IS IT SAFE TO OUTSOURCE SOFTWARE DEVELOPMENT? EMBRACE CREDIBLE OUTSOURCING IN 2021
9 min
Jul 23 2021
Nikita L Is it Safe to Outsource Software Development? Embrace Credible Outsourcing in 2021
Nikita LBusiness analyst
Danil L Is it Safe to Outsource Software Development? Embrace Credible Outsourcing in 2021
Danil LWeb Developer
Over the last decade, the need for outsourced IT professionals was in high demand. The development of digital nomads communities, the attraction of freelance life on social media — these and other factors set up the trends for outsourcing IT services. Classical teams and offices started to be old school with the growth of different freelance platforms. The recent events connected with the pandemic have even strengthened the emerging tendency. This statement is supported by the recent Technavio forecast, which shows that the outsourcing IT market will grow by USD 97.51 in the nearest few years. This tremendous number shows great potential and creates some challenges for companies that face new realities, requiring more flexibility, acceleration, and quick adjustment. The process of outsourcing software developers can be overwhelming, as along with rapid expansion on this market comes difficulties with recruiting, legal issues, and quality standards. At the same time, developers have a fear of being blown off. To avoid unpleasant experiences in the hiring process, it is a good idea to dig into safe IT outsourcing by learning the basic terms and conditions of this process.

OUTSTAFFING VS. OUTSOURCING: WHAT IS YOUR DEMAND?

Let’s start with the concept of definitions. Both models imply hiring the IT professionals remotely, but with a significant difference in the team operations and hierarchy. Outstaffing is a remote services model involving an IT company that acts as an employer and hires developers. These developers have official employment and carry out all the duties for the third party on a constant basis. However, they are considered employees of the IT company. The last one acts as a buffer between the team and a customer and is responsible for overall work compensation, perks, and social benefits.
Arguments in Favor of Outstaffing Arguments Against Outstaffing
Low market price is the the main reason why this model has popularity. This is a good option to have the whole company of people working on your business, with significantly lower wages. However, there is a hidden maintenance cost, which is included in developers’ rates The threat of miscommunication. This model would work only under the term of properly structured communication, including channels and abilities to communicate the tasks correctly.
Skipping the part of the hiring process and office maintenance. All the obligations are on the IT company, which invests in recruitment and HR processes, office, furniture, safe and cozy working conditions. IT company as an outsource IT services carries out zero responsibilities for the project’s success. All decisions and outcomes are up to you.
The opportunity to decrease the tax pressure creates a win-win situation both for the customer (who chooses the advantageous tax system) and for developers, (who can have higher wages due to the saved on taxes money).
A customer has access to the team and is flexible in staffing changes.
This model allows controlling all the development processes.
Outsourcing works according to another cycle. In this case, the customer entrusts the whole project to the outsourced company. The process goes without any direct communication with the team of developers or other IT specialists and often with no understanding of what will be actually implemented. In the outsourcing model, a customer communicates their requirements through the project manager, who is responsible for the workflow with no obligation to set up a working environment for the team.
Arguments in Favor of Outsourcing Arguments Against Outsourcing
Cutting the cost is what attracts customers to this model the most. All the customers should be paying for is the hourly wages of the developers and other technical staff, which is much lower than in American or European countries. Usually, the process of choosing the vendor is based only on this aspect. No need to pay some extra or hidden cost. Lack of control on the processes. The project is entrusted to the PM or even to the management team. There should be complete trust in such specialists as outsourcing is not a place for micromanagement from the customer’s side.
The vendor is responsible for the overall project delivery in front of customers. The customer may not interfere in the development process, deadline, or operations flow. This is totally on the project manager, whose task is to manage the project and to report on results, rather than devote the customer to routing. The cost of the whole project may be higher as independent developers and consultants may have higher hourly rates compared to a hired employee working on a salary scheme. This issue may arise when the scope of work is not clearly defined.
No need for the hustle as the customer doesn’t have to spend the resources on hiring the team, providing them with office supplies or software.
The access to a variety of specialists, some of which may be involved in the project just for a few hours to solve the certain clearly defined task. This is way too affordable, and the customer has no need to enter into any labor relationships with such specialists.

THE SECRET BEHIND OUTSOURCING POPULARITY

Although the final cost for the project implemented under this model may be costly for the customer, this is still a preferable option for many businesses today. What encourages a company to outsource software developers? We can distinguish five primary reasons:
  1. Hiring specialists according to the precise requirements.
  2. Sparing time to focus on other goals and projects.
  3. Finding rare experts to enhance the product quality.
  4. Reducing lots of costs and the tax burden.
  5. Expanding the business internationally.
Let us talk about the abovementioned reasoning in more detail.
Reasons why companies choose to outsource
Why do companies choose to outsource?

Hiring Developers According to the Precise Requirements

Outsourcing and outstaffing provide excellent opportunities to find developers at cost-effective rates, with any level of skills, and in each, even the most specific, niche. Many countries like Ukraine, Poland, and Lithuania have very attractive taxation systems and affordable levels of life, which positively influences price formation. Russia is also a perspective country for offshore software development. Overall, a business may save up to 50% of expenses compared to the United States or Western European countries.

Sparing Time to Focus on Other Goals and Projects

The next reason why companies seek outsourcing IT services is to spare time for their core businesses. It allows businesses to concentrate on their own goals rather than operations and processes related to recruitment and human resources management. This way, companies find new directions and nail business development. In addition, involving side specialists allows reallocating the workflow among the in-house team. It saves them from overtime and multitasking, therefore increases efficiency.

