What Are the Advantages of Software Development Outsourcing?

Throughout a wide range of industries, outsourcing software development to a dedicated software development company has become a growing trend. But why exactly? What are the advantages of software development outsourcing?

Full disclosure: Yes, this is a service we offer at Baytech Consulting, so yes, we’re in support of it. But we’ve also been at this for a while now, and we have a pretty good handle on why outsourcing software development works so well.

There are lots of reasons why we and others say outsourcing makes sense as the cost-effective choice for software development. Many of the specific reasons come back to one or more of several factors, including focus, efficiency, cost-effectiveness, and access to needed skills.

Of course, those factors play out in all sorts of interesting and unique ways, including the 11 we’ve included here.

1. Outsource Software Development to Stay Focused on What You Do

First, outsourcing software development to a dedicated software development company allows your business to stay focused on what you do. Unless your company itself specializes in software development, this discipline is not one of your core competencies.

Building up the in-house capability is possible, but is it the right idea? Does building out an internal team and all the infrastructure that goes with it truly enhance your mission, or does it begin to distract from it?

Stay more laser-focused on the core of your business by outsourcing your software development needs to a company that can remain laser focused on them.

2. Outsource Software Development to Be Cost Effective

Related to the previous point, it can cost a lot of money to staff up an in-house software development team. Not only do you need to pay premium wages for skilled software developers, you also need to build out additional management capability as well as project management capacity and additional IT infrastructure.

All told, this can be a complicated and very expensive process. And the smaller your business, the harder it will be to absorb these costs.

Let someone else worry about all the overhead of hiring and training and managing the software development team. In many cases, outsourcing to an external, dedicated software development team is the most cost effective approach.

3. Gain Efficiency by Outsourcing Software Development

It hardly matters the size. Hardly any organization (besides those where software development is a primary focus) has the resources to develop the breadth and depth necessary for truly efficient software development. It’s such a specialized field, and by the very nature of your organization you’re forced to hire people with more generalized skills.

That’s because when this project ends, a new one begins. And that new project may require an entirely different approach. If you hired software developers with the exceedingly specific specializations needed for Project A, they may be next to useless for Project B. That’s why in-house personnel tend to be more broadly or generally skilled.

But when you outsource your software development needs to a dedicated software development company, you get instant access to devs with a whole host of skills, both general and deeply specific.

In other words, when you work with us, the conundrum of depth versus breadth is solved. Since software development is one of our core competencies, we have the capacity and ability that you don’t. We can work far more efficiently than many in-house teams we’ve partnered with can do on their own.

4. Overcome Skills and Experience Shortages through Outsourcing

Even companies that are seeking to do development in house face roadblocks to doing so. They may run into a situation requiring a particular programming skill that no one among the staff has. Or they may struggle to maintain a staff with the right combination of skills and experience for the projects on the docket.

Not having the right skills available at the right time is an issue for many businesses, and it’s not for lack of trying. One survey concluded that in 2017 fewer than 50,000 people in the US graduated with a degree in computer science. That seems like a sizeable group until you consider the 500,000 open positions in the field!

With a ratio like that, hiring is challenging. Then, even if you’re the one in 10 that lands a recent grad, they’re inexperienced and may need additional training before they can be completely effective.

Overcome your team’s gaps and shortcomings by outsourcing that portion of the project to a firm that has the requisite skills and experience.

5. Increase Accountability by Outsourcing Software Development

Another way that working with an outside software development company helps your business succeed is by the increased accountability that comes with it. When you work with a vendor, the vendor is contractually bound to deliver what is agreed upon. In this case, that’s functional software with a certain set of features.

Now you may be thinking, “How is that any different than building software in house?” That’s a fair question.

Here’s the big difference: what happens when something goes wrong?

With an in-house team, if the team reaches the end of its rope and can’t solve a problem or deliver an agreed-upon feature, you’re stuck. Either it doesn’t happen, or you have to bring in someone from the outside (like us). But since the outside specialist didn’t build the software, you’re going to lose time and money getting the vendor up to speed on what’s going on. If fixing the problem requires significant reworking of code, you’ll end up losing all sorts of productivity (not to mention money).

But when you outsource to a vendor, you also outsource the responsibility of getting it right. If a vendor can’t figure out how to implement a feature they agreed to create, they have to find a way. That may mean the vendor has to go outside itself to a specialist. But better them than you, right?

Save yourself the headaches that occur when your in-house team hits a wall. Outsource from the beginning and let those headaches be someone else’s problem.

6. Get a Better Final Software Product through Outsourcing

Businesses that outsource their software development to a dedicated software development company often get a better final software product than those that don’t. Again, this comes back to resources. If you’re an enterprise-level business, then perhaps you have the resources to fully staff a development team with knowledge and experience that’s both broad and deep. But most companies can’t staff like this, and even those who can often don’t.

For most firms, then, the in-house team is underdeveloped, under-resourced, and a little more generalist in approach. Your in-house team may be able to provide a solution, but is it the best solution you can get?

Think of it another way. How much do you trust that your in-house resources are keeping up with the latest trends and developments in software development? Do they have the margin needed to do this, or are they too busy with ancillary tasks to keep up on this front?

