What is Outsourcing development strategy and which are their models
Every company aims at finding ways to increase ROI and enable business growth. In the digital age, marked by the increase of the markets operational scope, many businesses choose to outsource certain activities, accessing a much larger talent base at a much lower cost. This is the backbone behind the idea of software development outsourcing.
To be successful in this endeavor, however, it is necessary to adopt a strategic approach, taking into account the benefits and challenges involved in such an arrangement. It is not enough to decide to outsource: you need to know how to do it, understand the different modalities, and determine the most effective way to direct your investments.
In this text, we will explain in detail what is software development outsourcing and point out the differences between its formats. Also, we will indicate which option brings more value to your business. Ready to learn more? Read on!
Software outsourcing development refers to a business model in which the company hires external agents to fulfill all tasks related to the software development process. These professionals can be autonomous or linked to other corporations. It is important to note that this is not necessarily something new, but it has been gaining projection due to the continuous technological breakthroughs. Today, regardless of the size of your company and the region in which it is located, it is entirely possible to establish partnerships with professionals who are geographically distant, expanding the quality and quantity of the available talent.
By choosing to outsource its software development tasks, the company ensures that these activities will be conducted by third-party experts, which brings several benefits ranging from reduced payroll to increased quality of delivery. In this way, it becomes more feasible to scale the business and overcome market barriers.
This type of activity also allows the company to focus its efforts on other types of investment. After all, it will not be necessary to worry about training the professionals involved in the project, paying extra labor taxes, or spending on benefits.
However, to really benefit from this strategy — and any other, of course — it is necessary to better understand its modalities and decide which one best fits your reality. To learn more, read the following topics!
Now that you understand exactly what software outsourcing development is and are familiar with some of its advantages, let's talk about the different ways you can invest in such a strategy.
It is vital to compare each one's characteristics and thus decide which is more appropriate to benefit your business.
The name says it all. In an onshore outsourcing model, the company accesses development professionals located in the same country. We are talking about partnerships between companies that are geographically close, and that can supply the demand for quality developers. Here, the challenges are smaller, since the language barrier does not exist.
However, onshore outsourcing will hardly generate significant savings. Since they are located in the same economic environment, outsourced professionals will cost almost as much as an in-house developer. Also, the shortage of available experts in this field represents a major obstacle.
For these reasons, more and more companies are deciding to invest in professionals from other countries, as we will show below.
Investing in offshore software outsourcing is a solution found by many companies to expand their activities based on a low-risk and cost-effective strategy. The idea is to seek professionals in foreign countries. India, China, and other Asian countries stand out in this category.
When a company located in the United States outsources its IT department to other regions, it can access much cheaper and, at the same time, extremely qualified labor. The challenges, of course, are language barriers, cultural differences, and time zones.
Besides, the offshore outsourcing market has shown remarkable growth in recent years, which represents greater competitiveness. As a result, some companies are experiencing cost increases and even difficulties finding available qualified professionals.
Nearshore software development refers to something very similar to what we described in the last paragraphs. The idea is to work with professionals based in other countries, but with a fundamental difference: as the name implies, these countries are geographically closer thanthose involved in offshore operations.
But, after all, which of the modalities listed is the most advantageous? Of course, to answer this question accurately, we would need to consider all the particularities of your business, such as its size, the market in which it operates, and the available budget.
However, based on the definitions of each modality, we can identify essential points. For example, investing in onshore outsourcing may be interesting for specific companies, but, overall, it falls short of having all the potential benefits of IT outsourcing.
Thus, offshore appears as a more beneficial modality since it represents a considerable reduction in costs and increases the number of professionals available. With the help of technology, it is possible to overcome geographical distance and time zone barriers.
The problem with offshore is that this market is already a little overwhelmed. If you have ever tried to implement this idea and experienced frustration, you know what we are talking about.
Many countries that are now presenting themselves as sources of skilled labor do not have the structures necessary to offer genuinely qualified professionals. Meanwhile, the qualified ones are disputed by large companies, and their costs are getting higher and higher.
This is where nearshore software development comes in. Turning your eyes to nearby countries, such as those located in South and Central America, can be the key to finding a partially unexplored market, with enormous availability of properly trained professionals.
Moreover, by dealing with geographically closer regions, this modality usually presents fewer obstacles related to cultural barriers and time zones.
Investing in software outsourcing development is a way to boost your ROI and increase your IT teams; quality. Although the process involves some challenges, the benefits achievable from a strategic perspective allow you to scale your business with a cost-effective and low-risk approach. CTA: Interested in learning more about outsourcing your development teams? Follow us at @kobe.software for more information!
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