Outsourcing is more popular than ever. Countless modern organizations outsource fundamental portions of their business to third-party vendors. In fact, the global market for outsourced services is worth an unbelievable $92.5 billion, and that’s only expected to grow.
Outsourcing is a big step. Many organizations struggle to break free of the DIY approach. After years of doing the work yourself to save money, the idea of paying someone else to handle it may make you uncomfortable. But after outsourcing some key functions, 78% of businesses have a positive view of their outsourcing relationships.
Software development is no different. Many organizations realize that hiring a team of in-house developers doesn’t make sense practically or financially. In some cases, organizations hire outside development teams to supplement their in-house development staff. In other cases, they outsource all of product development.
Why do so many organizations outsource this part of their business? What benefits does outsourced software development offer for the product? Let’s explore the top reasons.
1. No Bad Assumptions
An outsourced team is a fresh set of eyes. They ask unique questions and explore strategies you never considered. They validate what they think they know and run experiments to learn more. When you say, “Oh, I know what the customer wants,” the outside team says, “Let’s test it anyway.” In some cases, an outside team will ask questions you never thought to ask.
An outside team isn’t burdened by bad assumptions or corporate politics. They aren’t weighed down by your previous failures or abandoned projects. All of the peripheral inputs and variables that plague your work are irrelevant to your outside team. They just want to make a good product that marries an effective user experience with your business goals.
2. Faster Product to Market
In many cases, building a development team can take as long - or longer - than building the MVP. Then you’ll need to onboard them, teach them your processes and workflows, integrate them into your company culture, and pray one of them doesn’t decide to leave before you release something.
When you hire an outside team, they start building on day one of your relationship. A quicker product means sooner opportunities to show it to customers and users. It means more data, more learning, and more time to get things right before you let users in.
Speed to market is especially important if you’re trying to beat a competitor to market. A shorter timeline could represent significantly more users, press coverage, and revenue.
3. Reduced Development Costs
Reducing your costs is the most impactful way you can build a better product. In fact, it’s the most common reason organizations choose to outsource software development. According to Deloitte, 59% of companies outsource with the intention to reduce or control their costs. Which makes sense, when you consider that Outsourcing can reduce development costs by 70%.
Reducing costs frees up resources for future development (bug fixes, new features, more hardware, or - in the most extreme cases - a pivot). If you don’t need additional funds for the current product, lower costs leave resources that can be reinvested into the project, either by accelerating development (by adding more developers to the team) or expanding the product’s scope. Otherwise, you can use that savings for future products or other business expenses.
4. Focus on Other Things
Development work takes time, money, and other resources. If you’re forced to oversee the development team, you can’t spend as much time on other tasks that could impact the product.
For instance, building a great product requires a clear understanding of customer/user needs. You could spend time savings talking to the people who will use the product, uncovering their needs, preferences, behaviors, triggers, and pain points. Or you could use that time walking key users through early versions of the product.
5. Decreased Project Risks
No matter how much market research you’ve done or how many customers promise to buy your product, every project comes with some risk. Even internal products that employees will be required to use can fail.
If you hire an in-house team to build and manage a product, and then that product fails or gets abandoned, what happens to the team? Your only options are to fire everyone (which no one likes to do) or reassign them somewhere else in your organization (assuming there’s somewhere for them to go and you don’t mind eating the expense).
Outsourcing removes this risk. If you decide to abandon the product, simply sever your relationship with the outside development firm and move. There’s no further expense and no messy HR or legal issues to resolve.
Staffing isn’t the only risk to a product, of course. Do you understand the development workflow well enough to lead a team? Do you have experience producing applications that generate ROI? Do you know how to create a culture that supports engineers and designers? These are all risks you don’t have to worry about when you hire an outside team.
6. Flexibility to Scale
In-house teams are rigid and inflexible. Hiring new people to scale up takes time - at least 23.7 days, but longer for specialists, according to Glassdoor. And like we explained above, cutting jobs to scale down is problematic.
With an outsourced team, however, flexibility to scale is baked into the arrangement. You don’t have to worry about hiring, training, and integrating new employees. Those are the vendor’s problems. They will bring on and remove people from your project as needed.
Image: EightShapes
If your project requires a little extra work, or you want to meet an earlier deadline, you can simply ask your outside development firm to add team members or you could hire an additional vendor. If your product requires less work (like after release and you scale down to “support and maintain” mode), you can reduce the team size to save costs.
7. New Talents and Skills
Your internal team is limited to their current skills and abilities. Sure, you could send them to training classes or create mentorship programs, but those require money and time. Who knows how long it could take to hire or teach someone the skills they need to make an impact on today’s project.
An outside development team gives you access to wider skill sets and deeper knowledge than hiring internally ever could. Instead of asking your Node.js developer to learn React, you can just hire an outside guy with years of React expertise. Plus, an outside team brings more than a wide variety of technical skills. Development firms bring analytics, testing, project management, and quality control services as well.
Furthermore, hiring outside development teams lets you reach any specialist, no matter where they are. You can hire from anywhere in the world. You aren’t limited to the people who are willing to drive to your office every day. You’re free to choose the best person for the job based on their skills, experience, and personality from anywhere in the world.
And when the project is complete, you politely sever ties with the specialist until you need him again. There’s no ongoing expense to keep those specialists on board when you don’t need them.
Final Thoughts
Outsourcing is a strategic partnership. It’s not a simple hand-off of responsibilities. You’ll only receive a better product through outsourcing if you work closely with the development team. Keep lines of communication open. Establish a reporting process and track their progress. And of course, it helps to have at least one technical leader in your organization who understands software products well enough to collaborate with the outsourced team.
The benefits we outlined above demonstrate why more organizations are outsourcing their software development than ever before. Hiring an external team will make your life easier and produce a better product.
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