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The case for effective IT outsourcing

The case for effective IT outsourcing

  • Updated: December 28, 2020

IT outsourcing is one option to deliver better applications to your end users. In software development, the vision of what exciting features to offer your users often exceeds the budget set aside for the project. Stretching a budget as far as possible is a balancing act that takes careful planning and teams you can trust. In any project, labor is the most expensive line item and this only gets more expensive if you have to hire an in-house team. It’s worse if there’s a talent shortage in your region. 

One of our most active markets Finland, for example, lacks developers, especially in newer technologies and this problem will only compound over the next decade. Finland is not alone, though. Western European and American firms also struggle to fill positions to keep up with their growth goals. 

One obvious solution to this shortage of affordable labor is to outsource your software development project to a firm in a place with lower labor costs. However, this comes with its own set of challenges. So much of the outsourcing industry is a race to the bottom in terms of cost and code quality suffers as a  result. Even among providers that produce good code, the range of project management standards — and work ethic — varies widely.  

Look for a firm that will not only extend your own team but will also think critically and carefully about the task at hand. Many of the benefits of hiring an external team are that there’s less risk, it’s a better value, and you’ll likely capitalize on the competitive advantage of a specialist team. Striking this balance is one of the best ways to ensure you’ll use your IT budget effectively. 

Less risk

Since outsourcing an external partner is not a fixed cost, hiring a remote software team is less risky than the long-term investment of hiring in-house developers. This flexibility allows you to scale up your project as the scope of the job expands. By the same token, it also frees you to scale back production if you need to. 

With in-house teams, expansion can take a long time and gets very expensive. Time, of course, is precious and competitors are moving just as fast. Meanwhile scaling back a team is a difficult decision for any organization. Depending on the types of contracts, it can also take a serious bite out of revenue to scale a team back once you launch the program.

Software houses that charge by time and material, rather than fixed-price models give even more flexibility and transparency as well so you can stay within your budget. Being able to rapidly respond to an ever-changing market is vital in the tech industry as those who fail to adapt don’t last long. Mitigating the risk of obsolescence is one way to effectively use your IT budget. After all, there will be no budget if you’re out of business. 

Better value

As I mentioned above, outsourcing allows you to find teams at a comparatively lower cost than those available at home. While this may sound like a great way to save, doing your due diligence is an essential part of selecting the right partner for the job. Low-cost development often requires more resources to fix mistakes than having something done right the first time. So choose a partner that does it right the first time. 

Additionally, project management styles vary and those teams who can delegate and deliver within the deadline will waste fewer billable hours. Productivity is key and firms that specialize in software delivery pass on huge savings to clients. 

In your search, client references and portfolio entries reveal a lot about an IT outsourcing company and its reputation. Use those as a starting point to determine which provider can offer the best value for the money. 

Competitive advantage

You can’t try to do everything and still do it well. Even highly skilled internal teams have knowledge gaps that need to be filled. That’s one of the best budget-friendly aspects of hiring an outsourced team. Quickly finding the right experts for the right amount of time goes a long way toward helping you reach your firm’s growth goals. 

For example, if you’re planning on launching a payment application, find a team that has plenty of payment experience under their belt. These types of projects need more than just standard developers and instead, need those with lots of relevant work history. Fintech applications are not the place for amateurs. Integrating these are highly complex and require very sound code. 

Dynamic teams with an up-to-date grasp on emerging technology are valuable assets to a software development project. Finding in-house developers with the right level of experience for the price your budget allows can be daunting. Outsourcing these tasks to solid, reliable people will keep you within budget and on schedule. What you save in not hiring an in-house team can translate into more features, better UX, and a great start in the market. 

Conclusion

Budgets for a software development project are often tight and spending every penny wisely is a must. At the same time, development is a labor-intensive process that can get very expensive very quickly — especially if you’re hiring an in-house team in a place with a talent shortage. 

Spending your IT budget wisely often requires tough decisions about cost, quality, and the types of features the app will have in the end. This is something a solid IT outsourcing partner can provide. 

Competitive advantage is the key here for both fully outsourced projects and team augmentations. Filling temporary gaps in specific areas of expertise enables careful CIOs to stay on budget and launch their applications with a greater offering of features on time.

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