Outsourcing is a fairly common business practice these days. Many companies outsource certain functions to a third party so they can focus on their core business activities. Software development is no exception to this practice.
However, not all forms of software development outsourcing are the same. There are several types of software development methodologies, outsourcing practices, and other factors to consider for IT software outsourcing.
Some common questions to consider include: Should your company use local or offshore software outsourcing services? What project management structure does the software development agency use? Why outsource software development in the first place?
What Is Offshore Software Outsourcing?
Offshore software outsourcing is, simply put, the practice of outsourcing software development to an overseas company instead of a local company within the same country.
For a U.S.-based company, this often means outsourcing to a company in Europe or Asia. However, some companies may outsource software dev or other tasks to countries nearer to the U.S., like Mexico or Canada. This practice is known as “nearshoring.”
Offshoring software development carries many of the same pros and cons of outsourcing to a company in the same country. However, certain benefits (and drawbacks) may be bigger with offshoring—and the practice can introduce a few extra hurdles, such as a language barrier and greater difficulty scheduling live meetings because of time zone differences.
Outsourcing Software Development Pros and Cons
So, what are the pros and cons of outsourcing software development? The specific benefits and drawbacks that a company may see with IT software outsourcing can vary from case to case. Some of the more common pros and cons of outsourcing that companies report include:
Pros of Outsourcing Software Development
- Reduced IT Spend. One of the biggest benefits of outsourcing work to external software development agencies is that it helps reduce IT spend. Instead of having to pay for an internal team of IT experts, specialized development software, and all of the other associated overhead, companies can simply hire the external software dev. Offshore outsourcing can further enhance this, as the cost of IT dev labor in overseas locations can be significantly lower than it is in the U.S.
- Access to Broad IT Dev Skills. Odds are that a company specializing in software development will have a large team or network of IT engineers who have diverse skills for web development, backend software dev, cybersecurity engineering, and more. Normally, recruiting a diverse team of specialists to address all of the company’s software dev needs would be a time-consuming (and expensive) process. By outsourcing, companies can get quick access to a deep pool of development talent.
- Faster Starts to Software Development Projects. When trying to build a software dev team internally, it often takes a long time to build the team and then train each team member so they can do the work. With ready-to-go development teams, software development companies are often able to start working on a project soon after getting briefed on the project.
- Access to a Wide Range of Software Development Tools. Unless a company’s core business is centered around software development, it is unlikely that it can afford to invest heavily in software dev tools. Because software development is their bread-and-butter business process, dev companies are often able to spend far more resources on acquiring and maintaining specialized tools that help save time or maximize quality when developing software solutions.
Cons of Outsourcing Software Development
- Managing Communications. One of the biggest hurdles reported by companies working with outsourced software developers (especially smaller organizations or ones located overseas) is managing communications. It may be difficult to align schedules with the external company to arrange meetings, there may be a language barrier when working with foreign companies, and the company may not have direct access to individual software engineers to make change requests. This complicates communications, which can have a negative impact on project management.
- Potential for IP Theft. Many companies worry about intellectual property (IP) theft when outsourcing any key business process to an external organization. Unfortunately, IP theft is a risk of outsourcing—especially when offshoring projects to an overseas company that doesn’t operate under the same legal system. Software development can itself give rise to new IP—and the assignment of rights for IP created by the outsourced labor can be murky. This is part of the reason why counselors from the firm Kilpatrick Townsend state that “any outsourcing agreement for software development must contain a clear and present assignment of arising IP” to help protect the company’s IP rights.
- Quality Concerns for Software. One potential risk of using an outsourced company to handle software development is that they aren’t always fully dedicated to delivering a high-quality solution. This can result in software that only just meets the bare minimum requirements/goals set (if it even succeeds at that). Poorly made solutions can have a negative impact on the business processes that rely on them, which affects the business’ ROI for software development. This is one reason why it’s important to find the right outsourced software development partner.
Software Development Tools
Software development can be a very complicated process—one that requires a lot of collaboration, testing, and troubleshooting as issues are discovered and goals change. Software development tools cover a broad range of software products that help enhance collaboration, track changes in a program, and log specific tasks for individual developers to tackle.