Finding Rare Experts to Enhance the Product Quality

For many companies, outsourcing is a chance to enhance the quality of services by finding fulfilling business-critical needs. In the demanding IT world, some specialists possess very specific knowledge and skills, and not every business has an opportunity to hire one. Therefore outsourcing can be a “magic pill” providing access to outstanding human resources.

Reducing Lots of Costs and the Tax Burden

Outsourcing reduces infrastructure costs significantly. At a virtual office, an outsourced IT specialist is responsible for their working conditions. The customer is relieved from providing space, equipment, and other IT helpdesk infrastructures.

Expanding the Business Internationally

Besides the obvious financial side of the question, outsourcing is a good opportunity to expand business globally, acquire new talents and technology. All these foster the customer to boost their company to a new level, making it more competitive and increasing the return on investment.

SHOULD MY COMPANY OUTSOURCE IT SERVICES OR NOT?

While making a decision to hire remote personnel, a business owner should have a clear and honest answer about the resources his company possesses. Questions to answer before hiring outsourced software developers:
Outsourcing vs outstaffing
Decide how much control and management you want
Choosing the second scenario, a business owner should be ready to let the external vendor loop in all the internal IT processes and infrastructure just to deliver a project. This is not an option for managers with a delegation and micromanagement system. Outsourcing will be the right decision to make for the companies that have short-term goals but are not able to fulfill them just by exploring internal resources. Outsourcing is the right thing to do if your company can hardly be called technology-oriented, but your product or service definitely needs to be strengthened. The same applies when you need to automate and simplify any business process.

5 MILESTONES TO CONSIDER FOR SAFE IT OUTSOURCING

The golden rule here is to make a proper calculation of resources and define the scope of work. That may be a tough exercise for inexperienced players, and in this case, it is no shame to use some additional services of business consultancy. What can you do to outsource software developers securely? 1. Deliver precise requirements and share the final vision of the project. It complicates the process when a business owner doesn’t have a clear idea of the final result or tries to fit something unsuitable into the company. It leads to unclear requirements and obviously to useless money drain. 2. Keep the clarity in communication. Be straightforward with the vendor and treat them as a partner. Withholding the information or a vague pitch can ruin the whole project. 3. Be open to new ideas. If you reach out to real professionals, they probably know the subject inside out. That would be unreasonable to dismiss their advice and suggestions on the enhancement. 4. NDA is a must. Don’t forget about the legal routine and sign the non-disclosure agreement along with the contract, as security remains the highest priority. 5. Have clear deadlines and fines for not meeting them. It is hard to keep the billing if there is no technician on your side. Otherwise, how do you know that the vendor delivers the project on time and does not prolong it on purpose?

PITFALLS TO SEE THE BIG PICTURE

Like any other market, the outsource IT services market is a live organism. It grows and develops, which means some shortcomings that may bring turbulence into the business. Let’s explore what companies should be prepared for when deciding to work with outsourced personnel.

Price-Quality Ratio

The IT market today is a highly competitive environment. Due to the enormous number of new players coming to this sphere, some senior IT professionals with a unique set of skills may overestimate their rates. On the contrary, junior newcomers may dump the prices; therefore, middle-level professionals can sell their services as seniors. As a result, here comes a considerable risk to hire someone who doesn’t meet the requirements.

Communication

IT specialists from Eastern European countries have issues with fluency in the English language. It may sometimes cause major miscommunication. Besides, many developers seek a better living and eagerly relocate to Europe, Canada, or the United States.
Another problem is weak legislation and often — political turbulence. IT sectors accelerate, and legislative bodies do not keep up with speed to create working and effective laws. Therefore, there are many gaps in the law, which play a dirty trick with the overseas customer. The situation is compounded by the negative influence of the political regime on business. Countries that are the leaders of outsourcing provision are often undergoing the changes of political powers, so it is better to keep your seatbelts fastened. Some dirty and unfair businesses can take advantage of this situation. Often, the customer doesn’t conduct proper due diligence before entering into an agreement with such a shell company. It is not difficult to imagine what happens next: besides money, they lose the trust in safe IT outsourcing as such. Weak IT infrastructure and data protection are other threats that you should consider before getting in touch with the outsourcing company.
Checklist for safe outsourcing
How to avoid mistakes and disappointments

BRING THE ACTION: CALL ON EXCEED TEAM FOR THE BEST OUTSOURCING EXPERIENCE

Despite all the issues businesses cover with the help of outsourced software developers, finding first-class outsourcing specialists is an issue itself. This is why it is a smart idea to delegate it to reliable partners like Exceed Team. What kind of benefits brings such cooperation?
Fulfillment of these three elements guarantees a first-class project delivery. Contact us here or by hello@exceed-team.com to learn how we can help you with our experience and a responsible approach.
Most popular questions

Is it safe to work with Exceed Team?

It is. Our working processes are very straightforward, and payments are transparent. What is more important, our company acts under the relevant legal procedure that protects both a customer and a vendor.

What if I’m not happy with the outsourced team?

We guarantee that the outsourced team will carry on the duties until reaching the results that satisfy our customer. What is more, you can have a trial period to make sure that new developers understand your project and that you communicate with each other effectively.

Why should I go with Exceed Team?

To minimize the risk of hiring ineffective developers, it makes sense to rely on professionals who have implemented dozens of outsourced projects. This simply means that we have already worked through the stumbling block, and all that is left for the business is to lean back and wait for the result.
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Igor TeterevlyovHead of Sales Department
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