Skip to main content

When it comes to outsourcing, one of the biggest myths is around cost. Outsourcing should be done only if you need to save costs is a myth that has been apparent in the industry for quite a long time. Many organizations think outsourcing should be done because it is cheaper than hiring your own team, and this is a trap. As per the latest report by Market Business News, by 2027, the global engineering outsourcing market is supposed to earn around 431.12 billion US dollars with a CAGR of 5.1 percent in 2021—2027. When it comes to a type of business that implements outsourcing services, Statista reports that it is engineering start-ups that integrate outsourcing to satisfy their top business needs. These statistics clearly shows the surge in global demand for IT outsourcing.

There are many reasons why more companies choose to outsource IT operations. This will not only speed up technology integration but also help reduce management costs. Outsourcing is also one of the best ways to meet your company’s unusual requirements around high demand, talent shortage, niche skillset, swing teams to name a few. Outsourcing is a strategic decision that is much more than just cost savings.

When should you consider outsourcing then? What are the triggers for outsourcing your technological needs besides just cost savings? Read on to learn more

1. You Need to Extend Existing Software to New Platforms or Languages 

Some companies feel that they need to update their software to use a different language. Reasons include security vulnerabilities, your plug-in or API does not support your current language, or difficulty finding a developer for your current language. Instead of wasting time and money to “redo” a project for the new platform, it is better to use an external team. Since your project has been completed, anyone who joins the project already knows the specifications, expectations, design, and roadmap.

If you are looking to migrate the application from one language to another or if you are looking to upgrade the application for UI/UX, outsourcing could free up time for you to focus on processing feature requests and updates for the actual product, while facilitating external teams to join. Whether you are cooperating or handing over this part, an expert outsourced product development company can make it easy!

2. Your IT Project Requires Niche Expertise 

When you participate in a project that requires expertise, the true value of outsourcing is reflected. These projects could be on the Internet of Things (IoT), Artificial Intelligence & Machine Learning, Cloud or Edge Computing, Mobile or Network Security. You might consider challenging your internal IT staff to handle these projects, but you are likely to get unsatisfactory results. Hiring a whole set of experts is feasible, but it can be very expensive. The best practice is to outsource these operations so that you can be proficient and do not end up building a team that you cannot drive yourself. It’s better to let a chef cook a delicious meal with ingredients he knows best to use than you buying those ingredients and trying a recipe you have not tried your hands on, ever. If you still do so, it will be a strategy doomed to fail.

Finding the best developers for a project has always been challenging, but it is even more so today. LinkedIn’s annual emerging job report stated that since 2015, the annual growth rate of full-stack developer positions has been as high as 35%. Therefore, finding talent is a time-consuming task of finding and hiring suitable candidates. Outsourcing is a quick solution that allows you to hire a temporary team to meet your deadlines.

3. Your IT Department is Experiencing High Turnover 

As a company, the last thing you want is high employee turnover in any department. Unfortunately, sometimes it happens, and the reasons can be many. IT professionals are usually in high demand ever since the pandemic subdued, and you may not be able to meet their salary requirements. This may result in a high turnover rate in your IT department. A practical way to solve this problem is to start outsourcing your IT functions until your business is profitable enough to make higher full-time employees comfortable.

In small businesses, it is not uncommon for people to wear more than one hat to keep things running. However, overwork is the fastest way to cause disaster, because their work output may be unsatisfactory or full of errors. Although outsourcing seems to be the last choice you want to make in difficult times, outsourcing can give your core team enough room to focus on the activities that brought you your customers in the first place. It may actually be a movement that can stop sliding.

4. Businesses with Peak Demand 

Enterprises with peak demand may result in insufficient resources or inefficient operations due to too many team members and insufficient tasks. This is especially true for seasonal businesses or e-commerce businesses during peak holiday periods. Instead of reassigning existing employees to loosely appropriate roles, or hiring support staff only during peak hours, consider a supplementary external team or a swing team. The advantage is that you only pay them when you are at the peak, allowing your full-time employees to focus on the tasks they are hired for.

