Do you really need to outsource your software development?
Outsourcing software development has become a highly cost-effective business strategy, with numerous companies offering services at various price points. The market pressure to innovate and create new revenue streams from digital products and services, especially leveraging GenAI, continues to drive substantial growth in the outsourcing sector. As of 2023, the IT outsourcing market is a major revenue driver in the IT Services sector, generating approximately $395 billion and still expanding. With so many companies competing for your business, the question arises: do you really need an outsourcing service?
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Most decision-makers looking for such services are driven by one of three main reasons:
- they don’t have enough time to do the work themselves,
- the outsourcing option is less costly than recruiting and maintaining an in-house team of developers,
- or the external route is the best way to access the specialist skills and experience that the product needs.
The purpose of this article is to help you decide whether outsourcing is best for your project or not. First, we’ll run through the key decision factors, then summarize the pros and cons of either outsourcing or keeping the project in-house.
Software development outsourcing decision factor #1: Time
Time is always a factor in any project. You have a date or deadline by which you want a digital product – a website, an app, a platform… – and you have to decide whether you can get it done in time. If you have an in-house team with all the necessary skills and knowledge then it’s simply a question of capacity: what else have they got on, and which project is the priority?
One thing is for sure: software development is a complex business and any cut corners are likely to result in impaired functionality or a substandard user experience. In one sense, you shouldn’t rush the work – whatever needs doing, must be done.
Speeding up the process usually involves throwing more resources at the project and in that respect, a third party outsourcing provider might be an attractive option. Time-wise, this is the key plus point for outsourcing: the time you save for your in-house people, allowing them to focus on other – maybe more business-critical – goals.
That said, although the project is likely to go quicker if outsourced, electing good web development company can take time and that ‘recruitment’ process, including the necessary due diligence and getting to know the possible providers and the way they work, must be offset against the other potential time advantages.
The speed with which a provider can get your project underway can be critical to the project’s success. At Boldare, we have a proven track of very quick starts: we started a hugely complex project for BlaBlaCar within just two weeks and we needed only four days to start with Sonnen, the global renewable energy leader (and we provided a fully working app within four months).
Factor #2: Money
One reason software development outsourcing is increasingly popular is that it tends to be significantly cheaper than using an in-house team. As mentioned above, the process of finding an outsourcing partner that is a good match can (and should) be rigorous. But once you have the right partner, outsourcing becomes the less expensive option.
Aside from the cost of recruitment, an in-house development team carries the following additional costs:
- Salaries and bonuses,
- Equipment and software licenses,
- Taxes and other deductions,
- Benefits and expenses,
- Training,
- Accommodation,
- Office space,
- IT architecture and other necessary infrastructure.
If you don’t already have an established in-house team, then for a single project, outsourcing is probably the most cost-effective solution; it’s only over a longer (multi-project) relationship that an in-house team might compete on price. However, there are other benefits to such relationships (such as opportunities for knowledge and skills transfer) that can balance out the money equation.
Why outsource software development -factor #3: Specialist skills
One of the key differences between a great and a mediocre digital product (or no product at all!) is the skillset of your development team. Potentially, the outsourcing route gives you access to a world of skills and expertise, from JavaScript to .NET to AI and machine learning. What’s more - some of the software development companies can help you with design and UX/UI part of the project. This is super handy when it comes to the creation of whole products.
One thing an external provider can potentially offer is a full range of dedicated professionals, each with more varied experience than any in-house developer is likely to acquire.
For instance, at Boldare, if the project needs it, we can deploy frontend developers, backend developers, full stack developers, GenAI developers, QA engineers, business analysts, agile coaches and scrum masters, digital strategists, visual designers, interaction designers, UX designers, information architects.
We also provide business support in the form of our CTO as a Service service - each of our partners receives this support for free. It’s a service that helps to build products in a holistic way, not only paying attention to the technical side of the endeavour.
Arguably, developing your own in-house talent is always a good investment but it can take months or years. There are many specialisms within the world of software development – the key is to understand exactly what expertise is needed for your project and if you don’t have it in-house, look at outsourcing.
Factor #4: Methodology
Skills are essential but so is the the specialist context in which those skills must be used – a broader understanding of how software development projects are managed, and how to best ensure seamless cooperation between outsourced team and client representative.
