Why Do Companies Outsource Software Development?

Last Updated on 2025-03-09

Software development is a time-consuming and resource-intensive process.

And for startups dealing with resource constraints, outsourcing software development is the best way to afford it.

Despite all its benefits, outsourcing development is not an easy task.

First, you must understand why software development is the most outsourced function by most companies. This will give you a better idea of how you can leverage outsourcing for your business.

The Outsourced Development Trend

Software outsourcing has become more popular recently, especially in the tech sector. Companies are expected to adopt digitalization and leverage the latest tech trends. In 2023 alone, the IT outsourcing industry was expected to generate around US$460.1 billion in revenue.

Smaller businesses are driving the software outsourcing trend because they lack the necessary knowledge, capabilities, or means to develop software.

Benefits of Outsourcing Software Development

So, why do companies outsource software projects?

Businesses have several motives for this arrangement, from cutting costs to expanding operations. Here are some of the biggest benefits of outsourcing.

1. Fill the talent gap

Outsourcing development projects has emerged as a strategic solution for companies facing constraints due to the current talent shortage in the US.

By leveraging the expertise of offshore professionals, you can tap into a global talent pool and access a diverse range of skills and core competencies. You can also maintain a competitive edge in the market.

Instead of struggling to find and afford professionals locally, you can partner with offshore development centers, like Full Scale, with the resources and expertise to handle complex IT projects.

2. Cut down software development costs

Building software can quickly become expensive, with projects often exceeding $150,000 in costs, depending on their scale and complexity. Moreover, reworks and maintenance after deployment can further add to these expenses.

This is where outsourcing software development becomes a more cost-effective option. You only need to pay for the outsourcing services you require without the overhead costs of maintaining an in-house team.

Additionally, outsourcing software development helps in avoiding costly reworks and maintenance. 

Outsourcing partners are typically responsible for ensuring the completion of projects according to the agreed-upon specifications and quality standards.

3. Reduce management cost

Managing an in-house team involves paying their salaries and covering costs such as vacation time, benefits, and taxes. Plus, having to report their progress to stakeholders regularly.

When all these factors are considered, the total cost of a new in-house developer for a business can be twice the base wage. 

On the other hand, outsourcing services allow businesses to partner with an outsourcing partner who takes care of these costs, resulting in substantial savings.

4. Increase efficiency

Allow your outsourced teams to focus on specific projects. Here’s why. 

It removes unnecessary burdens from your main operations, boosting the efficiency of your core processes. As you outsource software development, your internal teams can concentrate on their core competencies. 

This, in turn, can lead to increased profitability as the business operates more efficiently.

5. Improve output quality

When internal teams collaborate with outsourced talent, they can benefit from new ideas and approaches that may not have been considered otherwise.

Here are other ways that outsourcing impacts output quality:

• Thorough testing—With an expanded workforce, you get more software testers who can point out possible issues with the product.  
• Higher productivity—Collaboration between your internal and outsourced teams encourages a more productive working environment. Both teams can learn from the other’s technological expertise, leading to breakthroughs and better overall projects.
• Diverse skillset—Outsourcing partners can provide diverse talent specializing in tech stacks, frameworks, and ecosystems. They often have specialized quality assurance processes, ensuring that the final product meets high standards and is defects-free.

Software development outsourcing opens up new opportunities for your business. It gives you more flexibility in choosing candidates with better compatibility with your internal team. 

With the right combination of outsourced and internal team members, you improve the team’s agility, innovation, and productivity in developing software.

Outsource Software Development With Full Scale

Looking to scale your startup’s software development team? Full Scale can be your trusted partner.

Our software dev outsourcing services offer immediate team expansion. We can reduce the time and effort typically required for recruitment, hiring, and onboarding. 

With over 300 full-time developers, we provide massive developer engagement, ensuring your project receives the attention and expertise it deserves.

Advantages of Outsourcing Software Development in the Philippines

• Diverse talent pool—Outsourcing in the Philippines allows you to find specialist developers with high proficiency levels. You can overcome obstacles such as the high cost of hiring in the United States and the challenges of finding niche expertise locally.
• Lower labor cost—The Philippines has a lower living cost than other countries. This allows you to access a wider talent pool and recruit experts at a lower rate. 
• No long-term contracts—For example, in the aftermath of layoffs or budget constraints, outsourcing allows companies to rent the expertise they need without the long-term commitment of hiring full-time employees.
• Flexible arrangements—You can hire more experts and integrate them into your existing team seamlessly. Full Scale developers are trained to adapt to all kinds of collaborative dynamics.

Finding Specialists through Outsourcing

Outsourcing provides access to experienced software contractors who can build solutions from scratch or augment existing teams with their expertise.

This is especially valuable for companies looking to expand their tech capabilities without the overhead of hiring additional in-house staff.

Outsourcing allows companies to tap into the knowledge and experience of seasoned professionals, including CTOs and other senior developers, who may not be readily available in the local market.

This can lead to more efficient web development outsourcing processes and higher-quality business outcomes.

Outsource Your Software Development Project