Software development outsourcing has thrived on the premise that it leads to significant reduction in operational costs for the same work that has been done in-house since time immemorial. However, global software delivery models are complicated initiatives, with language barriers and cultural nuances adding to the complexities.
According to Statista, the European IT outsourcing market is expected to reach $103.9 billion by 2021, a growth trend which will be observed globally. This figure includes IT infrastructure outsourcing, IT application outsourcing, and IT administration outsourcing.
Owing to lower cost, as key strategy, businesses outsource overseas to remain competitive and consolidate their market position. Furthermore, an effective transition to outsourcing software development can help organizations unlock the true value of an outsourced software development engagement such as access to a vast talent pool of expert developers along with laying the groundwork for a long-lasting partnership.
This blog attempts to discuss the various benefits of software development outsourcing from the perspective of organizations looking to make the switch to an outsourced software development business model. Since it is a common misconception that only lower cost drives businesses towards IT outsourcing, here are the top 10 benefits of software development outsourcing to a third-party vendor:
Editor's Note: This article was published in 2020. Read updated version of this article, Benefits of Software Development Outsourcing in 2022
- Agility with Quality
Anecdotal evidence suggests that agile methodology goes a long way in helping to achieve great product quality. An agile software development environment ensures greater collaboration between businesses and cross-functional IT development teams, leading to unmatched speed, efficiency, and productivity. An agile team focuses on detecting and fixing bugs to ensure that the final product meets the business needs of the client. The agile methodology followed by a highly disciplined CMMI Level 5 outsourcing software company helps establish a fail-proof process to ensure that the sign-offs promised in the service level agreements (SLAs) are met.
- Expertise – the Indian way!
India is a front-runner in the global software development business. According to Gartner, the four main reasons that make India the most sought after outsourcing destination are: availability of highly skilled developers, low labor cost, market size, and innovation. India is a strong competitor to other Asia-Pacific countries in terms of maturity, market penetration, resource pool, and brand. Talking about academic skills, India produces 1 million technical graduates annually, with specialization in cloud, analytics, software application development, and digital marketing. Furthermore, the Indian IT/ITeS industry has a strong and established customer footprint in North America and Europe with its clientele spanning across industries such as healthcare, manufacturing, retail, BFSI, media and entertainment, among others. According to the EF English Proficiency Index, India ranks third in Asia on English proficiency. In fact, many people consider English as the first language in India. The English language has developed and spread to the point in India that it is spoken in the country at par with the rest of the English speaking world. With an average age of 29 years, India is well on its way to becoming the country with the youngest and largest employable population. By the end of 2020, it is estimated that India will have around 2 billion English speaking people.
- Future-Ready Approach
In the past couple of years traditional outsourcing has transformed into disruptive outsourcing. Emerging technologies such as the Internet of Things (IoT), AI/ML, 5G connectivity, and blockchain are accelerating change within the organizations that have the audacity and skill to leap over the technology chasm. The modern market scenario demands that businesses should digitally transform into future-proof enterprises to keep pace with the rapid technology shifts. A Gartner report has already predicted that by 2020, 7.6 billion people will have 100 billion connected devices that will run 1 trillion apps. An experienced outsourcing software vendor can bring to the table, the necessary technical expertise to design applications with a futuristic approach, so as to meet the unique business needs such as leveraging predictive analytics to identify events that trigger unexpected surges in traffic.
- Huge Cost Saving
Software developers based in countries like India work at salaries lesser than what their counterparts command in countries like the United States and the United Kingdom. According to Accelerance, the leading US-based global outsourcing advisory company, businesses can attain a competitive edge through outsourcing, as the skills and expertise that cost $100/hour in the US market can be found at an equivalent standard for just $55/hour offshore. Even by taking into account the most conservative estimates, a business can save tens of thousands of dollars a year in rent, hardware depreciation, product support, employees’ training, and regular employee benefits. Through outsourcing, a business can bring down the overall application development cost from both the standpoint of labor cost and the total cost of ownership.