When sales are rapid and orders pile up, the pressure to obtain orders quickly and efficiently is huge. Incorporating promotions and fulfilling all these orders can be a major challenge, especially for small and medium enterprises. Therefore, the first question to ask before any busy period is: Are we staffed appropriately to meet the demand? If not, do we have enough time and funds to hire internal experts? It is very unlikely that these two situations will be true at a certain moment. Choosing a suitable outsourcing partner should solve your problem of scaling operations as and when required by utilizing a swing team.

5. Short Term for Software Development 

If the software development period is short, and you need to go through the entire process of hiring experts, software development, problem-solving, testing, etc. when creating an application, you must leave the project to a team of well-known experts who will develop you in a shorter time.

Take a closer look at how much billable time you will lose for tasks you can pay for others to do. This may be a warning that you have suffered a loss due to not outsourcing. Remember, people buy your product rather than develop their own product, because they are not experts, and you are. However, you may not know all the knowledge of software development or have never used niche technologies. At this time, it makes sense to hire a partner who makes living developing software applications for companies like yours.

6. You Did Not Continuously Train Your Internal IT Staff

Employees in most departments of your company need to upgrade their skills on a regular basis. You want to ensure that your employees are kept up to date with the latest developments in their field of expertise.

With the rapid development of the IT industry, it can be challenging for your small business to keep up. There are endless training options, and you may not know where to start. This is why some small businesses choose to ignore most of the latest developments in IT.

If you do not have the internal expertise or a well-defined training program, outsourcing saves cost and time than recruiting and training new employees. This way, you can focus on your core business and let experts build products for you without delay. You need many different resources to build a mobile application, including Android programmers, iOS programmers, mobile architects, product managers, testers, and business analysts. Hiring all these resources for just one mobile application project can be time-consuming and expensive. And, you cannot build a mobile application with your web programmers. In this scenario, ideally, you want to use an external company to build the initial product, and then determine whether you need to hire internally or continue to use external help. You need to hire an expert who has done this many times so that your product meets or exceeds your end customer’s expectations.

7. You Spend too Much on IT

Approximately 45% of companies that outsource IT projects do this to save money. Running an internal IT department can be very expensive. Cost still remains one of the main drivers for outsourcing but not the only one as highlighted from the above scenarios. Due to a shortage of IT skills, IT individuals usually demand higher salaries than most other employees in the company. If employees have certain expertise, such as data science or low code, no code, they will even negotiate to get high remuneration. In addition to high salaries, the cost of setting, building, and operating a team of these individuals is also high.

So how can outsourcing help reduce these costs? Well, first of all, you must pay a predetermined price for the required service package for the duration required to complete the work packets rather than paying salaries full-time. Both start-ups and enterprises face the pain of having to find, hire, and then train full-time developers to help deal with the workload of the project. This time-consuming and expensive measure can be simplified by hiring a team of experienced experts, who only need to understand your project requirements and expectations. When you consider the cost of benefits, wages, and long-term commitments, outsourcing is always usually cheaper!

Conclusion:

Companies outsource as per their needs and financial capabilities. While some companies delegate two-three functions only, some are comfortable with having very few employees and outsourcing the maximum amount of technology development work. However, the ultimate goal is always the same – to increase the flexibility of the business model and to lower the operational costs. 

The overall trends of the past decade suggest that outsourcing is a highly popular route among small businesses. But, if you haven’t tried it yet and you can see any of the above signs in your own company, go ahead and test it for yourself. Need help getting started with your software project or looking to outsource? Reach out to Pratiti Technologies, an expert outsourced software development firm with the experience and expertise to craft your digital journeys!

our services:
Edge Computing Solutions | Healthcare Software Development | Data Analytics Solutions | Cloud Computing Services Providers

Nitin

Nitin Tappe

After successful stint in a corporate role, Nitin is back to what he enjoys most – conceptualizing new software solutions to solve business problems. Nitin is a postgraduate from IIT, Mumbai, India and in his 24 years of career, has played key roles in building a desktop as well as enterprise solutions right from idealization to launch which are adopted by many Fortune 500 companies. As a Founder member of Pratiti Technologies, he is committed to applying his management learning as well as the passion for building new solutions to realize your innovation with certainty.

Leave a Reply

Request a call back

     

    x