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Top 12 Reasons Why Software Development Outsourcing Is So Successful

Tesla, born in Silicon Valley, never outsourced their software — they write their own code

Morris Cohen

When the automobile industry faced a shortage of computer chips in 2020 and many automakers were forced to shut down, Tesla racked up record sales. Tesla took it upon themselves to write the software of their computer chips instead of depending on third-party suppliers. Many people associate Tesla’s success with its firm decision against outsourcing.

Should all companies be like Tesla and develop their software in-house to be successful?

Is it always wise for businesses to choose in-house development over software development outsourcing? 

It is hard to imagine a business that does not need software services today, be it a small bakery or multi-billion dollar financial firm. But not every company is equipped to develop its software like Tesla. Tesla’s software is a core part of their business and they have an army of technical savvy engineers and the necessary infrastructure to keep it in top shape. 

Many businesses, especially those belonging to non-technological industry verticals, choose to outsource this job to specialised app development companies. Outsourcing is not just a way out for small, technologically challenged businesses. It is a successful business model that has significant benefits for companies – which is why tech giants like Google, Slack, Microsoft, Alibaba, GitHub, and many more rely on software development outsourcing.

world-leading companies that outsource
5 world-leading companies that outsource

Software Development Outsourcing – Facts, Figures, and Future

According to Statista, the global IT and software development outsourcing market reached USD 395.05 billion in 2022. Experts predict the outsourcing market to grow further at an annual rate (CAGR 2022-2027) of 8.20% and reach USD 587.60 billion by 2027.

Source: Statista (2022)

There are simple reasons for this growth. Let’s suppose you wish to initiate a short-term project for your company. You require a team of professional app developers, but creating an in-house team would cost you an arm and a leg. The vetting, hiring, training, and management of different technical resources would not only require financial investment but would also take up a lot of precious time. The time that could be better spent on the other core functions of your business.

Instead of doing all that extra labour, you can simply opt for software development outsourcing: hiring a third party to take over your development process. The outsourcing company will already have the required professional skillset on board, and you can easily obtain their services for your software project for a much smaller investment.

“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”

– Lee Kuan Yew, Prime Minister of Singapore

The cost savings that software development outsourcing guarantees are one of the major benefits many businesses gain. In fact, for many companies, outsourcing is a gambit to survive in today’s highly-competitive market where everyone is looking for ways to reduce expenditures to get ahead.

12 Reasons Why You Should Consider Software Development Outsourcing for Your Software Project

In this section, we will talk about how outsourcing software development can be your gateway to success and the many ways in which outsourcing software projects is a much better option than hiring an in-house development team.

1. Software Outsourcing Is a Time Efficient Solution

Have a project with a fixed delivery time frame? Or want critical business software to be quickly developed and be ready-to-use? Or are you a startup aiming to release your software product in the market as swiftly as possible? If you are in a similar situation then custom software development outsourcing is the right answer for you.

Outsourcing developers is a popular solution for short-term and time-sensitive software development projects. With software outsourcing, you can find a software provider that best fits your project and get started with the development as early as possible. While the process of building an in-house development team is a lot more time-consuming because it entails spending months finding the right talent, and hiring and training them before the actual development work can begin.

Moreover, with software outsourcing, you don’t have to spend time micromanaging everything. When you outsource the project to the software team, it becomes their responsibility to keep to the agreed time schedule and deliver the final product in a timely manner.

Experienced software development companies have time-tested processes to develop and deliver software efficiently according to their client project timeline. Therefore, with a professional and well-organised software outsourcing partner working around the clock, it is guaranteed that you can reduce your time-to-market by developing and launching the product in a shorter time than in-house development.

2. Cost-Effectiveness of Outsourcing Software

Software development outsourcing is a cost-effective solution, especially for startups and smaller businesses that do not have the financial resources to invest upfront in an in-house development team. The cost of the in-house development can affect the company’s capital requirements and its overall starting position, therefore. outsourcing software development can be a viable solution by saving you enormous upfront costs.

Unlike in-house development, you not only save money by not spending on the whole hiring process but you also avoid additional overhead, operational, training and management costs that you would have incurred with an in-house team. This means by outsourcing development you only pay for the product development without any additional costs.

