Chapter 2: Does Outsourcing Work For Us?

IT outsourcing is booming, with global revenue set to grow nearly 70% between now and 2028. 

Your business has likely heard the buzz about outsourcing. But while you may be curious about this option, will it truly work for you?

We’ve already gone over the basics of software development outsourcing in Chapter 1. Now, we’ll delve into what types of companies and industries make for the best use cases for outsourcing. 

In this way, you can determine if outsourcing will meet your company's key IT objectives.

In-House Development vs. Outsourcing

Pros

In-House Development

• 100% control of teams
• Aligned cultural and company fit
• Direct line of communication 
• Airtight quality control and compliance 
• Holistic product support

Outsourcing 

• Tap into top global talent
• More control over costs 
• Rapidly scale up and down
• Ampler technology expertise to leverage
• Proven development processes 
• Hands-free management and logistics
• Shared project risks

Cons

In-House Development

• Difficulty in capturing top talent 
• Costs can be sky-high
• Lengthier time-to-hire 
• Management needs are complex
• Recruitment and turnover is your full responsibility
• Time-to-market can be slower

Outsourcing 

• Less project visibility and control
• More involved team logistics 
• Higher risk communication practices 
• Need for security and confidentiality protections

Businesses fulfill their IT demands either by building in-house teams or outsourcing. Both have their merits, which we’ll outline below.

In-House

In-house hiring is an appealing choice for retaining 100% control of your project. It involves creating an internal team managed by your company resources.

It’s ideal for handling long-term IT requirements, especially if you have the capital. In-house teams are more expensive, as you have to pay for salary, benefits, equipment, etc.

What’s more, it can be tough to capture top talent. In today’s market, competition for specialists is fierce and you may have to pay top dollar for the best experts.

Outsourcing

Outsourcing is the #1 option if you want to hit the ground running with your project. Outsourcing lets you offload IT needs to a third-party provider. Often this leads to greater efficiency and a quicker time-to-market.

Essentially, outsourcing gives you more control over costs. With it, you can get developers on-demand through your partner and scale up/down as you wish. These agencies typically tap into global talent as well, which tends to cut costs.

Of course, outsourcing isn’t right for every business. Depending on your partner, you might not have the visibility you’d like into your project. You may also struggle with team logistics, such as time zone differences, etc.

Read More Here:

• In-House Development vs. Outsourcing: Pros, Cons and How to Choose

Which Companies Benefit from Software Outsourcing?

Some company activities and objectives are better suited to outsourcing than others. Let’s take a closer look at the types of companies and cases that lend themselves well to outsourcing. 

1. Companies of All Sizes

From small businesses to global enterprises, companies of all sizes can leverage outsourcing. 

Just consider that 92% of G2000 businesses are using IT outsourcing. At the same time, 90% of small businesses are planning to do so. Outsourcing can be easily adapted to fit your company’s resources and project scope.

2. Companies with Specific Business Cases

Companies facing certain resource limitations may also lean towards outsourcing. For example, outsourcing is an effective choice if:

• Your IT needs fluctuate greatly from project-to-project. 
• You don’t have the capital to hire a permanent in-house team.
• You can’t get the specialized developers you need. 
• You don’t have the time or know-how to build up an internal team. 
• You require flexibility to scale the project up/down. 
• You want to use some level of outsourcing to maximize resources. (This may include team expansion, special projects, R&D center, etc.)

In addition, outsourcing may be right if your business doesn’t have software as a core competence. In this case, you’ll need the guidance of experts to make appropriate technical decisions.

3. Companies Undergoing Certain Project Types

(Source: Deloitte’s 2022 Global Outsourcing Survey)

Finally, the suitability of outsourcing for your company will depend on your project. Outsourcing is especially useful for getting cutting-edge solutions. That's because you can access specialists who understand latest trends and prioritize innovation. 

Besides software and app development, the most popular areas for IT outsourcing include:

• Cybersecurity (81%)
• Next-gen tech (78%)
• Data and analytics (75%)

In particular, outsourcing is a powerful way to undertake digital transformation. Many businesses are overhauling legacy systems with best-in-class outsourced solutions.

Read More Here:

• Which Companies Should and Shouldn’t Use Outsourcing?
• The Advantages of Outsourcing Legacy System Maintenance

Industries That Can Benefit From Software Outsourcing

(Source: 2023 ManPower Group Report)

Ultimately, IT outsourcing is advantageous for any industry with complex digital requirements. Even so, the industries with the greatest demand for software outsourcing today include:

• Communication services (79%)
• Energy & utilities (79%)
• Health care & life sciences (78%)
• Information technology (78%)
• Consumer goods & services (77%)
• Industrials & materials (77%)
• Transport, logistics & automotive (76%)
• Financials & real estate (73%)

(Source: SourceSeek’s Global Software Marketplace Insights)

Often IT partners will specialize in certain industries. For example, in Eastern Europe (where Netcorp is based!), we have a strong reputation in:

• Finance/banking (25.3%)
• Health care (17.3%)
• Entertainment media (13.4%)
• Education (9.4%)

As you can see, outsourcing serves these industry verticals well. However, your company can benefit from outsourcing regardless of your line of business. For optimal results, just be sure to hire an IT partner who has experience in your industry.

Read More Here:

• Which Companies Should and Shouldn’t Use Outsourcing?
• Numbers Don't Lie: Exploring Software Development Outsourcing Statistics in 2023

Reap the Benefits of Outsourcing Software Development

Outsourcing is well-suited to a diverse range of companies and industries. By knowing the best use cases above, you will have a good grasp on whether outsourcing is right for your needs.

Get in touch with our team to learn how we meet your specific company objectives. No matter your industry or project, we'll align with your vision and build a leading product.