Outsourcing or not outsourcing some particular function is a question that each business faces sooner or later. There are several factors to be considered before turning to outsourcing service providers. And we will mention some of them in this article as well as explain the main advantages and disadvantages a company might face while outsourcing some tasks to a third party provider.
Outsourcing has become a very popular process nowadays in many spheres like manufacturing, accounting, staffing & recruiting, distribution & wholesale and IT sphere in no exception. More than 50% of programming and IT services are outsourced to such popular destinations as India, Eastern Europe, Latin America and Southeast Asia.
Which IT Services are typically outsourced?
- Web app development
- Mobile app development
- Database development or management
- Application support or maintenance
- QA and Testing
Today, most companies consider outsourcing web app development projects due to several reasons:
- Lack of in-house resources
- Faster time-to-deployment
- Cost reduction
- Lower TCO
- Improved business focus
But since 10-20 years ago the cost was the main reason for hiring outside contractors, nowadays companies become more and more aware of the other advantages outsourcing can bring. Today, companies consider outsourcing web development as they are missing the required level of expertise or resources to successfully deliver their projects. They’d rather look for the outsourcing company or freelancers with the state-of-the-art technologies and required expertise than spend time and money hiring and teaching in-house people. There is also sometimes a problem to find and hire the web designers and developers with the needed level of expertise on the local market. Thus many companies decide to find an outsourcing partner who can provide a sufficient amount of the required specialists. Or there might be a situation when there are enough web developers in-house but no graphic designers. Then a company decides to outsource the web design function to an experienced service provider.
It’s a common practice for startup companies to outsource their development projects as their top priority is to release the app to the market fast. The hiring process might take time and efforts that not every startup can afford. While outsourcing the development function a start-up might concentrate on marketing and business development strategy and further promotion of the project.
Let’s sum up the main advantages outsourcing brings to the companies.
Advantages of IT Outsourcing
Access to a pool of development resources — outsourcing opens up a worldwide technology talent pool, providing access to critical IT skills that you might be missing in-house or fail to find locally.
Cost Savings – the major benefit of outsourcing is inevitably significant cost-savings. The rates of outsourcing development companies are much lower than on the local market. A typical company can save up to 60-70% on outsourcing to low labor-cost countries.
Focus on core activities — while outsourcing the web development, the company’s internal team can concentrate on some other business-critical issues like marketing, business development, financial strategy, etc.
Fast time-to-deployment — by outsourcing the development work to a vendor, the project can be released much faster than an in-house team could do. A company can also release several projects simultaneously while integrating an inhouse and outsourced teams.
Improved quality —most outsourcing providers have an independent QA team who checks the accuracy of code and provides bug-free software to the customer. Moreover they can run various types of testing like performance, security, usability, etc. making your application invulnerable and high performing under peak loads.
Cons of outsourcing
In spite of all the advantages the outsourcing provides it has some disadvantages that every company should consider before moving forward with a vendor. The most important are supplier organizational issues, project management issues and geographical/cultural concerns.
Supplier organizational issues – while looking for an outsourcing company it is very important to understand whether it will be a reliable partner, financially stable company, able to keep needed team members with low turnover rate. It highly influences the success of the outsourcing project and its deadlines as well as budget. One of the crucial points in the cooperation is the ability of a supplier to protect client’s intellectual property from being stolen or sold to a competitor.
Project management issues – very often a cooperation between an outsourcing company and a client doesn’t last long as it can be ruined at the very first steps. It can be because of an inability to transfer the work to the provider, lack or absence of transfer knowledge, inappropriate project management both on client and outsourcing side.
Geopolitical and cultural concerns – when choosing an outsourcing vendor it is important to check its location as it might be too far from your country with a very significant time difference and you won’t be able to manage the provider’s team or legal situation in the country can be unstable, not mentioning the locations with a threat of war or terrorism or any other natural disaster like tsunami.
Cultural differences between the two parties, inability to understand each other properly that is poor communication skills or language barriers might also result in failed cooperation.
Thus said, outsourcing web development is a great option for companies of all sizes looking to cut development costs, concentrate on core business activities, lacking in-house resources, however several issues should be taken into account before moving into a cooperation with an outsourcing provider.