Over the last decades, software development outsourcing has experienced incredible growth. One of the recent reports states that IT world spending is expected to keep growing. There are numerous benefits that go beyond software development outsourcing services, ranging from faster time to market to cost reduction. Let’s dive deep into why companies outsource and how to do it correctly to meet your business objectives.
What Is Software Outsourcing?
Outsourcing is a popular service in the IT industry when businesses choose to have custom software solutions developed by a third party. Companies with little technical expertise can deliver a high-quality web, mobile, or desktop software solution with these services while focusing more on their main business operations by delegating software development to vendors.
Why Companies Outsource Software Development
Different surveys report numerous reasons why businesses outsource software development projects, ranging from filling technical gaps to reducing costs. For example, in 2016, the key reason for executives was reducing costs, while 2019’s report found out that accessing skills which are not available in-house was the key driver for outsourcing software development.
Essential Reasons for Choosing IT Outsourcing
Optimizing Development Expenses
Cost reduction is what drives companies to choose outsourcing, according to Deloitte Global Outsourcing Survey 2020. It is becoming increasingly important for 70% of interviewees, who see cost savings as the main motivation for outsourcing.. The trend is impacted by the COVID-19 crisis when the uncertain economic environment is switching the focus to reducing operating expenses.
Outsourcing Enables Digital Transformation
Globally speaking, outsourcing can be a driver to the digital transformation of businesses. The COVID-19 pandemic has strengthened the necessity for digitalization of organizations across various industries. By now, digital transformation is all about leveraging innovative technologies like Artificial Intelligence, Robotic Process Automation, the Internet of Things, etc. However, even well-defined transformation projects may spiral toward disaster if they aren’t implemented well. According to Genpact research, companies waste $400 billion annually on misguided digital transformation efforts. Outsourcing software development has become a proven strategy for implementing innovative IT solutions. As the modern market requires businesses to innovate faster, leveraging the software development expertise of IT companies is the best decision.
Using External Resources to Reach Key Business Goals
There’s another trend why organizations use outsourcing services – to overcome the key challenges with less resources involved. According to the latest survey, top challenges to overcome through outsourcing include:
· Increasing capacity;
· Reducing labor costs;
· Improving service quality;
· Finding more time to focus on core business functions.
Software Outsourcing Business Models
Dedicated Team
With the dedicated team model, you hire a team of tech specialists who will be allocated to your project. According to this business model, a software development company provides a project manager or delivery manager who serves as the cooperation body between the client and the team. This model implies the highest level of the outsourced provider involvement in the development process. The dedication team is more than just scaling your team with developers, as the development team typically includes diverse specialists such as business analysts, UX/UI designers, QA engineers, etc.
When to outsource software development with dedicated team model
Dedicated teams are perfect to hire when you want developers to complete a particular project. The model also suits long-term projects without clearly defined requirements and project work scope.
Outstaffing
Outstaffing is a business model that suggests extending a company’s development team with external developers. Outstaffed specialists are under your direct control, and it is your responsibility to use their skills to meet your business objectives best. Similar to the dedicated team engagement model, businesses save on administrative expenses, while scaling their in-house team fast with employees they lack in their team. The model ensures flexibility when you need to expand or reduce the team to meet temporary project needs.
When to choose outstaffing for software development projects
The IT outstaffing model may be a good choice for long-term projects as well as for businesses that already have an established in-house software development team but need to augment it in the shortest possible time.
Outsourcing
Outsourcing is another model widely used to deliver software development projects. In this model, your technology provider manages and delivers the projects based on your specifications. You also agree on the project timeline that the outsourcing partner must follow to meet its deadlines.
When to opt for project-based outsourcing?
The project-based outsourcing suits projects with straightforward requirements that are unlikely to change. Such outsourcing contracts are suitable for companies with no in-house software development skills. The remote software team will complete the project tasks without client’s involvement.
Key Outsourcing Destinations
Eastern European countries, including Poland, Ukraine, Belarus, Romania, and others, are among the most attractive destinations to outsource software development. The region has over 2600 custom software development companies by 2022. The attractiveness of the IT sector in Eastern Europe is fueled by a high level of technical expertise in the region. Whereas, the expertise is based on high standards of education in Eastern European countries.
Benefits of Outsourcing Software Development to Eastern Europe
There’s a wide range reasons why you may choose the Eastern European market of IT companies to outsource your software development project, and here are the key reasons for considering:
· Rich talent pool of technical specialists.
· Lower development costs.
· Geographical proximity to Western Europe.
· Proficiency in English.
· Similarity in cultural values with Eastern Europe.
Conclusion
There are multiple reasons why U.S. and European companies strive for outsourcing their software development, whether it be to close technical skills gaps or reach specific business goals. One thing is clear, and it’s that they want to get a cost-effective solution that will improve their business results.
There are multiple engagement models software development companies from Eastern Europe work with, including dedicated teams, outstaffing, and outsourcing. Choosing the one that will fit your project needs will allow you to reach the objectives you’ve set.