Beyond Cost-Effectiveness: In-House or Outsourced Software Development

Santex
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If you find yourself looking to expand your software team we would like to offer you a couple of reasons in favor of outsourcing.

When it comes to software development, it is often common for Product and Project Managers to assess the advantages of holding the process in-house or outsourcing the work to a specialized software development company. It is a fundamental decision if you want to build your product fast, keep the quality high, and keep the costs under control.

The difficult part is there is no written rule to help you decide whether a project should be outsourced or kept in-house — it could be enterprise software, a mobile application, or system integration — and the truth is there isn’t a silver bullet to guarantee success in this realm.

Companies require custom solutions that go beyond the black or white fallacy and which fall somewhere in the middle range of possibilities — in software development terms, it could mean relying on both internal and external teams.

Still, if you find yourself looking to expand your software team and having this kind of internal discussion, we would like to offer you a couple of reasons in favor of outsourcing, other than the simple cost-benefit argument.

Scaling up or down

Arguably the greatest advantage of outsourcing your development needs to a trusted partner is the ability to scale your team up or down without any risk. You can do it whenever you need and much faster than in the case of an in-house team. Outsource and forget about the structure necessary to manage a pool of engineers with different levels, expertise, and availability.

It is especially useful if you will develop your product using programming languages where the international pool of developers is scarce, as you won’t need to deal with recruiting processes that could demand more time and effort than you originally expected.

Lights-out project management

The success of any development plan — which is usually part of a product or service launch or upgrade — depends not only on the developers’ expertise but also on the development workflow itself. When project management efforts are supported by digital transformation teams, it is possible to increase development productivity beyond the industry average.

But unless you measure performance metrics such as staffing speed, completion rate or rework it is likely that your project gets delayed or goes over budget. If you are already doing so, have you ever pondered the cost required to keep competitive and up-to-date the technology infrastructure that supports the development process? It needs continuous investment and innovation, which can turn into an unforgivable expense even for the most cost-conscious company.

A leading software company will be able to provide transparency of their processes and help you understand how your time and effort with us.

Drive strategic value

Outsourcing should be much more than just a way to unload non-core costs. More and more, companies are realizing that their best partner is the one that offers them the greatest value, not necessarily the lowest cost.

For some, it means partnering with a software provider on the cutting edge of technology that can offer the latest languages, frameworks, and development tools. For many others, it represents the possibility to leverage outsourcing as a catalyst for change to drive enterprise-level transformation — transformation outsourcing. Often companies are able to shift their marketing position by offering your existing clients new services and solutions.

The average revenue per employee

Have you ever considered that software outsourcing could help increase your company’s market value? You may be thinking… How exactly? The average revenue per employee is a popular metric used to calculate a company’s market value. It helps measure corporate productivity to develop rankings between companies in the same sector.

In the software industry, for instance, Netflix was the most effective company in 2019, generating over 2.34 million U.S. dollars of revenue per employee, while Apple ranked second with almost 1.9 million U.S. dollars per employee.

Outsourcing software development is a smart way of keeping a decent ratio between your revenue and overall headcount. It is especially convenient for publicly traded companies looking to increase the value of their stocks.

Outsourcing Software Development

These are four excellent reasons other than cost-benefit to turn the tables in favor of outsourcing a non-core business activity like software development.

However, we are sure you can’t help but wonder: how do I become one of the success stories and avoid the pain, cost, and frustration of a failed deal?

To succeed you will need a thorough plan where you can prepare and evaluate your business case, process and scope, deal structure, technology and tools, regulation and data privacy among other factors.