Software Development Outsourcing – Here Are The Advantages and Disadvantages

6 mins read

05 May, 2014

Software Development Outsourcing has been an increasingly popular trend for several years now. The cost benefits are easy to understand when you compare the average annual salary of an engineer in the USA with that of an engineer in India. Outsourcing gives you access to professionals, experts, and high-quality services. Outsourcing companies allocate specific business processes to a specialist external service provider, which is a plus as an enterprise cannot handle all aspects of a business process due to resource constraints.

Prevailing Questions Related to Software Development Outsourcing

  • Is Offshoring worth it?
  • Are the cost savings as high as they seem?
  • Is the quality of the software sacrificed, or is it improved?
  • Are there risks associated with offshoring software development?
  • Are there ways you can hedge against any of the risks involved?
  • Should you consider offshoring any software development, or are there certain things you should not outsource?
  • How can you recognize the danger signs of offshore work going awry?

Software Development Outsourcing & Offshoring

Advantages of Offshore Outsourcing

Advantages need to be substantial for companies to endure the disadvantages of offshoring. Offshore outsourcing is a viable way to remain competitive in an increasingly aggressive global environment. Many USA, UK, and Australian companies are now looking to outsource due to the ever-increasing overhead costs of software development. Outsourcing helps in cost reductions of up to 30%.

  • Cost Savings- The most noteworthy attraction is significant cost savings. Companies are finding that offshoring their software development process saves them big because of lower labor costs. With outsourcing, the labor costs get cheaper and output improves.
  • Time Savings- When employees work on your projects round the clock, the software development takes much less time, so the product reaches the market more quickly.
  • Tax Savings- Some companies are attracted to offshore outsourcing because of potential tax savings. They can take advantage of opportunities for tax incentives offered by the Indian government.
  • Focused Strategy- Some companies that have had successful experiences with offshoring report that outsourcing offshore allows their companies to focus on business-critical initiatives, while they outsource their non-critical software and project-management functions.
  • Talented IT Professionals- IT outsourcing companies accumulate the best information technology and software development brains, so you get access to that pool of talented resources overseas.

Disadvantages of Offshore Outsourcing

Nothing is without tradeoffs, and offshoring is not an exception. It’s essential to look at a few potential drawbacks before deciding to send your software development requirement offshore. The risk of losing sensitive data and the loss of confidentiality are some of the disadvantages of outsourcing. The following points will help to determine whether the rewards outweigh the hazards involved in offshoring.

  • Technology Difference- Technology differences can pose problems. It is essential to ensure that the hardware and software development platforms used for software development are compatible with the intended platforms for the end product software.
  • Cultural Problems- Soft factors such as cultural differences relating to software development, different standards, coding practices, documentation styles, and work ethics can be problematic. However, some of the offshore development houses are well-versed with these factors and their outcomes. And hence, quite prepared because they have been catering to the needs of overseas clients for years.
  • Hidden Costs- Travel and communications costs can be substantial if your offshore partner needs to spend an extended period on site.
  • Communication Gaps- One of the other disadvantages is language difference, it can sometimes lead to miscommunication. Since good communication between user and developer is the key to accurately extracting the requirements for the software to be developed.

Software Development Outsourcing- Concluding Note

Despite many challenges and drawbacks, offshore outsourcing will remain an attractive solution for many companies. Companies should take maximum advantage of it, and it is advisable to determine the importance of the tasks considered for outsourcing. With outsourcing, there is an increase in productivity and efficiency, as hence the business can be more successful, better-prepared for market challenges with streamlined cash flow.

Keyideas custom software development company has years of experience and knowledge by serving companies overseas, especially from the USA. Our team possesses good communication skills and hence, comfortably understands the complex requirements of the client. Keyideas is a custom software development company in India, focused on quality since it started, and has built credibility in the overseas market. We focus on our processes and quality aspect, which naturally differentiates us from ordinary suppliers.

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