourcing risks

Presumably, all agencies or start-ups wanting to save costs have never thought about IT outsourcing to Poland, Ukraine, or India. Together with the greatest advantages and reasons how and why outsourcing software development works, there are still certain risks. Outsourcing can work if you follow a few rules. Another advantage becomes clear only at second glance: No matter which programming language, developers are almost always available at short notice. Every year, 20 times more software developers leave universities in India than in the USA, and the Indian IT industry employs more than 4,000,000 people. For an agency that is currently looking for iPhone developers in the USA labor market, these are almost perfect conditions.

Outsourcing Software Development can be a perfect competitive advantage

Here are the most important rules for making sense of outsourcing.

1. Keep a realistic picture of your project
Time passes, but one thing remains unchanged: startups and small businesses try to accomplish extensive projects with as little financial input as possible on websites such as rentacoder.com. This is rarely a workable solution. A Youtube clone for $500 is unrealistic, but this offer is popular from other freelancers on several platforms as well. Either the application is flawed at the end or you simply do not get it delivered. Note: outsourcing software development is cheaper, but it’s not free.

2. Have a detailed plan of your project
A specification sheet, project planning and project controlling are basic parts of every project that you consider seriously. How should someone at the other end of the world know what you want if you do not know it yourself?

3. Pay attention to intercultural communication
Basically, the developers from other countries understand what you want from them. Nevertheless, there may be misunderstandings due to cultural differences. A typical “submission of the software at 12 o’clock” means that too. What seems clear to us can be occasionally interpreted by members of other cultures in the wrong way. In European countries one can come across such experiences. A Spaniard who is two hours late for an appointment, just has the feeling of being slightly behind schedule; whereas for Americans, being late for more than 15 minutes is really annoying. Actually, it can lead to the termination of a contract.

In order to avoid misunderstandings in terms of content and deadlines, obviously self-evident points should best be made in writing. However, there are differences to note especially with Asian cultures: a “yes” is not always to be understood as an American “yes.” These differences often lead outsourcing companies to unprepared companies, and the inevitable complications can be easily avoided with a well-structured approach and accumulated experience. The contact with other cultures can be an interesting enrichment for daily work on both sides.

4. Respect the culture and religion
A special point in the cultural differences is religion. If you work with an Indian developer, keep in mind that it is a common thing to have a rest from work not only on public holidays such as Gandhi’s birthday, but also on some Hindu holidays. It is best to ask the developer for a listing of the state or the religion holidays the early stages of cooperation.

5. Engage the developer as much as possible with your team
A developer from Asia or Eastern Europe should not be a foreign body in the company. If you simply specify that a product X should be completed in Z days, the result is usually devastating. Many bad experiences with outsourcing have their origins in such an approach. It is great idea to integrate the outsource developer into the company’s internal project planning and the project controlling. This should be one of the most important rules for successful outsourcing to a developer.

Companies choose outsourcing directions depending on their needs and financial abilities. Some dedicate only two or three functions to outsourcing; for some, it is easier to keep a staff of ten employees and at the same time outsource the maximum amount of work. Nevertheless, they have two goals: to increase the flexibility of the company’s business model and to reduce operating costs. Given the growing popularity of outsourcing, it loves this task. Just try it!