It costs much more to build an in-house team than outsourcing software development services through a third party service provider.
What are Startups and Small Businesses doing to Outsource?
Startups choose outsourcing over hiring a software development team in-house for many reasons, including:
- Access to rare skills, knowledge, and experience
It can take months to hire in-house software developers, as the global shortage of developers is $8.5 trillion.
Many large corporations have engineering positions that remain vacant for several months. This is especially true for those who are skilled in rare programming languages and/or niche expertise.
In the current economic climate, there have been many layoffs of tech workers. Despite the fact that there is still a shortage of developers, the overall job market situation has improved doyantoto.
- Flexibility and scalability
Outsourcing allows you to scale up or down your software development team at any given time in order to achieve the desired results.
You can choose a fixed price, time, and material model or a team engagement model depending on your project requirements to save quite a bit of money compared to paying in-house.
- Save time and money
Outsourcing means that you don’t have to spend weeks or days building a team of software developers. You are saving your time and protecting your financial resources, since time is money.
Don’t be tempted to choose the lowest-priced outsourcing vendor. Before you commit to software development, make sure that the vendor is competent and qualified.
Every startup is different in terms of product, tools and development time. Before you start looking for an outsourcing vendor, make sure to analyze your requirements in order to choose the right vendor for your project.
How to reduce the top risks and challenges of outsourcing software development
Outsourcing has many pros that outweigh its cons. But there are risks.
- Improper vendor evaluation
You should review their past projects and ensure that they are able to work with the technology stack you require when choosing a vendor for software development. A project that is purely based on ratings and rates will not succeed.
- Poor communication
Communication between vendors and clients can be negatively affected by time zone differences, poor language skills and cultural differences. All of these factors can be overcome if:
– There are some overlaps between the vendor and client’s working hours
– All review sessions and calls are planned in advance
– A dedicated project manager acts as a liaison between the client, the development team and the client
- Intellectual property concerns
Tech entrepreneurs are concerned about intellectual property safety. When choosing an outsourcing partner, make sure to review their security policies, data loss prevention system, and data processing methods. Additionally, signing an NDA agreement with your vendor can help protect your intellectual property.
- Hidden costs
Your project budget could be impacted by overhead costs. A faulty collaboration model can lead to this. A project with clear requirements and a fixed price is a great fit. When you want to concentrate on your core business and essential processes, the dedicated team engagement model is a good fit. The time and material model is useful when there are multiple iterations.
The right engagement model will optimize your budget and reduce the chance of unexpected surcharges. Ask your vendor to detail the hourly rate and fees they charge for each service when you draft a contract.
- Code uniformity
Uniform code will simplify code maintenance and make it easier to get a team of people to fix bugs. You might have to rehire your former contractor for additional maintenance and support.