June 7, 2024

Why Are More Businesses Outsourcing Software Developers?

Nadya Bakhur

Researcher, Technical Writer


Outsourcing software development

Nadya Bakhur

Researcher, Technical Writer


Outsourcing software development

As digital transformation becomes a competitive edge and survival imperative, software development outsourcing becomes an integral part and driver of advancement and growth. The practice is adopted by companies around the world, from start-ups to huge corporations.

In this article, you'll learn the key reasons to outsource software development and the numerous benefits IT outsourcing can offer your business.

Key Takeaways

  • Outsourcing software development can significantly reduce costs while providing access to a global talent pool. It enhances flexibility and scalability, allowing businesses to adapt quickly to market changes.
  • Partnering with a professional team for custom software development ensures high-quality deliverables and accelerates time-to-market for projects.

A 2022 tech staffing report revealed that more than 68% of companies spend a month or more recruiting a single developer, and most of the time, one in five recruits ends up being replaced. This results in delays and further costs due to the hiring and training of new employees. Business experts said that outsourcing skilled talents can help solve this problem. The same report also showed that software development outsourcing will increase by 70% between 2022 and 2023. Despite these challenges, companies are still actively recruiting software developers because they play a vital role in the business world.

Therefore, more companies should consider IT outsourcing to quickly address their technological needs. Maryville University shared how software developers are responsible for determining the software needs of the organization by evaluating their existing systems. From there, these professionals create new software designed to address these potential shortcomings. They are also the ones who introduce the software to the organization and provide necessary training to ensure the smooth adoption of the software.

Ultimately, software developers always promote the development of efficient systems to improve a business’s performance. Companies that fail to adapt because of the lack of software developers will eventually fall behind their competitors.

Outsourcing Software Development in the Nutshell

Outsourcing a software development project or just a part of it is basically hiring a vendor company to provide services related to software development within your requirements. Outsourcing partner provides you with its specialists with hands-on experience fitting your specific project.

Software Development Outsourcing vendors deliver quality services and an opportunity to save time and budget on recruiting talent to:

  • establish web or mobile development in-house;
  • overcome delays in product delivery;
  • get rid of bugs;
  • accelerate your growth in digital.

NEKLO has been in the technology industry for over ten years and seen many businesses that demand software development without fully realizing its challenges and great rewards.

We’ll start by clarifying the essence of the most common engagement models that software outsourcing vendors offer.

Types of Outsourcing. Cooperation Models

Custom web development and other types of information technology outsourcing have 3 basic models: staff augmentation, project-based model, and dedicated team.

We’ve made a brief overview of them to help you map out your software development outsourcing strategy in advance.

Staff augmentation

Staff augmentation (also referred to as team extension) as a model of IT outsourcing means attracting remote professionals to augment the staff of your company for a certain period of time.

Staff augmentation makes sense when:

  • your existing staff is not enough to complete the project or the development process is slowed down;
  • you need specialists with advanced or rare expertise to plug the skill gap in your team;
  • you are looking for an experienced consultant to train your staff members or to lead your software development project requiring specialized skills.

Project-based model

You might have also come across this model being called as managed IT services and full-process outsourcing.

In the case of a project-based cooperation model, the outsourced development team takes responsibility for your project from start till launch, including team organization, project management, and quality assurance. Your management efforts can be minimized and time liberated to focus on core business activities. However, other models provide a much faster setup.

Project-based model is your choice to opt for if:

  • you need full-cycle development for a small-scale project or a project that you don’t have development expertise for;
  • you can’t monitor project development stages due to being overloaded with other projects, etc;
  • all the project requirements are clearly defined and are not likely to change.

Dedicated team

Dedicated team model implies hiring a team of IT specialists needed to satisfy the requirements of your project. The model allows you to fully control the work in progress as well as the intermediate and ultimate results.Your hired dedicated team integrates with your in-house team or your another vendor to work on an outsourced part of the project

Having worked with quite a big number of clients, we have identified the common need in having rapid access to development process expertise and expert practices.

That’s why at NEKLO we offer the dedicated development team engagement model as a standalone service. We have several pre-assembled teams ensuring accelerated project development ramp-up and delivering all the important features that this cooperation model incorporates.

The dedicated team model will suit you in case you have:

  • an established development team but lack resources or essential expertise;
  • flexible project requirements and a team that is supposed to scale during project implementation;
  • limited time or budget to hire and train an in-house team for the project.