- Fast Delivery
A full product development cycle can consume a whole lot of time. The amount of time required for the development of an application depends directly on the scale of the project and the unique business use case. While a native or cross-platform hybrid app can be developed in a few months, it could take several years to build a complex platform that deploys technologies such as AI and machine learning. Outsourcing an enterprise-grade application project to a specialist firm can rapidly accelerate the time-to-market that would otherwise take long to develop with in-house teams. Augmenting an in-house team means going through the hassles of recruiting and onboarding processes, which can be time consuming. In accordance with the prevailing industry standards, a reliable software development outsourcing vendor can deliver a minimum viable product (MVP) in up to 12 weeks by following an agile and nimble-footed approach. Hitting first-to-market is the key to success for any startup due the omnipresent risk of idea theft.
In outsourced software development, saving time and cost are the ideal outcomes in choosing a one-stop-shop vendor. A far cry from best-of-breed, in a one-stop-shop business model, streamlining of communication between the vendor and the client, presence of multi-faceted processes in one place, and availability of a robust talent pool of developers with in-depth knowledge across technology stacks can help unleash infinite value across the entire project lifecycle. A one-stop-shop software outsourcing company provides all the product development services under one roof encompassing ideation workshop, strategy building, UI/UX design, product development, and QA testing along with maintenance and support services.
- Focus on Your Idea
Having an innovative idea always lends advantage to a business; however, losing focus on your idea can prove to be counterproductive. This is precisely where most startups and young entrepreneurs go wrong by diverting their limited resources and time on the application development and the technologies involved. By software development outsourcing, a business can free up energies to focus more on the core business idea and activities such as brand building and research and development to provide value-driven services to its customers. As for the technology part of software development, it is better left to the outsourcing partner, who can provide advice and guidance to business leaders to help them through cutting-edge technology trends such as AI, data analytics, and cybersecurity to implement the best-fit solutions.
- Universal Fit
It is a common myth that software development outsourcing is only beneficial to large enterprises. But in reality, the size of a business has nothing to do with outsourcing. Businesses across scale, from startups to Fortune 500 companies outsource their software development projects. While large enterprises benefit by hiring offshore development teams to mitigate locational risk by distributing the workforce, small and medium businesses outsource to cut spending on human resources, IT infrastructure, and bypassing new employee hassles. Whatever the business use case, industry vertical, technology, or scale of the project, software development can be outsourced to a third-party vendor to drive and accelerate innovation.
- The MarTech View
According to a new survey data by WARC and BDO, the global martech technology market size has increased by 22% year-on-year to reach an estimated $121.5 billion in 2020, with North America and the UK accounting for more than half (54.2%) of the global total. In the North America market in particular, the increase in martech budget appears to be coming from outsourced marketing technology. Outsourcing digital marketing, SEO, and social media management for branding, lead generation, increasing sales, and customer engagement is now commonplace. Even businesses having huge budgets prefer to outsource digital marketing to an outsourced marketing specialist, who would be better equipped to leverage technology to maximize results in comparison to an in-house team.
- Trusted Backstage Partner
With increased adoption, outsourcing is gradually coming of age. More and more businesses now outsource IT support and maintenance services which allows them to focus on their core competencies. Businesses running on complex legacy systems and applications are often overloaded with maintenance and support of software applications, which leaves them no time for development and deployment of new software systems. The only solution to this problem is to outsource software application maintenance and support to a trusted technology partner, who can provide real-time support and maintenance of systems, timely upgrades, and migration while ensuring compliance management and cybersecurity.
Kellton Tech – Reliable Software Development Outsourcing Company
Today’s IT landscape is ridden with skill shortages, budget constraints, and constantly changing technologies. To address these challenges, an exceptional team is required that can seamlessly deliver application development, maintenance and support. However, despite the global market being awash with world-class IT development companies, very few have the breadth and depth of skills and resources to address these demands. Kellton Tech can help you leverage new found agility to automate and consolidate applications to free up systems, costs, and talent to fuel your digital transformation.