Software Development Outsourcing Hub

The Benefits of Outsourcing Software Development

May 5, 2023

Choosing who will build your business-critical product is a big decision. As you look into your options, don’t dismiss the potential of software outsourcing. 

The IT outsourcing industry has evolved significantly in recent years. As a result, it offers powerful possibilities for your next project. Today, 78% of companies who leverage outsourcing experience positive outcomes

Often CEOs or CTOs who entrust their product to an IT partner achieve a competitive edge. This includes cost savings, a quick time-to-market and a high-quality end product. 

Let’s give you 360° vision into the benefits of outsourcing software development. In this way, you can make the right decision for your business. Here are key advantages of outsourcing software development, as chosen by our experts. 

1. Flexibility Combined With Quality

(Source: UpCity)

Outsourcing lets you build your IT team on your own terms. This flexibility was cited by 21% of small businesses on why they choose outsourcing. Typically, outsourcing partners will have a “bank” of expert developers available. By leveraging this talent, you can scale your project up and down as needed. 

What’s more, outsourcing partners have on-call specialists with diverse technical skills. So, your business can access high-quality expertise on an almost on-demand basis.  

This is in direct contrast to hiring in-house developers, which locks you in long-term. For example, direct-hiring involves paying salaries, benefits, onboarding, equipment, training, taxes, etc. 

With outsourcing, you have the flexibility to shift project focus and resource allocation. In turn, you forgo the pain points of permanent in-house hires.

2. Development Expertise: India’s Case Example

(Source: Statista)

Accessing top talent is the #1 reason why companies choose outsourcing

This makes sense when you consider today’s competitive talent market. Businesses are hard-pressed to capture elite talent, especially with the widening developer gap.

Just consider how India transformed the IT market with their talent pool. Essentially, this country wrote the playbook for IT outsourcing success by offering:

  • Mature technical talent
  • Diversified IT expertise
  • Streamlined teams and workflows
  • Domain knowledge
  • High-quality industry standards
  • A track record of successful products

Even today, India is listed as #1 for IT outsourcing on Kearney’s Index. Plus, it raked in a whopping $144.8 billion in ICT service exports in 2022, according to the World Bank. India’s case shows how expertise is one of the clear advantages of nearshore outsourcing. 

3. Forward-Thinking Strategies

Outsourcing is no longer a linear journey to fulfill a specific product vision. Today, companies are leaning on outsourcing partners to get transformational, outside-of-the-box solutions. 

By handing off development to their partner, businesses can access their expertise. This includes future-ready approaches, technologies and trends, as well as opportunities for innovation. 

To this end, outsourcing partners today include a “discovery” phase in their workflows. During it, they get a deep understanding of the business and customer needs. From there, they create a roadmap for moving forward.

This enables businesses to achieve products that make a competitive difference. In a real-life case, for example, an outsourcing partner built a next-gen billing system. This saved the client a stunning $10 million in duplicate payments.

4. Significant Cost Reductions

Although cost is no longer the driving factor for outsourcing, it’s still a priority. 

Hiring in-house developers incurs a range of costs and risks. Besides a competitive salary and benefits package, you must handle expenses for:

  • Recruitment, hiring and onboarding
  • Training and career development
  • Workstations and equipment
  • Managers and PM software
  • Local taxes and compliance

The turnover costs for a developer can also be steep. Studies estimate that replacing a developer can involve 2.7x their base salary. What’s more, your team will have to deal with loss of institutional memory. And a lack of a full team will likely lead to product delays.  

In short, cutting costs is one of the benefits of outsourcing software development. Outsourcing partners are specialists in finding reductions to your budget. They do this by discovering talented developers worldwide that meet your urgent requirements.

5. Fast Product Delivery

55% of businesses outsource to enable a faster time-to-market. Entering the market fast is key to getting a competitive edge, as well as winning over customers.

Outsourcing partners are able to rapidly ramp up projects. They have efficient processes and team relationships already in place. Their industry experience also allows them to boost productivity and leverage best practices.

Outsourcing elevates resource maximization across people and technologies. This way, your business doesn’t waste time hiring developers, setting up workflows, etc. 

Instead, you can jump right into your project needs with an outsourcing partner.

6. Comprehensive Solutions in One Place

Outsourcing also provides a one-stop shop for software development. 

Working with multiple vendors can be a hassle. You’ll need to contact them for quotes, build new relationships and define workflows. It’s also difficult to predict the final cost, as you usually need to adjust or add services over time. 

One of the benefits of outsourcing software development is the all-inclusive structure. 19% of small businesses are outsourcing to improve efficiency, which outsourcing empowers. Having a range of services under one roof can lead to:

  • Achieving operational efficiencies
  • Deepening a trusted relationship 
  • Simplifying development processes 
  • Getting peace of mind about pricing

Specifically, IT outsourcing is often a go-to service because of the relationship component. 57% of outsourcing projects fail due to miscommunication. This means it’s vital for businesses to find transparent, highly collaborative partners. 

