Tech outsourcing can be an effective model of cooperation for startups and big companies to manage complex workflows. Grand View Study predicts the global business process outsourcing market to grow to USD 525.2 billion by 2030. Additionally, when it comes to technology, software development is the most commonly outsourced tech function. In 2022, revenues in tech outsourcing will reach US$395.00bn. This article presents the reasons why companies of all sizes choose outsourcing and case studies of outsourcing models for all sizes of businesses. As we know, the first step in understanding why you should outsource is to comprehend why other businesses do it.
Reduce Costs
According to a recent report, reduction, or management of costs, is one of the most common reasons companies outsource; around 44% of respondents pick this reason as the primary. Outsourcing projects will allow access to competent, experienced developers. Since these developers receive salaries and bonuses from their direct employers, your business will not bear the additional costs associated with hiring and maintaining staff (office, equipment. etc.)
Cost reduction is also tightly connected with the fact that outsourced workforce usually comes from locations with lesser developed economical situations. Therefore, hourly rates of hired employees in these jurisdictions are significantly lower than in the countries they will be working for.
Slack began its growth by hiring a dedicated development team. Similarly, GitHub hired offshore developers due to a lack of financial capital. Having determined what they wanted and how it would look, they chose an outsourcing model from the beginning of their growth.
Save Time on Hiring and Training Tech Specialists
Recruiting, interviewing, and hiring one developer takes months. Due to talent shortages, finding qualified, unique staff members, especially senior developers, can be challenging. When the company feels the need and can’t close the talent gap fast, the efficiency of the team drops.
When you give the development to an outsource company, you delegate it to the team in which people have already worked together and are well versed in the sphere you need expertise at. Most definitely, it’s only going to be like this if you work with an experienced outsourcing company.
Training and integrating new employees can be challenging for small or medium-sized businesses. In addition to being time-consuming, training employees can be a risky endeavor. What if things don’t work out with your new hire?
Newcomers wouldn’t be able to function at 100% until they are fully integrated. By hiring developers from outsourcing, the company can save time and effort on training and see a faster return on investment. When developers arrive, they get right to work.
Maximize Flexibility
As Clutch’s research states, to access flexible resources, 33% of small businesses outsource. Employing developers from outsourcing is a good strategy if a business needs specific knowledge for a particular project. Additionally, you’ll have external talent who can pivot when necessary. Corporate giants also benefit from the flexibility that tech development outsourcing brings.
Hire Top Tech Talents
Outsourcing staff provides, among other things, access to skills, specializations, and qualifications that may not be available to your employees. 26% of small-size companies outsource primarily because of a chance to hire ios developers as well as other tech experts from a wider pool of candidates.
Asia’s largest e-commerce company, Alibaba, faced a scarcity of tech resources. The business then began looking for expertise in e-commerce web development instead of discovering the necessary human resources in the US.
Get Better Security and Compliance
By entrusting confidential tasks to tech experts with the relevant hands-on background, you will face fewer risks of regulatory and compliance issues. Outsourcing keeps you up-to-date on regulations, quickly upgrades your system to the latest security infrastructure, and ensures compliance.
A lack of knowledge about industry peculiarities can leave you vulnerable to security breaches and system attacks if your in-house team is not trained in compliance and security. Similarly, outsourcing partners should consider HIPAA issues to develop high-quality solutions for the healthcare industry.
Fruitful cooperation with top-notch outsourced experts who are experienced in navigating different compliance issues protects companies from the potential lawsuits that come with non-compliance.
Stay Focused on Your Core Business
Non-specific tasks take up much time and effort, disrupt focus, reduce enthusiasm, and often their solution is more expensive. Outsourcing allows the project’s main participants to focus on their main competencies.
For instance, Google uses outsourcing forces for administration and IT development. As it grew, it outsourced the support of products such as Google Ads. Similarly, Apple outsources hardware and services to multiple partners in the US, Asia, and the Far East. Outsourcing Apple’s supply chain and manufacturing facilities allows the company to concentrate on what it does best—designing great products.
Try to Avoid Mistakes When Outsourcing
According to my experience as CEO, many businesses still misdo some issues when outsourcing. Entrepreneurs’ errors in outsourcing a particular part of work might have a long-term impact on the company’s expansion.
The top outsourcing errors that business owners commit are the following: wrong assessment of the budget and needs, failure to manage the dedicated software development team effectively, choosing cheaper labor with quality losses, choosing a partner without proper capabilities to get the job done, etc. If entrepreneurs take all these little parts into the equation, they can have a successful experience using an outsourced workforce by avoiding pitfalls.
Summary
Statistics and cases have proven that outsourcing software development is a massive success for many companies worldwide. Globalization has led many companies to improve their competitive advantages continuously. In a rapidly developing technological world, outsourcing will reduce internal costs, open up the pool of top talents, save time and effort on recruitment, and allow your company to focus on its core competitiveness.
