The present era belongs to digitalization, where more and more businesses and people are adopting digital technologies and are going online. Resulting of this, the IT service sector is under tremendous pressure to meet the high business demand for digital products and solutions.
The businesses, on the other hand, are resorting to different mediums to build digital products for their organization. While some business owners are undertaking the product’s development by themself (DIY development approach), others are hiring a complete team of project managers, designers, developers, and QA engineers to fulfill their demands (in-house development approach).
However, the most popular approach to building a digital platform is undoubtedly outsourcing, with as high as 60% of businesses preferring this approach over others. Outsourcing development is one of the most optimum options for building a digital product for numerous reasons, which we will be discussing in this blog. We will also discuss the fundamentals of outsourcing and other aspects, like how you can outsource your IT service requirements.
However, let’s start the blog by understanding what exactly development outsourcing is.
What Is IT Outsourcing?
Source: Statista
Outsourcing, in general, refers to hiring external resources to complete a task, project, or duty. Today, businesses outsource numerous of their requirements and processes, from core processes like finance and accounting to other processes like cleaning and security.
Outsourcing has become a prominent term in the IT sector, with more and more businesses preferring this approach. Today, businesses outsource the development of websites, mobile apps, software, and numerous other technologies. From the business’s point of view, outsourcing is an excellent option to get a high-end digital product from an expert.
Usually, when a business plans to outsource its requirements, it has to choose between a development agency and a freelancer. It is commonly known that IT agencies are a much better option for development outsourcing as they are reliable, efficient, and highly equipped. Therefore, we will be continuing this blog in the context of outsourcing development to an agency.
Moreover, it is worth noting that depending on the location of the outsourcing agency, IT outsourcing can be classified as onshore, nearshore, and offshore approach. Here’s what each of these approaches means.
Onshore Development: Here, businesses outsource their requirements to development agencies that are located in the same country. Example- A New York-based business hiring an Austin-based development agency to build its website (both organizations are located in the same country).
Nearshore Development: In nearshore development, businesses choose development agencies located in neighboring countries. Example- A US-based business hiring a Canada-based outsourcing company to build its website.
Offshore Development: This approach refers to hiring development agencies from anywhere in the world except the business’s own country and neighboring countries. Example- A US-based business hiring an India-based agency to build its website.
A business must carefully select the development approach, as it can significantly impact the overall development cost as well as final product quality.
We hope that by now, you are aware of what exactly development outsourcing is. However, you must be wondering why so many businesses prefer development outsourcing over other development approaches, right? Let’s find the answer to this question in the upcoming section.
Why Outsource IT Requirements?
Cost-effectiveness
Businesses that plan to digitalize often wonder how much it will cost them to build a digital product. Let us tell you that there is no ‘one size fits all’ answer to this question and that the cost of development depends upon the type of features, product complexity, technology requirements, and, most importantly, the development approach.
To elaborate, businesses can significantly optimize the cost of development by selecting the right development approach. Moreover, a business also has to focus on the quality of the final product, which again varies from one approach to another.
In this case, it is in the best interest of businesses to outsource their IT requirements to an agency. Development outsourcing enables businesses to get a high-quality and cost-efficient digital product.
Moreover, businesses can further optimize the cost of their product by choosing Asia-based development agencies from countries like India and Indonesia, where development costs are as low as $15/hour.
Wide Talent Pool
It is commonly known that building a digital product is not a piece of cake. The development lifecycle of a digital product involves numerous steps and stages, all of which are unique in their own ways.
Each of these stages requires the input and expertise of a specialist in the field. To elaborate, the programming process requires well-experienced programmers that are familiar with the selected programming language, its frameworks, libraries, etc.
This is where the role of development outsourcing comes into the scenario. Businesses going for development outsourcing can choose from a global pool of talent and handpick individuals to build their digital products. This is not possible in the in-house development and DIY development approach. India and Ukraine based developers are the best choices in this matter, as these countries are known for their high-end IT education and wide talent pool.