7. Prioritizing Your Business Vision

When you choose outsourcing, your partner becomes your technical expert at the table. But your in-house team knows your industry inside and out. In this sense, your vision to meet your customers’ needs should stay at the forefront.

57% of companies embark on outsourcing to concentrate on their core competencies. Outsourcing frees up time and resources to dig into what your internal team knows best. Let your executive team focus on strategic ideas and goals. Meanwhile, your outsourcing partner can iterate and implement the technical side. 

Ultimately, relieving your technical burden results in innovation, business strategy and added value.

8. Versatility for All Needs and Industries

(Source: SourceSeek’s Global Software Marketplace Insights)

IT outsourcing is also a highly pliable option that can be adapted to your industry and project. 

Software development outsourcing isn’t exclusive to one type of industry or project. In fact, outsourcing partners often have experience in many industries and technical specializations.

Sometimes this versatility shifts by region, too. For example, outsourcing partners based in Eastern Europe – like us! – commonly develop for Finance/Banking (25.3%), Healthcare (17.3%) and Entertainment/Media (13.4%). However, this varies widely depending on the partner.

At Netcorp, we'll meet your needs, no matter the industry or project complexity. Check out our recent success stories to get a sense of our technical diversity. 

9. MarTech-Driven Approaches

(Source: State of MarTech Report 2022)

The MarTech landscape is booming, with 24% growth since 2020. This trend involves providing high-quality IT solutions to enhance marketing initiatives. 

Often these projects involve AI, machine learning, automation and other cutting-edge trends. Just consider that 57% of machine learning efforts are aimed at customer experience. Some potential MarTech projects include:

  • Automated recommender systems
  • 24/7 chatbots
  • Personalized touchpoints
  • Customer engagement workflows
  • Data management dashboards

As your IT expert, your partner keeps pace with latest trends and technologies. Choosing outsourcing means they can design state-of-the-art solutions for your ambitious marketing vision.

In turn, these MarTech projects boost long-term customer engagement and loyalty. 

10. Trusted Partner for Digital Transformation

(Source: Deloitte’s 2022 Global Outsourcing Survey)

Digital transformation is a prime concern. 91% of businesses today are undertaking new digital initiatives

Yet, overhauling legacy systems can be challenging without the right guidance. IT partners are well-versed in technologies, such as AI, big data, the cloud, etc.

After all, 78% of businesses outsource to obtain “next-gen tech”. They just don’t have the in-house know-how and infrastructure to handle these projects. Instead, they entrust digital transformation to their outsourcing partner.

Extra Reasons to Consider Software Development Outsourcing

Of course, this is just the start. The benefits of outsourcing software development are numerous, depending on your business needs. You may discover more reasons that tip the balance in outsourcing’s favor, including:

  • Access a wider talent pool. Outsourcing partners tap into talent in regions worldwide. This provides a wide berth of expertise, often at a lower competitive rate.
  • Gain expert domain knowledge. The IT industry has its own best practices and processes. An outsourcing partner has on-the-ground expertise to build your product.
  • Save on recruitment and turnover costs. Discovering, hiring, onboarding, training… the costs of a new hire can be exponential. You can cut out these expenses by choosing outsourcing. 
  • Get the right project managers onboard. Project management is an essential cog in the product machine. Having skilled PMs can make development seamless. 
  • Minimize project risks. Your data, IP and security are at risk without expert implementation. Lock down any technical threats with a specialized outsourcing partner. 
  • … and more!

For more details, check out our in-depth guide. You'll get even more benefits of offshore software development.

Reap the Benefits of Outsourcing Software Development With Us

Outsourcing unlocks countless advantages for businesses beyond just cost savings and technical expertise. With the right outsourcing partner, you elevate scalability, innovation, business alignment and time-to-market.

Start reaping the benefits of outsourcing software development with us. At Netcorp, we provide solutions using latest trends in the IT outsourcing landscape. Get in touch with us to learn how we provide top-shelf technical partnership.

Paavo Pauklin
Executive Board Member

Paavo Pauklin is a renowned consultant and thought leader in software development outsourcing with a decade of experience. Authoring dozens of insightful blog posts and the guidebook "How to Succeed with Software Development Outsourcing," he is a frequent speaker at industry conferences. Paavo hosts two influential video podcasts: “Everybody needs developers” and “Tech explained to managers in 3 minutes.” Through his extensive training sessions with organizations such as the Finnish Association of Software Companies and Estonian IT Companies Association, he's helped numerous businesses strategize, train internal teams, and find dependable outsourcing partners. His expertise offers a reliable compass for anyone navigating the world of software outsourcing.

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