Why Do Companies Outsource and What Are the Benefits of It?

by Anna Khrupa on 09/5/2019

Outsourcing became a common practice for many companies and businesses today. The benefits of outsourcing are diverse. In this article, you will find out what is outsourcing, what types of outsourcing exist, and the main reasons why companies are willing to outsource their software development tasks.

What Is Outsourcing and Why Might a Company Practice Outsourcing?

Outsourcing means the allocation of specific tasks by a contractor to third-party specialists. Outsourcing comes in handy when a company or business can’t control and handle all the processes internally. Entrusting business processes to external professionals became an everyday reality. Software development, customer support services, content writing are one of the most popular tasks that are outsourced to other companies.

The main reason for such growing popularity of outsourcing is the lack of internal experts and cost-saving initiative. For some businesses, there is no need to hire an in-house team of professionals to perform certain tasks. Thus, outsourcing is the best option that can help a company get all the jobs done effectively and for the reduced labor costs. Your company or business can benefit from outsourcing as well. After you allocate a task to the chosen outsourcing company, as a service provider, they become responsible for performing the job and maintaining the highest quality.

Why Outsource Software Development?

Outsourcing software development routine is a widespread practice today. Whereas hiring an internal team requires way too much time, money, and resources, outsourcing is a much more convenient option. Here are the top 6 benefits that will convince you that outsourcing software development tasks is a good idea for your business:

1. Reduced costs

The main benefit of outsourcing consists of much lower labor costs. Therefore, it is cost-efficient and profitable to reduce your expenditures and significantly save budget. At the same time, you will get quality professional service at a reasonable price. Also, you save time and money on recruitment, training new in-house staff, offering benefits, etc.

2. Larger talent pool available

When hiring in-house local employees, you don’t have much choice. Outsourcing allows you to expand your search and choose from a variety of companies and the best professionals from all over the world. It is possible to find the right team of experts that will meet all your requirements to achieve better results. The more experts are involved in your project, the faster all tasks get done.

3. Focus on the essential business activities

Usually, companies outsource the most time-consuming and tedious responsibilities, such as software development. Delegating tasks to an external team of professionals will allow you to pay more attention to core business activities. You can actively work on elaborating your marketing strategy or other business-related activities.

4. Risk sharing

While outsourcing some of your tasks to another company, you share responsibilities as well. They also help you with risk assessment and analysis, which is also a crucial advantage. An external team will predict and help mitigate potentially occurring risks.

5. Increased process efficiency

An outsourcing company helps you carry out some burdening tasks, and therefore, you can achieve better results, make all processes more efficient, and boost productivity. It goes without saying that excellent quality level is always maintained. Outsourcing team possesses industry expertise and business-related knowledge to deliver professional services.

6. 24/7 availability

Outsourcing some tasks to a team located abroad means for you a significant time zone difference as well as holidays difference, which allows overseas workers to perform duties even if your team doesn’t work. Your business will run smoothly and effectively all the time.

The Main Types of Outsourcing

If you don’t want to hire an in-house team of software developers, then you should find out more about outsourcing and its types. Generally, there are three of them: onshore, offshore, and nearshore outsourcing.

Offshore outsourcing means hiring a team of developers outside your country, in a distant location. The most popular countries for offshoring are India, China, and countries of Western Europe. They have a lot of qualified professionals, and the main benefit is the low hourly rate that allows cutting on expenses significantly. You can communicate with the team via email, phone, or chat to discuss all project-related details. Time zone difference is also beneficial for those companies that are offering 24/7 customer support service.

Nearshore outsourcing is quite similar to offshoring, but the main difference is that you hire software developers from countries located closer to your home country. The main upside is also affordable labor costs and minimal time zone difference, which is no more than a couple of hours. Nearshoring is more convenient as there is not that much of cultural differences and communication turns to be much more effective and smooth.

Onshore outsourcing is also called homeshoring as it means hiring professionals from the country your business or company is located in. It’s very convenient as contractors can monitor the development stage closely and improve the process right away. No cultural, language or time zone differences are expected, but you should take into account that costs for onshore experts are much higher.

Choose an option which will be the most appropriate for your business and aligns with your budget and product goals.

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