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Outsourcing. It usually means handing over the most labor-intensive assignments to the lowest bidder in a country where labor costs are lower than ours. And sometimes it just means ‘cutting costs’. Other negatives that come to mind, when outsourcing is mentioned, are issues with quality control. Having a substantial part of your business outsourced to another country or another timezone might impact quality. Another potentially challenging thing is communication, which again, by having people crucial to the project, distributed around the continent or world, might disrupt information exchange. But is it really so?
Why Outsource Software Development?
The trend of outsourcing in various industries has become a prevalent strategy. It is adopted across various industries, enabling companies to optimise operations, reduce costs, and focus on core competencies.
Outsourcing has become a key way of delivering 24/7 IT Support. This approach minimises internal staffing requirements and provides cheaper access to technical expertise. Service Desk staff is relatively easy to train and simple tasks like password resets or logging issues for upper tiers of support.
Another example that will be our main focus here is, outsourcing software development. That’s exactly what WizzDev is doing by being an attractive software development solution.
Outsourcing has numerous benefits. The foremost benefit of outsourcing is obviously, the drive to generate savings. Finding a cheaper service provider without being limited to the home market, is obviously a thing to do. Lower operation costs always bring a smile to the financial officer’s face.
Imagine a situation where a certain country has an abundance of university graduates in various fields of IT, technology, and engineering. The job market is unable to absorb all of them in domestic industries but some companies outsource their services to companies from all over the world. Thus specialists or people with potential can use their knowledge and gain useful experience. So, in a way, outsourcing is beneficial for countries that strive to join the world market and compete in the technological race.
Outsourcing makes businesses scalable and flexible. This means that when a need arises a business can always look for more ways to outsource services that fit current needs. Expand the Service Desk? Acquire additional programmers or enlarge the procurement department? Just outsource your needs to companies like WizzDev. Your company lacks AWS solutions and AWS specialists. Same story. I think you get the idea.
Outsourced services have already built, streamlined processes and people experienced in executing them and delivering value. This means a company does not have to concern itself with building processes from square one but simply research the outsourcing market and find the partner with the best value for money.
Common concerns
As mentioned in the introduction, outsourcing might raise concerns about quality control and communication. But there are also one or two more concerns that might come to mind. The first one is security. Having crucial services outsourced means that third-party contractors have access to user accounts and password reset tools as in the case of Service Desks. However, these concerns can be discarded as leading technological companies like Google, Amazon or Apple outsource their 24/7 support for years. Specialised companies that take care of their support allow these giants to focus on innovation while their management of essential IT services is secured.
What to outsource?
In IoT context, for example, a company, your company, may outsource software development to a company like WizzDev. Our developers, through the years, have completed many projects and the quality of their work is for example visible in Mill products:
IoT outsourcing means firmware and software development is handed over to experienced programmers usually seasoned in finding and fixing issues. Furthermore, outsourced developers can create mobile applications tailored to the customer’s needs. The benefit of this approach is obvious. Numerous software houses specialise in building custom applications. Thus, there is no need for a company interested in developing a new application to hire developers and spend time on building processes. Many highly specialised companies will develop what you need, saving time and money.
How to choose the right one?
Choosing the right partner to outsource is, well, the most important thing that may make or break your project. Fortunately, there are ways to verify the quality of your potential partner before the contract is signed. Platforms like UpWork are built specifically for handling cooperation between partners. This plus going through client reviews or receiving recommendations from other contractors is the correct course of action to be taken. Furthermore, selecting a partner with a well-established place on the market and an impressive portfolio will usually be the right thing to do. On the other hand, picking a smaller developer with a more flexible approach might also be a good idea. It depends on your needs.
One has to bear in mind that finding a highly praised contractor is only part of the success story. It is also important to make sure that the technology we need is our partner’s area of expertise. Additionally, it is good to mention the cultural context. Misunderstandings sometimes stem from different backgrounds or work ethics. So sometimes it is smart to select a firm in a closer neighbourhood.
The future of outsourcing
A quote from ‘The Lord of the Rings’ says: ‘The world is changing’ and it is, constantly. Geopolitical tensions and attempts to halt globalisation will probably not hinder the tendency to globalise and stretch supply chains. But outsourcing is the main contributor to cutting costs and as long as there are businesses that are willing to look for cheaper alternatives to having everything under their own roofs, outsourcing will be a gladly adopted solution. With the growth of IoT and big data business models will come an increase in demand for cheaper, more competitive outsourcing providers.
