Outsourcing is commonplace these days in small as well as large companies. Simply put, it is a practice wherein work is contracted to an outside firm which otherwise would have been routinely handled within the company. Big businesses outsource generally to cut costs while small companies constrained by resources outsource business operations like accounting, payroll, distribution and some others on a regular basis. In response to the strong demand an entire outsourcing software solutions industry has evolved over the years.
In fact, outsourcing your software development process is a strategic decision involving cost considerations and also involves giving over control of some business processes to outsourced agency. Prior to outsourcing any business process, it is imperative that you get a clear understanding of the advantages and pitfalls of outsourcing to a third party vendor. Benefits of outsourcing software development can be derived for a long term with some wise decision making. However, it could cost you money, time and irreversible damage to your business reputation if you outsource processes to unprofessional and incapable vendors.
Outsourcing will essentially help your company grow and save money if done with due diligence. The advantages of outsourcing go well beyond money. Let us look at some of the benefits of outsourcing software development.
- Cut Costs and Save Big
The direct benefit and most of the time the primary reason to outsource is cost savings that accrue as a result of contracting a third party vendor. India, Ukraine, Belarus, Philippines have come up as alternatives to quality services at lower costs. Sometimes the savings are to the tune of 60 per cent. When your business outsource a process then you end up saving bigtime on infrastructure and staffing requirements.
Outsourcing, generally, is a good decision in case of most of the back-office functions. Overhead costs in running some of the back-office operations are prohibitively high. The Company may require additional hires to handle these complicated back office operations. Consider contracting the functions which can be moved easily to a third party vendor. You will find, outsourcing such functions saves time, money and gets your business functions and goals accomplished without compromising on quality.
You can reduce overhead costs by outsourcing even some of the simpler operations like data entry and outbound telemarketing that will free up your office space and equipment. Practically, this helps you budget effectively as your fixed costs are reduced.
- Get access to skilled expertise
In a rapidly growing business firm, the non-core back-office workload too increases putting a burden on the existing infrastructure and other resources. This may put pressure on the staff and quality might be a casualty in such a scenario. Outsourcing of your software development opens gates to access skilled expertise for these specific business processes. This excellent talent pool of software developers is one of the biggest benefits of outsourcing software development.
Very often these vendors are master specialist in the field of software development. Additionally, the outsourced vendors have specific capabilities, equipment and technical expertise much better than the sourcing organization. Resultantly, the tasks can be accomplished a lot quicker with higher efficiency and better output quality.
If supporting functions are outsourced then it will allow business organization to build up their core business processes. Therefore, outsourcing your software development requirements to a third party allows the key resources of the business firm to put focus back on the primary business tasks that are important without sacrificing quality or service in the back-office.
- Gain Better Operational Control
Business operations involving higher running costs are the ideal candidates for being outsourced. Management should consider the business functions that have turned into inefficient and poorly conducted departments for outsourcing. This will reduce the operational costs of such unproductive, cost incurring business functions and departments.
Basically, the outsourced software development function will be managed by a third party entity which specializes in that particular business activity. Their focus and the level of skills and expertise they will bring to the table will certainly result in higher productivity and lower costs as a result of outsourcing. In turn your business will gain in terms of better operational control with lesser functions to monitor internally. The outsourced functions will be taken care of by the contracted vendor on a priority basis as per the agreement. Benefits of outsourcing software development will accrue, by and by, the entire business process will fall in line and will be managed systematically and efficiently.
- Staffing Flexibility
Some business functions have seasonal or cyclical demands and may require additional hands at those times. But more often than not the temporary staff hired isn’t reliable on quality and delivery fronts. As you know, hiring and training are very expensive business functions. Outsourcing at such times gets your business financial flexibility in case of uncertainty in demand.
Outsourcing lets you get in additional hires when you need them and release them once the demand ebbs. Therefore, based on the demand structure you can scale up or down your staffing requirements easily. Thus, benefits of outsourcing software development helps you lower headcount and also lessen the variations in staffing needs. There is an additional benefit of offshore outsourcing as it lets you run your business in full steam even during off season and holiday months at a considerably much lower cost.
Outsourcing tedious tasks frees up the human resources which can be applied in more productive income generating business projects. This reduces the work load on the employees and provide them with development opportunities which in turn keep their morale high.
- Level the playing field and Reduces Risk
In case of small businesses it is not viable for them to carry out all business functions of software development in house unlike a larger competitor. Outsourcing their many support functions gets them access to skilled experts bringing in economies of scale and efficiency that is usually enjoyed by a much larger firm. This is one of the big benefits of outsourcing software development for small enterprises providing them competitive edge.
Outsourcing, additionally, helps small, medium as well as larger firms mitigate risks associated with business due to change in market conditions, government regulations, financial conditions and technology changes. The outsourced vendors being experts in their field are adept in handling situations arising out of business uncertainty.