When you partner with a software development company, you get access to the entire body of knowledge and skill that that company possesses. Since software development is their main focus, they do have the resources to go both wide and deep in the knowledge and talent pool. In many cases, your final software product will be better as a result of such a partnership.

You’ll get software that’s built to the latest industry standards using best practices. You’ll benefit from the knowledge the vendor team has gained in solving problems for dozens of other clients before you. In the end, you’ll get a better product.

7. Get a More Secure Software Product, Too

Cybersecurity has never been more important than it is today. Many cybersecurity threats relate to the internet and web applications, but software vulnerabilities are another big concern.

How big? The National Institute of Standards and Technology (NIST) maintains the National Vulnerability Database (NVD), which catalogs only the publicly known software vulnerabilities. In the last three years, there have been a whopping 46,520 vulnerabilities added to the database, through October 2019! (And in the time it took to finish this article, that number has already risen by 54!)

The NIST has tracked vulnerability statistics for around two decades, and during this period the number of known vulnerabilities has increased at an alarming rate. The last three years have shown some of the fastest growth in known vulnerabilities.

Note that this figure includes only the publicly known vulnerabilities in commercially available software. Custom-built internal software—the kind many large businesses have been building for their own internal use for years—is not immune to this problem. If anything, it’s more prone to vulnerabilities because of the internal, untested nature of the product.

This point, too, goes back to how well you can trust your in-house team to be on the forefront of security in software design. It’s more than most generalists can do well.

But when you partner with a firm that’s dedicated almost exclusively to software development, you gain an ally that is able to stay on the front lines of security. Your end product (whether that’s an internal tool or software available for retail purchase) will be more secure as a result.

8. Reduce Leadership Stress and Workload

Another more intangible cost of developing software in house is the stress and workload that’s placed on company leadership. Even in the largest enterprise organizations, somewhere up the chain from the software development team sits a group of leaders that don’t exactly understand the nature of software development work. In many small to medium businesses, the person directly in charge of the software development team doesn’t even understand this kind of work.

Dysfunction, miscommunication and poor decision-making are nearly inevitable in these scenarios. When upper management doesn’t understand the needs of a department (and that department isn’t able to communicate in a way that’s clear to non-specialists), businesses and leaders take on undue stress and additional work.

Working with an outsourced software development company avoids much of this. Yes, there are still going to be occasional miscommunications, but any vendor worth its fee has successfully solved communication issues like these dozens (if not hundreds) of times. Vendors know that they need to communicate with non-specialists in a way that they understand, and they have proven experience doing so.

9. Control Software Development Project Costs through Outsourcing

We already looked at how outsourcing software development is cost effective compared to starting an in-house department from scratch, but there’s more to the budget story than just that. Many companies discover that they can better control project costs when they outsource than when they develop them in house. Here’s why.

When you work with a vendor software development company, the entire arrangement will be contract-bound in some form. The scope of work, the final deliverables and (most important) the contract rate are determined at the outset. You know what you’re going to pay and what you’re going to get from the outset.

When you develop software in-house, it’s often harder to get good estimates from the start. (Yes, we’re back to the experience point again.) Teams easily over- or underestimate how much time will be needed for the project. To make matters worse, other interested parties may exert influence to change the scope of the project, adding both cost and time. Cost and time overruns are commonplace, and tensions run high.

In many situations it’s harder for an in-house team to say “no” to new feature requests. Vendors don’t have this problem. They’re much better at saying “no,” or perhaps more frequently, “Sure, we can do that, and this is what it will cost you.”

It’s not that vendor-managed projects are immune from cost overruns or scope changes. It’s that vendors like us have the experience to manage these changes effectively, saving you money over the course of the project.

10. Improve Compliance by Outsourcing to a Firm that Understands Your Industry

It seems like compliance issues are everywhere these days. There’s HIPAA in healthcare-related industries, and GPDR affects practically everyone. And of course finance is full of all sorts of regulations and compliance issues.

Whatever compliance issues you face, ask the hard question: how well can you trust your in-house team to build software that satisfies compliance requirements? If you hesitated, even a little, before answering that question in your mind, consider that a red flag.

Some software development firms work in specialized niches, like finance or healthcare or government. Whatever compliance issues you face, you can rest easier when you outsource software development to a firm that deeply understands those issues.

11. Remain Agile by Outsourcing Short-Term Work

Agility or flexibility is another great reason to outsource to a software development company. If your firm plans to develop many iterations of similarly programmed software for years to come, then hiring an in-house team may make great sense.

But many companies don’t work that way at all. Their software development projects are short-term and sporadic. Hiring full-time in-house personnel for short-term projects like these rarely makes the best sense. Once the project wraps, at least some of the team is going to be bored, underutilized or assigned to a project that’s not a great fit.

Outsourcing sporadic or short-term software development projects keeps your organization more flexible. Let your vendor worry about hiring and pacing and right-fit assignments. You’ve got enough on your plate already.

Baytech Consulting: Your Cost Effective Software Development Company

At Baytech Consulting, as a Software Development Company, we take seriously the responsibility of crafting well-built, elegant software for every one of our clients. We understand the issues that you face in seeking to create software that meets your internal needs and your customers’ expectations, and we have a deep bench of experienced software developers that can do exactly that for you.

If you’re looking to start a new project soon, contact us to discuss how we can help turn your vision into reality.