A Guide to Outsourcing: When to Outsource Software Development and How to Get Started

What is Outsourcing?

Outsourcing, in general terms, refers to the practice of hiring services from an outside provider. In the world of software development, outsourcing most commonly involves hiring a team of developers working in a location that differs from the main office’s location. There are three main types of outsourcing – onshore, nearshore and offshore – and frequently outsourced teams are located overseas.

Which form of outsourcing a business uses will vary depending on their unique needs. Below, we look at some of the pros and cons of outsourcing software development to help you decide if outsourcing makes sense for your business.

Benefits of Outsourcing Software Development

Outsourcing custom software development is most often thought of as being cost-effective, and is frequently used by businesses looking to reduce their overall spend. This mentality, however, is a mistake. Outsourcing offers a wide variety of benefits; it is not merely a way to achieve cost savings, nor is it universally true that outsourcing will save your business money in the long run. Three of the top benefits of effective outsourced software development include the capability to:

• Fuel Business Innovation
• Expand Talent Pool
• Lower Costs

Fuel Innovation

When you bring in team members from outside your immediate geographic area, you open your organization up to new ideas and ways of doing things. Outsourcing inherently allows for this “cross-pollination” of thoughts and approaches, tools and techniques. As diverse teams share, collaborate, and learn, these new viewpoints open the door to innovation.

Expand Talent Pool

Outsourced teams not only provide skill and expertise to fill gaps in-office, they also allow you to employ talent not accessible in your current hiring radius. When you outsource, your talent search is no longer restricted by geographic borders, and you have access to a larger talent pool inclusive of experts from around the globe.

Lower Costs

Although it’s not always true that outsourcing is cheaper than in-house development, outsourcing software projects does often lead to a reduction in overall costs. This is due to a variety of factors, including reduced operational costs, variance in hourly rates in other parts of the world, and reduced time and resources required for hiring and recruiting (this is especially true if you hire an entire outsourced team).

Risks of Outsourcing Software Development

As with anything, outsourcing isn’t all smooth sailing. When you outsource, you open yourself up to some vulnerabilities, most of which are commonplace when working with any remote or distributed team. Several risks of outsourced software development are related to communication, and the difficulties that arise when communicating across distances and cultures. Three of these risks include:

• Communication Challenges
• Cultural Differences
• Lack Of Dedication

Communication Challenges

The biggest pitfall of outsourcing stems from challenges associated with communication. This can manifest itself in a variety of ways, from simple logistical challenges that arise from working across timezones, to more complex communications challenges resulting from cultural differences. Communication may be difficult if team members are not working at the same time, and with the absence of in-person or face-to-face meetings and non-verbal cues.

Cultural Differences

Another common outsourcing challenge is navigating cultural differences across teams. Business practices and cultural norms vary greatly in different parts of the world, and achieving alignment can be difficult, especially up front. The efficiencies which arise from team diversity when it comes to igniting new ideas and innovating can conversely serve as negatives when miscommunication or insensitivity leads to conflict or confusion.

Lack Of Commitment To Business

Although you’ll do your best to make your outsourced development team feel included (more on this below), it’s possible they may lack a deep commitment to your overall mission or company due to their physical separation. This can be magnified among teams that are hired to take on a single, finite project. This makes it hugely important to cultivate an environment of inclusivity when outsourcing your software development team.

To Outsource or Not to Outsource

The decision to outsource is a personal one, which will vary from organization to organization. There are some questions to ask when determining if outsourcing custom software development is the best choice for your business:

• What is my primary goal for outsourcing?
• Am I willing to devote the extra time upfront necessary to establish successful communications procedures and bridge cultural barriers?
• Does my company currently have technological tools (for example, video chat) in place which will facilitate outsourcing? If not, am I willing to invest in these tools?
• Is my business open to challenging existing ideas, bringing in new perspectives, and using these differences to make business better?
• Am I experiencing rapid growth, necessitating the onboarding of a new team or teams quickly?
• Have I conducted a cost-benefit analysis of outsourcing to obtain a comprehensive understanding?

So You Want to Outsource. Now What?

After you’ve assessed the benefits and risks, and you’ve decided that yes, outsourcing is the way to go, here’s how to outsource software development resources for your business.

Find a Design & Development Team

In order to work with an outsourced software development team, you first need to find them! Just like hiring a team at home, hiring an outsourced team takes time and effort. There are a few ways you can go about finding your custom software design & development team, from tapping into your business network and referrals, to hiring an outside recruiting agency, to conducting your own research. Many standard hiring procedures apply to outsourcing, with some becoming even more important than when making an in-house hire.

Conduct Extensive Interviews

It’s essential to ask questions to assess a candidate’s attitude, organization and planning, adaptability, attention to detail, and ability to work with others. Make sure to review personal background, skills, competencies and business culture traits as well as worth ethic. Is the candidate flexible? Are they eager and willing to learn? At Praxent, years of experience have taught us that a candidate’s proven record of curiosity and learning is actually more valuable than how much a candidate currently knows about development.

Test Technical Expertise

While many developers can reference methodologies and tools, it’s important to confirm they do have the technological aptitude they claim to. Consider asking candidates to illustrate their knowledge by having them complete a sample assignment or task. It’s also important to ensure candidates know the technologies or methodologies they’ll be working with, as these may vary in different areas. Again, ensure they can demonstrate this knowledge beyond simple conceptual familiarity.

Keep Communication At The Forefront

As illustrated above, communication is the crux of a successful and positive outsourcing experience. One good way to gauge a candidate’s communication ability is to pay attention to responses during the interview process. Does the candidate reply right away (within reason), given the time difference? Are they able to effectively make use of tools like video chat? Are they detail-oriented and able to effectively communicate in general? A demonstrated ability – plus strong effort – to communicate prior to being hired is often a predictor of a candidate’s ongoing behavior, and can help ensure success on the team.

>>> Read Our Post On How to Manage an Overseas Development Team

Communicate, Then Communicate Some More

Since communication is key, it should be given attention from the very beginning. Make sure to set expectations and procedures upfront, and set an example with the communications you send. Things like setting times when everyone should be logged on and scheduling mandatory video calls can help facilitate this. It’s important to set the tone with frequent, clear communication. If it feels like you’re overdoing it, you’re probably hitting the mark. Check in often, and ensure to include the outsourced team as if they were on location.

Cultivate The Team

If your outsourced software development team is unhappy, the time you spent hiring and onboarding could be wasted. It’s essential to keep your outsourced team engaged and excited throughout the duration of their contract, no matter how long or short. Make your team feel valued and avoid treating them differently than your onshore team despite physical distance. Include the entire team in meetings, activities, jokes, and other events. Don’t think of your team as two separate entities, but rather as a single cohesive unit.

>>> Learn more about the types of outsourcing and working with distributed teams