Debunking 5 Most Common Stereotypes about Outsourcing Software Development

According to research conducted by Deloitte,  79% of companies around the globe opted for outsourcing software development in 2022.

Although the trend of outsourcing in the IT sector is continuing to grow, there are still companies that hesitate to collaborate with external software development firms due to various reasons, including objective expected risks and prevailing stereotypes.

In our previous publication, where we discussed the distinctions between outsourcing software development and outstaffing, we also delved into some of the most prevalent challenges inherent in software outsourcing.

In this article, we’re going to discover 5 prevalent misconceptions about bespoke software development and explain why they are untrue or only partially true:

 

Stereotype #1: Outsourcing is Always Cheap/Expensive

To kick off, we will address two misconceptions concurrently, since they both pertain to financial aspects. In our article detailing the five reasons to opt for outsourcing developers, we emphasized that significant cost savings are one of the main drivers behind companies choosing outsourced development.

Turning to an outsourcing company can lead to various savings. You can sidestep the need to recruit and onboard developers, as all tasks are handled by the outsourcing firm. Moreover, since these professionals work remotely, outsourcing software development eliminates the necessity of investing in physical office spaces and related overhead expenses.

However, it’s important to note that cost savings do not equate to cheap software outsourcing. In certain regions, the hourly rate for an outsourced professional matches or even surpasses that of an in-house specialist.

This notion similarly applies to the misconception that software outsourcing is inherently expensive. Developer rates differ based on geographical locations.

For instance, in Latin America, Eastern Europe, and Asia, the outsourcing price ranges between $35 to $90, depending on the expertise of the specialist. 

This pricing is more affordable when compared to North America, Latin America, or Western Europe.

In essence, a) opting for outsourcing software development can yield long-term financial benefits, and b) pricing is influenced by the wage standards of the countries you consider for collaboration with an outsourcing company.

 

Stereotype #2: Software Outsourcing  = Complete Loss of Control Over Development 

When a company outsources software development, it essentially entrusts the project’s execution to an external team. This team manages both development and project oversight, relieving the client of the need to monitor every step taken by the outsourced experts.

Nevertheless, effective communication remains a cornerstone of outsourcing software development services. Thus, regular synchronization calls are arranged to keep the client informed about the overall progress.

If any issues arise, the client retains the ultimate decision-making authority. This is a responsibility that cannot be delegated to the outsourcing party.At the end of the day, since the client stands as the stakeholder and the outsourced software development company serves as the project’s executives, the project’s success becomes a shared responsibility.

Furthermore, clear requirements are imperative for any project. The more comprehensive the details provided to the outsourced developers, the better the outcome of custom software development. Assuming that you can relinquish the project entirely and forget about it until the product is done, you risk ending up with a product that falls short of your expectations.

 

Stereotype #3: Core Business Functions Should Never Be Outsourced

Core business functions encompass the essential services of an IT company that underpin its value proposition. These services not only define the company’s purpose but also outline the diverse ways it serves its customers and achieves its goals.

Interestingly, software development can be firmly classified as one of the core business functions of a software development firm, serving as the building block upon which the company’s technological solutions are crafted. However, depending on the company’s product offerings, these functions might also encompass a range of critical areas:

• Research & Development (R&D), a pivotal component integral to any software development process.
  
• Technical support, dedicated to aiding customers in addressing IT product/service-related inquiries.
  
• Project management, entailing planning, organization, and supervision of diverse project elements.
  
• Data management and analytics, enveloping the spectrum of data collection, storage, and analysis.
  
• Business strategy, entailing setting direction based on market analysis, trends, and the company’s strengths, followed by execution.
  
• Marketing & PR, encompassing the formulation and execution of a comprehensive marketing strategy.
  
• Other roles and responsibilities as per specific company requirements and industry dynamics.

 

According to last year’s research by Deloitte, 76% of companies said that they outsourced many of their IT functions. In our experience, besides software development services, smaller businesses tend to outsource accounting, customer support, and marketing.

However, the fear of losing control, security risks, or a lack of expertise in selecting suitable outsourcing candidates often deter businesses from the decision to outsource development.

One of the primary benefits of outsourcing software development is freedom to assemble a team with the exact specialists needed to build a product from scratch – from software developers and QA engineers to project managers, designers, analysts, marketers, and customer support representatives.

Besides, if your startup’s stage of growth or strategy requires outsourcing core business functions, you can’t ignore this fact. To dispel the stereotype, the key is to invest time in identifying a reputable outsourcing company capable of providing the needed specialists.

 

Stereotype #4: Outsourced Development Takes Longer Than In-House Development

It’s understandable why certain companies might believe that an in-house team could outperform an offshore team. With your in-house team being a group you’ve carefully assembled, you possess a clear understanding of their capabilities.

Additionally, your in-house team has established effective communication practices (has it?) and is familiar with project challenges. As a result, it’s easy to assume that an outsourced team might not meet the project’s requirements as effectively as your in-house experts could.

However, don’t underestimate the potential of an outsourced team. Even if your in-house team is exceptionally skilled, an outsourced team can execute your project no worse or even faster than your in-house team.

Why? Outsourcing developers entails that an outsourcing firm has already assembled the required specialists for your project. The time-consuming process of identifying and hiring new developers is thus circumvented.

Besides, as an outsourcing firm specializes in tailored development, it has refined communication and development processes that enable efficient service provision (for more insights into why software outsourcing leads to quicker outcomes, go here).

On top of that, if your in-house team juggles multiple projects, burnout can become a concern. Considering outsourcing software development could ultimately save considerable time and effort. It’s about finding the right balance between in-house expertise and the potential benefits of external collaboration.

 

Stereotype #5: Low Price Rates = Poor  Work Quality

Certain companies hold the belief that opting for lower rates when hiring outsourced specialists inherently implies a compromise in the quality of work delivered. While this line of reasoning may appear logically sound, it often signifies that these companies haven’t thoroughly conducted their market research.

It’s crucial to acknowledge that the quality of outsourced work is influenced by a multitude of factors, with one key element being the geographic location of the outsourcing provider. In reality, the compensation for outsourced specialists is intricately linked to the wage standards of the respective countries in which they operate.

What might be considered affordable rates within one’s own country, which undoubtedly presents a benefit, might not necessarily translate the same way when outsourcing to a different country. The outsourced specialists from countries with lower living costs can provide exceptional services at competitive rates.

Statistics show that certain regions renowned for their low outsourcing price rates, such as Eastern Europe, boast a substantial concentration of highly skilled software development professionals. This not only challenges the misconception of a direct correlation between rates and quality but also underscores the potential for discovering top-tier talent at favorable rates. 😉

 

Bottom Line

Outsourcing software development, an area that’s sometimes viewed through the lens of stereotypes, can become an integral part of your business.

However, it’s crucial to remember, especially in the realm of business, that stereotypes can be subjective and misleading and must never shape your decision-making process.

Since your company’s needs and goals are unique, taking the time to do thorough research before making a final decision about outsourcing software development is a smart move.

Undoubtedly, choosing to outsource software development services is a strategic step that can bring you significant advantages. By fully embracing the potential of outsourcing, you position yourself to stay competitive, innovate faster, and adapt to the ever-shifting demands of the modern business landscape.