Moreover, outsourcing agencies are highly peculiar when hiring their employees and make sure to hire the best ones. Therefore, by outsourcing your IT service requirements to development agencies, you are certain to get a highly skilled and experienced team of employees to work on your project.
Reduced Time-to-market
The process of developing a digital product is not only cost intensive but also time consuming. The exact development time of your digital product depends upon various factors. The most important factor here is the number of people working on the project.
When you outsource your development requirements to an agency, you can choose from various development models, one of which is the dedicated development model. Here, a development agency allocates a complete team of business analysts, project managers, UI/UX designers, programmers, and QA engineers to work on a single project.
The dedicated development team works full-time on the project and ensures to provide optimal results. This enables businesses to reduce their product’s time-to-market and boost its launch.
It is worth noting that a business can get similar results by hiring an in-house development team for the project. However, hiring an in-house team also requires additional investment in infrastructure and optimal human resource management, often making it an economically unviable approach for development.
High Flexibility
It is commonly known that no development project can be accomplished efficiently with rigid practices and processes. Flexibility forms an integral part of the development process and is something that every business looks for.
Businesses can easily impart this flexibility into their development project by outsourcing their IT requirements to a development agency. The present-day development agencies are client-centric and focus on delivering top-notch customer experience.
To elaborate, development agencies are highly dynamic in terms of their development practices, processes, and allocated resources. In case you are not satisfied with the outcomes of the current developer working on your project, the development team will be quick to allocate another developer for the project.
Moreover, many outsourcing agencies also offer to work in their client’s time zone, further easing communication between the agency and the businesses. This adds to the project’s overall flexibility and gives businesses more control over their product’s development.
These were a few of the many reasons why businesses prefer to outsource their IT requirements. It is clear by now that development outsourcing is the most optimal approach to building a digital product and overshines DIY development and in-house development in numerous aspects.
However, it is worth noting that businesses choosing to outsource their IT requirements are often likely to face certain challenges with the approach. These challenges are often negligible and do not impact the product’s overall quality. We will be discussing these challenges and their solutions in detail in the next section.
Common Challenges in IT Outsourcing + Solutions
Challenge #1: Time Zone Difference
Time zone difference is one of the major concerns of businesses planning to hire offshore agencies. To elaborate, working in different time zones often makes it challenging for businesses to efficiently communicate the project’s requirements with the appointed agency.
This is especially the case for businesses and agencies working in polar opposite time zones, like India and USA. The time zone difference between these countries is as high as 12 hours, making it almost impossible for businesses to connect with agencies during their working hours.
However, today, most of the development agencies have started to work in their target market’s time zone. This makes it possible for businesses to connect with project managers during feasible hours and communicate their requirements. The businesses can review the project’s progress in real-time and provide their feedback, therefore easing communication and avoiding delays in the development timeline.
Challenge #2: Language Barrier
Along with time zone differences, many businesses also struggle with language barriers and differences. This is especially the case with businesses from the west hiring Asian development agencies, where English is generally not a primarily spoken language.
This makes it challenging for businesses to communicate their needs with the hired agency. Moreover, there is also a high chance of mistakes and errors in understanding the business’s requirements resulting from miscommunication and flawed communication.
However, present-day agencies are aware of this requirement and have already found ways to overcome this challenge. To explain, outsourcing agencies nowadays are hiring language translators and mediators that are familiar with the target market’s native language. On the other hand, certain agencies are hiring employees that are fluent in the most widely spoken languages, like English, for better client communication.
Moreover, the governments of countries with top IT outsourcing markets are also aware of this challenge and are focusing on promoting English language learning for better outsourcing opportunities. This, in turn, is contributing to swift and seamless communication between the business and the outsourcing agency.
Challenge #3: Lack of Supervision
Supervision is one of the most important parts of the development process. A business planning to build a digital product prefers utmost supervision at every stage of the development process and prefers to receive timely updates.
However, it is often challenging for a business to supervise the development process with the outsourcing approach. To elaborate, the development agency takes complete responsibility for the project from start to end, which includes project supervision.
