pros and cons of software outsourcing vendors

Pros and Cons of Software Outsourcing

Are you on the fence on whether software outsourcing is an excellent strategy to scale your startup? First, weigh your options by understanding the pros and cons before you outsource your software development process to an outsourcing provider.

Over the years, the startup industry has undergone an impressive transformation bringing in sophisticated business models, solutions, and users. All these create new challenges that startup owners or managers must deal with.

One of these new business challenges is the struggle of coordinating various business operations with a multi-phase development process. Another challenge is finding the right skills that can adapt to the latest technological demands.

To answer these needs, some startups resort to software outsourcing. It is an innovative approach to increasing operational efficiency while minimizing costs. It seems like a great idea, only if you understand that anything great also comes with some inherent risks.

Before entrusting your IT operations to an outsourcing provider, let’s take a look at the pros and cons of outsourcing software development. Let’s start.

Pros of Software Outsourcing

1. Cost Efficiency

For startups to thrive, they can benefit from trimming down startup costs. While software outsourcing companies are not necessarily cheap, they are less expensive compared to hiring in-house staff, buying more equipment, and leasing an office.

Outsourcing allows you to prepare for expenses on a monthly or annual basis. Generally, outsourcing providers charge the total cost of the software project and divide them into monthly payments.

2. Access to the best skill set

A shortage of software developers in certain locations can also present some challenges. Outsourcing aims to fill in the gap by providing you with high-skilled talents outside of your country.

An outsourcing vendor has a team of experts that can walk you through the development process and guide you to make the right decision for your business.

3. Scalability

Another compelling reason for hiring a reliable software outsourcing partner is the ability to scale up or down. What does this mean to you? With scalability, you can add more people and resources to manage an increased demand or scale down as you see fit.

4. Save time

Outsourcing companies often work with clients on a project basis. Instead of hiring new staff to a project, you can outsource a portion of that software project to a third-party vendor until completion. As a result, you save time and money compared to doing everything yourself.

5. Focus on other aspects of the business

Having someone to carry out the software development process means that you can focus on other essential aspects of your business. Sales and marketing, distribution, or client management are some core areas where you can dedicate your time to.

Cons of Software Outsourcing

Entrusting your software development projects to an outsourcing vendor may seem like a great choice. And to a certain extent, they are, especially if you have an outsourcing company that offers competitive rates and a wide pool of tech expertise.

But we need to look at every angle and see if there are any weak spots in the software outsourcing process that might have a negative impact on your business.

1. Quality Concerns

It’s easier to enforce quality control when you can monitor software engineer’s output directly and speak to them face-to-face without any time zone barriers.

Therefore, it’s crucial to choose a reputable software outsourcing provider with an excellent track record of producing high-quality work for different clients. Your outsourced team should have a staff dedicated to software testing and quality assurance to ensure that product standards are met.

2. Communication

One of the biggest flaws when outsourcing software development is communication barriers. Differences in language and time zones can hinder proper communication.

Keep in mind, that a smooth working process starts with effective communication. So, if your outsourced team can’t understand or comprehend what you need, is this even worth your time and investment? We don’t think so.

3. Data and Privacy Risks

When you transfer ideas and data to a third-party provider, there’s a risk that they may steal or replicate them for their benefit. Moreover, if your outsourcing provider’s database is leaked, this will expose your company’s confidential information to cybersecurity criminals.

To reduce this risk, let your software outsourcing partner sign a non-disclosure agreement (NDA) before you share any data. Include Intellectual property clauses in the contract to protect your company against copyright litigations in the future.

4. Periods of Adjustments

Once your outsourced team starts working on your project, there will be a period of adjustments. How long this adjustment will take, depends on how well the project idea is communicated and the level of expertise of our outsourced developers.

The flow of interaction will be something new to both of you. Be realistic about your expectations and prepare for this adaption phase.

5. Hidden Fees

There is a risk that you might get hidden fees on top of what you already paid for. This is especially true if you offshore your software operation in another country.

These hidden costs can come in a form of additional consultations, travel, and phone call expenses. When these hidden costs pile up, you’re in too deep to back out from the project.

Always ask for a transparency report on all costs involved so there will be no unwelcome surprises in the end. Use tracking apps to monitor the tasks and the time spent on each task.

effective software outsourcing strategies

Minimizing the Risks of Software Outsourcing

Choosing to outsource your software development process will require some careful planning and research. Here are some tips you can follow to make the outsourcing process easier for you.

Cheapest may not always be the best

While your goal as a company is to minimize costs to increase profitability, choosing the cheapest you can find might not translate to better quality output.

Check out reviews and company ratings and get as many recommendations as you can from within your industry. Choose an outsourcing company with a great reputation for quality and one that offers a reasonable price in the market.

Be Proactive

When everything seems to work out well, it can be tempting to completely trust in the process and go with the flow. Trust is invaluable in this type of transaction. However, it is important to always keep your finger in the pulse.

Be present during video conferences and meetings. Always update yourself with the latest changes or developments in the project. No need to micromanage. Make sure to check if requirements were met in every milestone of the project.

Weigh your Options

Software outsourcing is an effective approach to focus on your core business, reduce costs, and get access to software experts. It all boils down to the crux of the matter, choosing the best outsourcing vendor.

Define all the important operations that you want to outsource. Research as much as you can; weigh all the pros and cons before you dive into outsourcing software development.

For software projects that require not only tech experience but in-depth management, you need an outsourcing partner that you can depend on.

Here at Full Scale, we take the headache out of the recruitment and deployment of software developers. This allows you to focus on what matters most, growing your startup. We have a wide pool of developers with expertise in mobile and web development.  Schedule your FREE consultation so you can start assembling your Rockstar software team today!

Contact us now to start building your team!