Outsourcing is especially cost-effective for businesses operating in Europe or North America because outsourced labour may cost them a fraction of the amount than the same labour performed in-house, sometimes up to 70% less. Businesses can hire software outsourcing companies globally and leverage the reasonable development rates offered by offshore vendors. Not only this, but they can also choose between different types of engagement and pricing models offered by outsourcing vendors such as fixed-price fixed-scope, time and material, and dedicated teams, and keep the development cost within their budget.

cost of software outsourcing
Cost of Software Outsourcing

3. Software Outsourcing Is a Flexible Solution

Outsourcing software development allows you to be flexible in every which way because you have a wide pool of options to choose from. Contrary to an in-house development team, outsourcing the job means you do not have to be geographically limited. With options located off-shore, you can choose a software outsourcing company located anywhere in the world.

With the flexibility to hire globally, you can select an outsourcing team with rates and cooperations model which will fit your requirements. No matter where your team is located, you can easily keep in touch with real-time collaboration tools like Skype, Redmine, JIRA, Trello, Zoom, and Slack.

If you wish to remain closer to the development ‘action’ you can choose to hire a hybrid software development company that works both onshore and offshore. This way you get the best of both worlds and a great deal of flexibility.

Hybrid Software Outsourcing Company in the UK

Based in London, GoodCore’s onshore presence allows us to be accessible to our clients and helps with efficient communication, whereas being offshore gives us access to a wider, deeper, and more technical skillset.
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4. Software Outsourcing Is a Scalable Solution

With software development outsourcing, you also don’t have to worry about scaling your employees if your requirements change from project to project. Whether your project requires a full-scale development team or just a couple of developers, you can negotiate this with the software outsourcing company and get a team with the right composition for every project, without having to worry about hiring or firing employees. Hence, allowing you the flexibility to work on projects of different sizes.

The illustration below depicts how the size of a development team can vary for different projects, and with software outsourcing, you can easily scale your development team depending on your project’s size.

scalability and software outsourcing
Scalability and Software Outsourcing

5. Outsource and Stay Focused on Your Core Business

Software development outsourcing means leaving the job of coding and development for the experts – the software outsourcing company and staying focused on the other core aspects of your business such as long-term goals, growth, and operations. Software outsourcing helps reduce the workload of your employees and enables them to do important tasks that require thorough work such as branding and marketing, finance, sales, administration and maintenance, customer relationship management, networking, and many others depending on the nature of your business.

These are the primary goals that are imperative to every business’ growth and focusing on them will be much easier without the burden of building and maintaining an in-house team of software development. You can outsource software development and focus solely on building your business and marketing your products which gives you a head start over your competitors.

6. Onboard Expert Talent with Software Outsourcing

The technological world rapidly changes and more new technologies and skills become relevant every day. Even if you have a good team of in-house developers, it is likely that they might not be experts at everything and may lack the skills required for a specific software development project.

For instance, imagine if you want to launch a face recognition app to compete with the best face apps out there, for this you need to have a team that is expert at Artificial Intelligence (AI) and deep learning mechanisms. Instead of going the route of hiring these experts, you can simply find an outsourcing company with adequate experience in AI and leverage their expertise for your project.

When you look for outsourcing developers, you look for experts in the field and you can find plenty of software development companies worldwide that specialise in different technologies and have the required personnel to kick off your project successfully. Hence, outsourcing development gives you access to a pool of talented and experienced development teams who can expertly build your software product and business apps for you.

7. More Than Just Developers

The process of software development requires a range of skills other than the skill of writing software. Therefore, you not only need a team of developers but you will also need other skilled workers such as UX and UI designers to design the interface and navigation of your product. You also need Quality Assurance (QA) engineers to test your product at every step of the development cycle and prior to the launch to ensure the quality and failure-free operation of your product. On top of that, you also need a project manager (PM) to manage, oversee and execute the project so that it is successfully completed on time. 

In-house development involves recruiting all these skills for your development team which is not only going to cost you more money, but it will also be time-consuming. So, when you outsource the project, everything from project planning, wireframing, UI/UX designing, and quality assurance to deployment would be the responsibility of the software outsourcing company. They would do it all without you having to worry about it.

8. Outsource Specific Functions of Your Software Project

When it comes to software outsourcing services, you can also choose to outsource one or a few of the functions of the software development process to third-party software development companies.

For example, you might have a good in-house team of developers but you might not have a talented UI/UX designer on your team or a QA engineer. In such a case, you can hire these experts to complement and complete your team. There are software development companies that offer a range of professional services like UI/UX design, QA testing, and support and maintenance independently.