This significantly limits the ability of the business to supervise or control the development process. However, the development agencies are aware of this factor and are implementing measures that enable businesses to have certain control over the project. One of the best examples in this context is development agencies adopting agile methodology in their practices.
In this approach, the designated project manager gives a time-to-time update to the business on the project’s advancements. This update can be based on milestones, time duration, or even on the completion of a particular stage of the development process.
This enables businesses to stay aware of the latest advancements in the project and determine whether or not the project’s progress is at par with the expected development timeline.
Challenge #4: Communication Barrier
One of the primary reasons why businesses prefer to hire an in-house development team is to facilitate seamless communication and exchange of ideas. However, this objective is often challenging to achieve with development outsourcing, where the interaction between the agency and the business is limited to certain video calls and meetings.
This significantly limits the business’s ability to receive and give inputs on the ongoing development project and communicate its requirements with the agency. However, many development agencies are aware of this factor and are providing solutions that enable seamless communication between them and their client.
One of the most prominent ways in which development agencies are overcoming this challenge is by adopting the on-site model, which combines the fundamental of outsourcing and in-house development.
The idea is to send the agencies’ development team to work in the client’s office full-time. This model not only gives the businesses more control over the project but also enables them to seamlessly communicate their requirements, therefore promoting efficient communication.
These are a few challenges that businesses usually face when planning to outsource their IT requirements. You would have realized by now that these challenges are mostly negligible and often have a solution to them, again proving the vast scope and potential of development outsourcing.
We are certain that if you are a business owner and are looking for a way to go digital, the first thing you’ll do after reading this blog is to find an outsourcing agency. However, with a large number of outsourcing companies to choose from, businesses often struggle to determine which company will be the best fit for their requirements.
But worry not, as in the next section, we have covered the step-by-step process of hiring an outsourcing agency. By following these steps, you are most certain to find the most optimal agency for your requirements.
Process of Hiring Development Outsourcing Agency
Find and Shortlist
The first step to hiring an outsourcing agency is to find a list of all the potential development outsourcing agencies. Here, you can use platforms like Clutch and GoodFirms to find the top development agencies. These platforms also have a feature to filter the agencies based on reviews and location. Alternatively, you can also use search engines like Google to look for development agencies. All you need to do is fire search queries like ‘top app development agency in USA’ or ‘top website development company in UK’.
Once you have found a list of potential development agencies, all you need to do is visit their website and check their portfolio, client testimonials, and service offerings. You can shortlist the agencies to, let’s say, the top 5 based on these factors.
Send Requirements
Once you have shortlisted the agencies, you can go ahead and send your requirements. It is a good idea to sign a mutual NDA at this stage to protect the integrity of your business idea.
The development agencies, based upon your requirements, will send their inputs on the projects, like added features, estimated development cost, and an approximate development timeline.
Shortlist on Quotations
Based on the inputs received in the previous step, you have to further shortlist the agencies based on your budget and timeline. This stage has scope for negotiations, so you can communicate to and forth with the shortlisted agencies and discuss your budget expectations.
Close Deal
After shortlisting all the agencies, you will have to select one agency and finalize the deal. Once finalized, you can sign the contract with the agency mentioning the terms of the project.
Moreover, at this stage, you can also discuss other aspects of the project, like milestones, development model, etc., with the selected agency. This is the last step of hiring a development agency and marks the inauguration of the development process.
Summing It Up
Outsourcing is one of the most popularly chosen approaches among businesses looking to build a digital product. By outsourcing your IT requirements to an agency, you are certain to receive a high-end product that is at par with the market’s requirements and is offering continuous growth to your organization.
Moreover, outsourcing IT services may come with certain challenges. However, most of these challenges are negligible and do not impact the final product’s quality. All you need to do is follow a systematic process and find the right outsourcing agency for your project, and you are certain to get a high-end product for your organization.
Also Read: The Ultimate Guide to Hiring Front-End Developers in 2022