Outsourcing software development means recruiting a third-party service provider to take care of your software development needs.
The software development outsourcing partnership can be done through a third-party vendor, a tech consulting agency, a subcontractor, or a freelancer.
There can be a difference between outsourcing and consulting. With outsourcing, the client has more power in what they want to do in the project. The outsourcing partner comes in and delivers the tasks.
With consulting, the consultants are more involved in strategy work through knowledge-sharing and recommendations. Sometimes, they do the coding work as well.
Nowadays, consulting and outsourcing companies don’t clearly distinguish between these two concepts. Depending on the job, they will play different roles with different clients at different times.
Different types of outsourcing:
Different models of outsourcing:
Before you decide to delegate your software project to a third-party, let’s look at the pros and cons of outsourcing software development.
Hiring a new employee, especially those in tech, can cost a company a lot of money. But this must be done because the job market for software engineers, especially those at the mid-senior level, is highly competitive.
On top of the cushy salary that software engineers usually have, they also receive generous employee benefits such as health insurance, fancy office equipment, tuition reimbursement, wellness program, performance bonus, paid sick days/vacations, etc.
This hasn’t even covered the company’s costs to hire new employees such as employment taxes or office expansion.
Joe Hazima has come up with a metric for estimating the extra cost of hiring a fully functioned employee, which is the salary base times 2.7.
Outsourcing software development lowers the cost of onboarding employees and saves your company a lot of money in the long run.
Especially if you do offshore outsourcing, which is subcontracting services from a distant country. Your software development expenses will be much lower in countries where the costs of living are not as expensive as the country where your business resides. Make no mistakes, just because the expenses are lower, doesn’t mean that the quality of service is lower.
In pre-Covid time, outsourcing outside the region or country might not be popular because many businesses require their tech consultants to work onsite.
Now that remote working has become the norm, companies have access to global talents who can help them manage tailor-made software development projects.
Technology consulting companies have cultivated expertise and experience from working with a variety of clients in different industries.
By working with a trusted outsourcing partner, you can be assured that the product quality is top-of-the-line.
For instance, here at Reactron – your partner in software development – we mostly hire developers that have at least Mid-Senior levels of expertise in software development. We also diversify our tech stacks to handle your various software development needs.
The cherry on top? We’re also your Project Manager. You’ll get to minimize the time dedicated to supervising the project and spend more time building your business.
Get things done quickly and effectively.
The biggest advantage of outsourcing software development is that your projects can be finished very quickly.
Your team gets to focus on the tasks that scale up the business while the software consultants take care of pending tasks that you don’t have the time or resources to spend on.
It will also benefit your in-house Dev team because they can concentrate on doing what they do best. If your software requires technologies that are outside your team’s knowledge, it can take a long time to learn new skills and apply them. It’s better to consult experts in the field and let them help you build the software that you need.
There’s also the flexibility in deciding your starting point and ending point when outsourcing software development. For example, it’s hard to say goodbye to your in-house software engineers even when you have no projects for them anymore, because you’ve invested so much time and money into them.
There’s also no interruption during the process due to sick leave, maternity leave, or parental leave.
Long hiring process
On average, a job posting for the Software Engineer position is open for 64 days. It can take approximately 45 days to hire a team lead, 30 days to hire a mid-senior developer, and 15-25 days for lower-level developers. More details below:
Some technologies take a longer time to hire than others. For example, a senior position for Go, Python, C++, or RoR developer can take up to 8 weeks to recruit.
While the recruitment process takes place, you already have to spend money to make sure that you get the best candidates. For example, you’ll have to invest in a good HR team or recruiter, marketing activities to present a good employer branding, and run ads to make sure that your job listing reaches all potential candidates.
The HR and tech teams usually exert themselves in making sure that their candidates are the right fit for the company: skills-wise, culture-wise, and personality-wise.
Even so, this is incredibly difficult to tell through merely 2-3 rounds of interviews and assignments. The biggest mistake a company can make when it comes to hiring is choosing the wrong person.
Risky employee turnover
Your company could spend all the resources on the developer just to find out that they’re not a good fit. Or worse, if the person decides to leave after only 3 months of working because they’ve found a better offer.
Rightfully so, because it’s a competitive market out there. In the end, you’re the one who has to take the brunt. All your time and effort spent on training your new employees – down the drain.
With outsourcing, your consulting partners are more obligated to finish the job because it directly affects their portfolio and reputation. In some cases, there are even penalties for those who cannot deliver.
With this said, it doesn’t mean that your outsourcing relationship is short-lived. Even though the most common form of outsourcing software development is project-based, there are other types of outsourcing such as a dedicated team or staff augmentation.
More on different types of outsourcing software development and how to choose the right one for your company on our blog – How to choose your software outsourcing partner?
It’s hard to share your precious company’s data with a third-party vendor that you found on the internet. Especially when you know that you’re developing cutting-edge software that no one has ever seen before.
In offshore outsourcing, companies can run the risks of miscommunication due to different time zones, language barriers, cultural discrepancies, and location restrictions.
These risks can lead to serious issues such as:
Outsourcing software development could send a signal to your Dev team that their jobs are replaceable. This can cause distrust and reluctance from your in-house developers, which prevents them from effectively collaborating with the outsourcing partner.
On the other hand, your outsourced people might feel like they’re not part of the team. If they’re not updated with the right information at the right time, it can heavily affect their performance and productivity.
You should outsource software development if:
Did you check all the boxes? Then it’s time you consider outsourcing your software development needs.
If you have a project that needs to meet the deadline soon but not enough resources to spend on it, let Reactron take care of it!
We are a tech consultancy with demonstrated experience in Mobile Development, Web Development, Back-End Development, and Infrastructure. Talk to us about your challenges and how we can help you fulfill your software needs.