4 Key Reasons to Start IT Outsourcing

Of course, there are various pros and cons of outsourcing software development. Business owners are often afraid to face low-skilled outsourcing staff, the risk of information leakage, or delays in responding and resolving issues.

However, the benefits outweigh the drawbacks. Thus, apart from having a more efficient hiring process, here are four reasons why you should start outsourcing software development services.

Reduces potential overhead costs

One of the main reasons why companies prefer opting for outsourced IT services is because it allows them to control their costs. With outsourcing, you only need to pay for the work that is done and hire IT solution companies when you need them, which reduces your human resources costs. Outsourcing software development services also means fewer expenses on onboarding and training employees. You will also save money because you will no longer need to spend on renting office space and purchasing office supplies and equipment. Because of the above, almost 70% of businesses outsource their software development rather than employ in-house developers.

Accelerates product time to market

Another benefit of IT project outsourcing is that it speeds up the development process of goods and services. Our previous article on ‘Outsource IT’ explained that when you outsource a software development project, you can significantly reduce the time you spend on the product development stage and introduce your product to the market ahead of your competitors. This is because hiring skilled professionals for a specific project allows them to finish the task on time without compromising the output’s quality. When you release your product before your competitors, you can build a long-lasting competitive advantage that will be beneficial to your business.

Expands your talent pool

The US Bureau Of Labor Statistics revealed that the employment of software developers is projected to grow 22% from 2020 to 2030, which is faster than the average for all occupations. This suggests that demand for highly-skilled software developers will increase, and businesses may have difficulties hiring the best candidate in the future. If you cooperate with an IT outsourcing company, you’ll be able to expand your pool of talent and hire experts regardless of their geographic location. Instead of hiring software developers just in the US, outsourcing allows you to find and hire highly-skilled developers from different parts of the world.

Allows you to focus on core business competencies

Although being able to accomplish various tasks on your own is commendable, it’s more efficient to spend your time doing whatever you’re good at. Let experts such as software developers accomplish projects that are within their expertise to ensure that you’re delivering the best product and service possible to your customers. For example, Slack outsourced to user interface specialists who helped them build the popular messaging application that we know today. If your company doesn’t specialize in software development, consider opting for an IT outsourcing service since this will allow you to focus and grow on your core business competencies.

How to Outsource Software Development Projects the Right Way?

If you are thinking of starting web / mobile development for your business or already have a similar project running, it involves turning to software development services as a rule.

The question that is always in the air is how to find and choose a reliable technology partner and outsource software development in a proper way? We have made up a list of what you can do before making a decision to win in the end.

1. Shortlist the candidates

Make up a list of 5 to 7 software development companies and draw up a table to structure the information collected about them.

Here is an example:

Company NameRates (possible discounts)Solution OfferedReferences from the former ClientsCompany 1Company 2

Organizing information in a table will help to easily compare and correlate proposed conditions, see every detail clearly, and evaluate each company’s offer faster.

2. Take time to check reviews on the potential partner

You can’t trust your business to a company that is not able to sustain itself financially or lacks clients. Carefully study the information on a company’s website and social media, check if the followers’ engagement is well organized.

Building a strong social media presence takes time and effort from a company, so if the most of feedback is positive and your potential partner is competent at building relations with their followers, it’s a sign of proficiency and stability.

3. Define product requirements and draw up specifications

What you can do to get the product the way you see it? To allow your potential partner to easily grasp the idea of what your solution will serve for and how it should function:

  1. Gather product requirements. It will help to specify what your solution needs to do.
  2. Draw up a detailed specification. It will serve to clarify how your end product meets the requirements.

Ask the outsourced team to participate in defining specifications to help make it a valuable guide on how to design and develop your solution. The vendor company can bring new ideas on what your product should look like and what strategy to adopt so that your solution can deliver benefits continuously.

Wrapping Up

The Internet and a vast variety of communication and management tools available today make it possible to outsource the development of your innovative web or mobile solution to an expert from any part of the world. Just try googling “custom software development company US” or the like to see some of the leading technology companies that can help you.

The practice of software development outsourcing is one of the fastest ways to get your software product delivered by an experienced team and on time.

Our team welcomes you to consider NEKLO as a candidate to take over your project and empower the development process pipeline. We’re ready to assist.