What this comes down to is the project method you use for your digital product. Much has been written on the differences between the classic (but obsolete) waterfall approach to such projects and the more contemporary agile methodologies. Frameworks such as scrum are perfectly suited to software development, outsourced or not.
Scrum enables a clear focus on the business and user needs as the foundation of development, then ensures close and focused teamwork, producing tangible iterations of the product at regular intervals or sprints (usually between one and four weeks, depending on the nature of the iteration and challenges to be overcome). For more differences between waterfall and agile, read our article: Waterfall vs Agile.
For outsourcing, scrum offers another benefit in its close working between client and provider (the client representative takes the role of Product Owner and is a full member of the scrum team for the project) and open and transparent communication (here at Boldare, the Product Owner has direct access to every team member – in other words, there’s no ‘gatekeeper’ project manager role, if the client has a question about the UX, for example, they simply talk to the UX designer).
Scrum enables the creation of products in small but regular iterations. Thanks to this approach, after each stage there’s a chance to change (if necessary, obviously) the roadmap and further improve the product before it is released to market. For more insights on how scrum works for software development, see our article on how to build successful apps using scrum development.
Outsource development team - factor #5: Culture
‘Culture’ in a workplace can be defined as the way we do things around here. The question for any business looking to develop a digital product is, do you have the right culture to successfully develop that product or would you benefit from outside input. The ideal circumstances for software development can be described as a ‘digital culture’; i.e.
- Innovative and risk-taking; open to new ideas and disruptive thinking.
- Decisions are taken quickly, based on data.
- A flatter, less ‘silo’ structure; cross-functional collaboration is the norm.
- An outward outlook, open to external partnerships.
- Faced with a problem or challenge, potential solutions always include a digital option.
- Strongly focused on customer and user needs.
If you don’t have this kind of culture, it may be an argument in favor of outsourcing. What is certain, is that outsourcing to the right partner is an opportunity to leverage your software project into a more profound digital transformation journey that more closely aligns your business to the reality of the 21st century.
If you anticipate multiple software projects then the longer term strategy can be leveraged into a process of digitization (switching to digital products and services) and digitalization (using technology to update and improve your business model and processes).
Why outsource software development and why not?
Let’s do a final check and compare these two solutions:
Software development in-house
PROs:
- It makes sense if the team is skilled in agile project management frameworks, such as scrum (that said, few organizations are used to working this way).
- Culturally, the advantage of in-house development is that the team and ‘client’ are both from the same organizational culture and understand each other.
- Proven methods of communication are already established and in use.
- Over long periods of time, for multiple projects, maintaining an in-house team can be cost-effective.
CONs:
- The project will need more time if you don’t already have a skilled and experienced in-house team of developers.
- Definitely more expensive in terms of individual project costs.Skilled developers are at a premium and can be difficult (and costly) to recruit and employ.
Outsourced software development
PROs:
- Usually less expensive, especially if the hired company is operating in a country other than North America or Western Europe - like Poland, for example!
- Often a broader array of specialist skills are available.
- Potentially faster time to market - skilled and experienced outsourced development teams that are specialized in making a specific type of products (let’s say custom e-commerce platforms or MVPs) will do their work much faster and better.
- Potentially a great deal of specialist knowledge transfer which can enhance your own internal ways of working (even to the point of the provider acting as a guide to your business’s digital transformation).
- The chance to implement not only new technologies but also new ways of working through agile and scrum (if the external partner uses them, of course).
CONs:
- Communication can be a barrier depending on how the client relationship is set up (at the risk of repeating ourselves, scrum and other agile project methodologies can be used to ensure close and open comms between provider and client).
- Depending on the location of the provider, communication can be complicated by different time zones and/or languages.
And the answer is…
Answering the question we asked in the article’s title - Do you really need to outsource your software development?:
if you don’t need to outsource - don’t do it.
If you have a great, skilled, cross functional and experienced team that has already successfully created great software, then outsourcing might be pointless. You’re good to go on your own!
But if you have limited access to one of the crucial resources (time, skilled and experienced specialists, money or knowledge) and you want to gain something more than just a mediocre app or other software-related product then outsourcing is a good choice for you. You will get your product and a chance to learn from more experienced experts. It’s a win-win option.
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