Top 5 reasons to outsource software development

However new or old your business is, how you get into software development Is a complex, long-term decision. Your options include hiring an in-house team, outsourcing, or a hybrid mix of the two. Is software development your business or is your business defined by your software? If you have a strong case for keeping an in-house team or a hybrid mix. In most other cases, outsourcing is advisable.

According to Deloitte, companies outsource software development with the following objectives in mind.

1. Reduce costs and overhead – 59%
2. Focus on business core competencies – 57%
3. Enhances capabilities – 47%
4. Critical to business needs –  28%
5. Access to intellectual capital – 28%

Deloitte cites enhancing service quality as another of the most popular reasons to outsource tying into customer support hotlines. This is a valid point, but it’s not specific to software development. These reasons serve as a pretty guideline for when outsourcing is a good idea. As you can see, the reasons for outsourcing often overlap with business requirements worth elaborating upon.

Startups are often cash-strapped even after succeeding in their recent funding rounds. Larger companies have budgets, too. Cost reduction is a major theme in outsourcing because most IT staff are able to perform their jobs wherever they may live. Costs of living and doing business vary widely by location. Wages, overhead, and benefits for an in-house employee in Silicon Valley can run 2-4 times the cost of outsourcing to an equally skilled developer in Europe. 

There’s more to the equation than hiring an in-house software team. You’ll need the office space, hardware, software, organizational structure, and long-term plans with ROI projections to make this a viable investment. So, as many companies start with a Minimum Viable Product, it can also be a good idea to start with a Minimum Viable Office. Once profitable, you might look at having an in-house team, state-of-the-art hardware, and pinball machines.

According to Warren Buffett, “You should only invest in what you know… and nothing more.” Though not a top technologist, he’s done very well as an investor. The wisdom of his words is reflected in why 57% of companies outsource, so they can focus on their core competencies. If your business isn’t a technology company it likely doesn’t have the internal resources to rapidly become one. 

Some examples of companies that outsource might help make the argument. Starbucks sells coffee, so it outsourced its app. Their app was so successful it almost single-handedly dragged the business world into the mobile market. A slight exaggeration, perhaps. Before it was acquired by Facebook, WhatsApp extensively relied upon outsourcing. Google has more outsourced contractors than employees, Many companies do rely upon outsourcing devs.

In a tech-driven world, it should be no surprise that skilled developers are in high demand. Depending on where you are located, people with the skills you need may be in low supply. Software developers can perform their jobs anywhere. Any company, large or small, not thinking “globally” is at a major disadvantage with both available skill sets and budget. 

This ties back to budgeting issues and warrants reading up on the matter of Purchasing Power Parity.

Universally, businesses need to keep pace and remain competitive in an increasingly tech-driven business world. This portends a long-list of potential business features, tools, and resources. Twenty years ago, this started out with the need for companies to have their own web sites. Ten years ago, companies started rolling out their own mobile apps. Now, companies are looking for new ways to use and protect data, automate job functions, and more. Dev outsourcing can also make it easier to plan for new technologies earlier. They are always watching for tools, ways to automate work processes, and what’s getting attention at the top IT trade shows.

Outsourcing for intellectual capital is another reason to outsource that can save years, tons of money, and a lot of headaches on many projects. You’re partnering with someone who has already done what you want to do. In customizing it for your business, they are supplying the technical expertise and you are supplying the business expertise. The two must work together in order for the software you need to fulfill your objectives. This keeps your specialists focused on the work they love and do best while also increasing their technical knowledge.

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Does the runway for your newly-funded startup need a boost? Have you decided that your business needs new software to remain competitive? Maybe your business needs just a few highly specialized IT staff? Perception Box can help you with all three scenarios, and more. Our blog will provide you many more reasons to outsource software development. We focus on building and scaling skilled software teams to reduce your risks and overhead across the entire hiring and onboarding process.