What Are the Key Performance Indicators (KPIs) to Track When Outsourcing Software Development?
Tracking KPIs is essential to ensure outsourced software projects meet your expectations. Key metrics include:
- Delivery timelines: Monitor if milestones and deadlines are consistently met.
- Code quality: Assess through code reviews and automated testing results.
- Defect rates: Track bugs and issues reported post-release to measure stability.
- Team responsiveness: Evaluate communication speed and problem-solving abilities.
- Budget adherence: Keep an eye on costs to prevent overruns.
- Customer satisfaction: Gather feedback from end-users regarding software usability.
- Project scope compliance: Ensure delivered features match agreed specifications.
Establish these KPIs at the project’s outset and review them regularly with the outsourcing partner. This approach helps identify issues early, maintain quality standards, and foster transparency throughout the development cycle.
How Can Agile Methodologies Be Applied in Outsourced Development?
Agile methods improve collaboration and flexibility in outsourced projects. To apply Agile successfully:
- Regular sprint planning: Define short-term goals with the external team.
- Daily stand-ups: Use quick meetings to update progress and raise blockers.
- Sprint reviews: Demonstrate completed work for stakeholder feedback.
- Backlog grooming: Continuously prioritise tasks based on business needs.
- Collaborative tools: Utilise platforms like Jira or Trello to track tasks and progress.
- Cross-team communication: Encourage transparency between in-house and outsourced members.
- Iterative delivery: Focus on delivering small, working software increments regularly.
Using Agile enhances adaptability, ensuring outsourced teams respond quickly to change and deliver value consistently.
What Are the Risks of Vendor Lock-In and How to Avoid Them?
Vendor lock-in occurs when switching outsourcing providers becomes difficult, risking cost increases and reduced flexibility. To avoid this:
- Use open standards: Prevent dependence on proprietary tools or formats.
- Maintain documentation: Keep thorough records of code, processes, and knowledge.
- Modular architecture: Develop software in components to ease transition between vendors.
- Clear contract terms: Include exit clauses and knowledge transfer requirements.
- Periodic reviews: Evaluate the partnership’s value regularly.
- Backup plans: Identify alternative suppliers beforehand.
- Train in-house staff: Ensure internal knowledge isn’t completely outsourced.
These steps help safeguard your business from over-reliance on a single provider and keep options open for future changes.
How Does Outsourcing Affect Company Culture and Employee Morale?
Outsourcing can impact internal teams’ morale and company culture. Key considerations include:
- Job security concerns: Address fears about layoffs or role changes openly.
- Communication: Keep staff informed about outsourcing goals and benefits.
- Inclusion: Integrate outsourced teams as part of the wider organisation.
- Collaboration tools: Facilitate easy communication to reduce ‘us vs them’ feelings.
- Training and development: Invest in upskilling internal staff alongside outsourcing.
- Recognition: Celebrate successes that involve both in-house and outsourced teams.
- Leadership support: Ensure management fosters a positive, inclusive culture.
Properly managed, outsourcing can complement your existing workforce and enhance overall productivity and innovation.
What Role Does Intellectual Property (IP) Protection Play in Outsourcing Contracts?
Protecting intellectual property is vital when working with external developers. Important points to cover:
- Ownership clauses: Specify who retains rights to code, designs, and inventions.
- Confidentiality agreements: Prevent sensitive information leaks.
- Usage limits: Define how and where outsourced code can be used.
- Patent rights: Clarify who owns any patentable inventions.
- Data protection: Ensure compliance with relevant laws on personal data handling.
- Dispute resolution: Set mechanisms for handling IP disagreements.
- Post-contract obligations: Include terms for return or destruction of IP materials.
Clear IP terms help prevent legal disputes and protect your company’s innovations and competitive edge.
Final Thoughts
Outsourcing software development offers significant advantages, from cost savings to access to specialised skills and greater flexibility. However, success depends on careful partner selection, clear communication, and managing risks like vendor lock-in and IP protection. By setting measurable goals and fostering collaboration, businesses can maximise the benefits of outsourcing while maintaining quality and company culture. This balanced approach ensures sustainable growth in an ever-evolving digital landscape.
