Software development outsourcing has been a common practice for businesses worldwide for years now. However, in the past, businesses would generally outsource only small tasks and quick projects, and insource – or hire an in-house team – for larger projects.
Nowadays though, software development outsourcing has become a norm, and many businesses have even gone so far as to outsource entire departments.
And it makes sense. Take for example externalization – if you want to move into a new market, you need locals who know the market, speak the cultural slang, and understand the users. That includes developers, designers, project managers, and of course local marketers.
But regardless of whether your goal is to become a global player or to strengthen your position within your home market, outsourcing is worth considering. So, in this article, we will help you answer the following:
- Is outsourcing a good idea for my business?
- What are my outsourcing options?
- Should I choose a dedicated team?
- When should I choose a team extension?
Let’s dive in!
What is software development outsourcing?
As you already know, outsourcing is the process of contracting third parties to take on activities within your business operations. And, as the world is becoming more and more digital, we see more and more companies relying on software development outsourcing as a means to compete or simply keep up.
Pros for software development outsourcing
Software development outsourcing has a number of benefits: For one, it is cost-effective – not only that you only hire the team for the length of your project, but switching from one team to another is also less costly and faster.
Secondly, it expands your possibilities in terms of expertise, compared to insourcing – keeping all the functions in-house limits the level of expertise to your employees only. By outsourcing, you can tap into the expertise of several teams and find the one that matches your need faster.
Finally, if the end results don’t match your expectations once the project is done, you don’t have to ever hire them again – simply find another team.
Cons of software development outsourcing
But don’t get too excited, outsourcing also carries some disadvantages. For example, choosing the right web development agency to bring your ideas to life according to your visualizations will probably require an investment of one of the most valuable resources – your time.
Lack of or bad communication is another complication you may encounter with outsourcing, even when working with the top players on the market.
Luckily, most agencies like Wiredelta know that clear communication is crucial to any project which is why we use Agile methodology in our processes.
With Agile, one of the core values is that you, as a business owner, are a part of every step in the process and we consult you for everything from analysis and design to development, testing and maintenance.
Is outsourcing what I need for my business?
To figure out whether outsourcing is the best option for your business, ask yourself these simple questions:
- Do you have an in-house team?
- Does your team have enough time and resources to cover every task 100% and reach your business goals within your set deadlines?
- And more importantly, does your in-house team have the experience and knowledge to deal with each task?
If you answered no to any of these questions, then outsourcing would be the optimal solution for you. Also, outsourcing takes out the stress of managing everything yourself, allowing you to allocate more time to your core business processes.
Once you have identified that you need to outsource your software development project, it’s time to figure out your strategy – what are your outsourcing options and which one is best for your needs?
What type of outsourcing can I choose from?
The major and most influential factors in choosing your outsourcing strategy are your requirements and your resources. Basically:
- How complex is your project?
- Do you have an in-house team and how much of the project could they take on?
- What is your budget and are there are pressing deadlines?
Based on these criteria, you have two options to choose from – You can either choose a dedicated team or you can go for a team extension.
1. What are dedicated teams?
The main benefit behind dedicated teams is that they work independently from your in-house team. This model is suitable for committing to long-term and more time-consuming projects. But it is also a good option when your project is outside your own team’s expertise or when you simply don’t have a team, to begin with.
Because these teams can on the entire lifecycle of your project, it frees you and allows you to fully focus on your core business processes. However, the biggest downside of dedicated teams is the lack of control.
Simply put, you’re not there with them, so there are the risks that the team won’t manage communication or their tasks according to your requirements, To fix that, most agile teams schedule sprint meetings every week or every other week depending on the difficulty of each task.
This way, you are periodically updated on the progress of your project and you can see exactly what the team has done in the past sprint and what is their plan for the next one.
1.1. How to choose dedicated teams?
The process of choosing a dedicated team is not as simple as it looks at first sight. But your ultimate goal is a long term partnership with a provider that meets your requirements, and you don’t have to go through this process too often.
So, before you commit to a team, you should consider a few criteria:
a. They are in a time zone that doesn’t block communication?
A key factor in a great collaboration with dedicated teams is communication. However, if your team is in a significantly different time zone, it will be difficult if not impossible for you to set up regular meetings. Make sure there is no more than 4 hours difference between you and your team.
b. Are you able to use your own project managers?
Using your own PMs gives you a bit more control over your project’s progress so if one of the dedicated teams doesn’t allow this option, maybe you should take them off the list.
c. Are there any major language barriers?
Working with teams outside your home market will always come with language barriers This is because people don’t just communicate through words – they communicate through culture as well.
So, while some words mean something to you, for another person from a different culture, they might mean something very different. And the only way to avoid this is by having a diverse or multi-cultural team.
d. Are they the most cost-efficient, or do you have more affordable options in other markets?
Another benefit of hiring a team from outside your home market is that you can find more affordable solutions. For example, a developer’s hourly rate in Eastern Europe might be lower than in Denmark, simply because the cost of living in Eastern Europe is lower than in Denmark.
2. What are team extensions
This software development outsourcing model is called “team extensions” or “staff augmentation” because it is literally about extending your in-house team by finding partners outside your company and is most suitable for short-term projects or for specific tasks within the project.
Simply put, the distinction between the two models is mostly in the complexity of the tasks which also reflects on the length of the cooperation. Team extensions are usually an addition to your in-house core team and are there to support instead of taking over.
Also, where control is a downside with dedicated teams, in this situation it is one of the biggest benefits. Since the team extensions usually join your in-house team, they are all under one roof – communication and coordination will go much smoother.
However, the biggest drawback of a team extension is the adjustment period. Basically, every time you bring someone new, they have to get familiar with your team, the project requirements, the sprint goals, their own tasks, and so on.
If not managed properly, team extensions can slow down your progress, so make sure you have proper documentation in place and your project managers and technical leads are always on the same page.
2.1. When to choose teams extensions?
So, with all that being said, when should you go for the team extensions option? If you aim to work on a project that needs some add-ons with very specific requirements, the team extensions model would be the best option enabling you to close the expertise gaps.
In simple terms, if you have an in-house team working on a project that needs some additional hands to perform short-term tasks that are not the core of that project, the team extensions model will definitely enable you to find the right solution.
This way, you would not only opt for a cost-efficient solution (compared to full-time onboarding) but also increase the chances the project will be realized according to your expectations.
When making the final decision, there are other benefits connected to the cost-efficiency you might oversee, such as the fact that securing all the equipment needed to carry out the project comes under the supplier’s responsibility.
Software development outsourcing has become a widely used practice more and more companies adopt. It can help companies gain a competitive advantage in the market by effectively paving the way to the right workforce.
Which model is the best option for you? Don’t forget that you won’t find a general answer on what’s the best fit for you.
As you could see, both models have benefits and drawbacks, but to be able to critically assess which one suits you better, you need to consider other variables related to your business.
In the end, the final decision on software development outsourcing not only depends on the pros and cons of the models, but on your company, your goals, deadlines, budget, and team.