Some examples of software dev tools that companies might use include:
Project Management Software
Project management is key for a successful software development cycle. So, many software dev teams use project management software like:
- Jira. An issue and project management software that allows team leads to assign software development tasks (such as writing code, creating programs, running bug checks, etc.) to members of a team and track their progress. Tasks are sorted into distinct lanes (such as To-Do, In Progress, In Review, and Done) as team members work on them. This allows team leaders to plan work around each team member’s work capacity and track if a project is on schedule.
- Trello. A board-based project management tool similar to Jira in many ways. One of Trello’s key features is its use of “bots” to help automate workflow tasks so they’re simpler to manage. It also boasts integrations with other apps and solutions to make it a key productivity platform.
Development Platforms and Software
Software development requires a development platform to work with. A good software development platform helps coders save time and minimize errors. Two examples of popular software development platforms include:
- GitHub. No list of software dev platforms would be complete without a mention of GitHub. It is, hands down, the largest development platform, with over 56 million developers across 3 million+ organizations active on the platform. The software makes it easy to record and rewind changes in the code for a software program—which is very useful when a code change causes unexpected errors. Think of it like Google Drive, but for coding.
- IntelliJ Idea. A code development platform that is “designed to maximize developer productivity,” IntelliJ Idea can analyze code and provide suggestions to developers to optimize their code, predictively suggest class, field, or method names when writing code, and generally help save time on tedious and repetitive coding tasks.
Team Collaboration Tools
Collaboration tools that help team members communicate with one another and share important files can be crucial for successful software development. They can also help with communication between software dev companies and their clients. Some examples of team collaboration tools that software devs might use include:
- Slack. Slack is one of the most prevalent team communication and collaboration software apps on the planet. Millions of people use Slack daily to communicate with their team members, share important files, and conduct video chats in real time. It also allows companies to set up shared channels with others from outside their organization, helping to smooth collaboration between software devs and their customers. By leveraging message boards, companies can share important updates or priority shifts without having to schedule a live conference between people who may have vastly different schedules.
- Zoom. Since the coronavirus outbreak in 2020, Zoom has become something of a household name. This team communication app allows users to schedule and conduct videoconference meetings with ease. Presenters can share their screens, record meetings for future reference, and even get automated transcripts of recorded meetings to help them gather a list of goals and priorities from their meetings. Integration with Google Calendar helps organizers schedule meetings for when they’ll be most convenient for all attendees.
The above tools are just a small sample of the countless solutions that are out there, and new software development tools and collaboration software are being created all the time.
Finding the Right Software Development Outsourcing Companies and Solutions
Finding the best software development outsourcing company or solution is crucial for maximizing the benefits of outsourcing while minimizing the risks. But, how can you find the right software development company for your needs?
Some tips for finding the right software development partner include:
- Checking Their Work History. Does the software dev have a track record for providing results? While every company has to start somewhere, it’s generally best to look for partners who have shown that they can consistently provide results instead of working with an unknown.
- Weighing the Pros and Cons of Offshoring. Hiring local developers may be costlier than using overseas IT developers. However, coding style differences, language barriers, and potential IP concerns may outweigh the cost savings benefits of going overseas. So, it’s important to consider the pros and the cons of offshoring before picking an overseas developer.
- Looking at More Than Just the Initial. Cost is always a concern for any business project. However, it isn’t the only concern. The return on investment (ROI) for IT spend should also be a major consideration. For example, if you're comparing two options and you see Company A costs 20% more than Company B, but they also offer extra services and expertise that eliminate or minimize your ongoing costs after the project is over, the actual cost over time for Company A’s services may end up being significantly lower. So, it’s important to look at more than just the initial bid for services and consider how the services offered will impact the project in the long run.
- Checking Who Is on the Development Team. Who are the engineers who will be handling the software dev project? Does the team include the company’s top talents that they advertise on their site, or is it a team of unknowns? Also, will the same team be on the project for its entire duration, or will team members be cycled out (requiring new people to be brought up to speed and negatively impacting productivity)? Getting answers to these questions can be very important.
- Verifying Communication Processes. How will the software developer handle communications? Will there be regular status reports where they provide updates on project status, major issues causing delays, and project milestones reached? Will the developer proactively reach out if there’s an issue? Who are the main people to contact for questions and requests—and how should they be contacted? Communication is a major part of any successful partnership. So, it’s important to find a good communicator.
These are just a few of the things to look for in an outsourced software development company.
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