Looking to outsource specific functions?

GoodCore offers a range of professional services including MVP Development, UI/UX Design, Support & Maintenance, Software Project Rescue, API Development and Integration, and QA and Testing services.
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9. Accurate Results and Project Timeline

Software development outsourcing results in enhanced accuracy in terms of project timeline and results. When you work with a software outsourcing company, you can set clear deadlines for the different components of the project, and know beforehand when the final product will be delivered allowing you to plan other aspects accordingly. Outsourcing software development companies are experienced in dealing with the timeframes of clients, they have experienced and proven development and project management procedures, which means they can precisely estimate the required amount of time and resources for your project. So, with outsourced software development, you can expect an accurate project budget, schedule and fewer risks of unanticipated expenses and delays. In the end, you will achieve accurate results (i.e. an efficient software product tailored to meet your requirements) within the decided timeframe.

10. Software Outsourcing Mitigates Major Risks

Outsourcing software development involves less risk than choosing an in-house software development team. From an investment standpoint, since outsourcing does not require a large amount of upfront investment it mitigates a number of financial risks. This is especially helpful for small business and startups. Moreover, with the project being in the hands of an experienced software outsourcing company, the risks of project failure are also considerably reduced.

11. Benefit From Cutting Edge Tools and Technologies

Software outsourcing companies stay on top of their game by using cutting edge tools and technologies. They know the latest technologies for web, mobile and cloud development, the latest framework, languages and tools. Most of these high tech tools require hefty licence fees for their usage and distribution. You can leverage their expertise by outsourcing the software project to them instead of spending a large amount of money on acquiring the latest technologies and training your in-house development team. Hiring an outsourcing company that already has the latest technologies, skills and experience reduces your costs and startup time and delivers high-quality work to you quicker.

Do you need software development experts for the latest technologies?

Do you need software development experts for the latest technologies? Reach out to us!
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12. On-going Support and Maintenance

Software development is an ongoing process, the software code is never just written once and done and dusted forever. Most software projects require ongoing support and maintenance. This is true for outsourced software development as well, the final product that is delivered requires support and maintenance to fix bugs, update, and add more features. This makes software development outsourcing a popular long-term solution for your product’s maintenance.

The outsourced team can work to maintain your product while you focus on other important aspects of the business. If it is a product that is meant to be sold to the customers, you can focus on its marketing and gathering customer feedback while your outsourced developers focus on improving the product.

Wrapping Up!

In conclusion, software development outsourcing is becoming a popular practice in today’s day and age because of the many benefits it offers for businesses. It has proven to be a mutually beneficial practice for businesses that outsource software development as well as software outsourcing companies.  

All things considered, software development outsourcing is an easier way to get things done for companies, especially smaller companies that are unable to invest in building and training an in-house development team or for short-term development projects that do not require a long-term investment of your resources. In short, software development outsourcing works for most businesses because it is a cost-effective, time-efficient, flexible and less risky alternative to in-house software development.

Before we sign off, we are going to answer some of the most frequently asked questions regarding software development outsourcing.


Is software development outsourcing only for startups?

Software development outsourcing is a suitable option for startups because it allows them to swiftly release their product to the market for a minimum investment and within the shortest timeframe possible. Outsourcing is also a popular solution for established businesses as well because outsourcing offers them convenience, and flexibility and allows them to develop, promote and market their products more successfully.     

How much does software development outsourcing costs?

Software outsourcing is a cost-effective solution, but how much does it actually cost? The cost of your outsourced project can vary depending on a number of reasons such as the requirement of your project, the required time and resources for your project, and the pricing of the software outsourcing company.    

How to outsource software development effectively?

When you outsource software development, the quality of your software depends heavily on the software provider you choose to work with. Therefore, successful outsourcing beings with finding the right software company. You can use resources like Clutch, The Manifest and GoodFirms to research and review top software providers. Shortlist suitable companies based on their work portfolio, pricing, and ratings. Get in touch with the companies and discuss your project and evaluate their suitability and make an informed decision considering all the important factors.   

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Yasin Altaf

The author Yasin Altaf

Yasin Altaf is the Executive Director at GoodCore Software & Forbes Technology Council Member. Yasin’s experience in recruiting top technical talent and delivering technology solutions and B2B services spans over 20+ years. Throughout his career, he has helped businesses across industries overcome complex challenges through custom-built solutions, and enabled entrepreneurs and nascent startups to launch market-leading software products.

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