Outsourcing software development has long been proven to have significant benefits for most businesses globally. Having access to highly qualified and dedicated teams or team extensions can be the perfect fit for both established companies and new startups. There are also thousands of outsourcing companies offering professional software development services. That means there are plenty of options to choose from based on your specific criteria like language requirements, time difference, geographical proximity and also cultural similarity.
Cost is an influential factor for most companies when outsourcing their software development needs. However, even if cost saving on any project is critical for a business, you must remember other factors. Selecting the right country and vendor for your project will comprise of a range of essential elements like the availability of the required IT specialists, corporate tax rates, time zones, infrastructure and general ease of operating business within that area.
Overview of Primary Outsourcing Destinations
For enterprises that are interested in beginning or enhancing their current software outsourcing activities, making a wise decision regarding the right outsourcing destination is critical. Below is a comprehensive guideline discussing the top outsourcing countries along with some pros and cons for every country. Your final choice will depend on your internal criteria like project requirements and financial implications. Nevertheless, all qualified software development outsourcing firms will be ready to listen to your needs first before helping you make the right choice.
India
India is undoubtedly among the leading nations within the software development outsourcing field. That is mainly because the country has a massive talent pool with different skill levels that combine to provide great value to any company. India is also considered to be among the best countries to offer excellent value software development services at affordable prices.
In addition to having a vibrant IT community, India has better conditions and enough resources that favor the setup of adequate offshore development facilities. Also, since the country has dedicated itself to developing its capacity of offering value-oriented, affordable and timely services over a long period, they have a proven ability to deliver software development outsourcing better than other countries.
Key Facts about the Software Outsourcing Industry in India
India has Skilled Software Developers
India has the most extensive pool of talents within the software development field. It has a large number of professionals within the IT field compared to most countries. Hence, finding qualified software engineers and other IT supporting skillset becomes more comfortable for an offshore firm.
Indians are Aggressive at Adjusting to Changes
Indian professionals are at the forefront when it comes to learning and working on the latest technologies. The latest IT competencies and skillsets include everything from artificial intelligence and IoT to blockchain and cloud computing among others. That is why Indian IT professionals are highly sought after across all industries, and you will find most of these professionals holding pivotal roles within the IT industry.
A Supportive Government
It is clear to see that India’s government is highly supportive of the software outsourcing industry in the country. In 2017, the government invested over 100 billion dollars on building infrastructure and strengthening the IT sector to give companies better opportunities and strengths.
Pros of Outsourcing Software Development in India
Besides the universal benefits of outsourcing such as cheaper and quick work, India has many advanced features that lure established enterprises, small businesses and new startups from other countries to choose this destination for their offshore software development needs. Here are
Huge Talent Pool
India is not only the second most populated country in the world, but it also has a remarkably large population of people with IT qualifications. Hence, Indian IT firms can hire plenty of tech specialists with the necessary skillsets. You can get an outsourcing firm with over 200 skilled IT professionals, which is highly beneficial when working on large scale projects.
Cost
While cost should be the only factor when choosing an outsourcing destination, it is hard to ignore India’s affordable yet valuable solutions. Indian firms work on optimized, cost-effective strategies that take advantage of the readily available skilled developers, thus giving the country an edge over similar countries. For enterprises, it means better control of your budget and access to highly skilled developers at low prices.
The Language Advantage
Even though some may rightly say that English is not the first language in India, it is a language that is primarily used in the business sector. Since India was under British colonial rule for nearly two centuries, the country has deep-rooted connections with the English language. That means better communication in interactions between locals and outsources along with smoother workflows.
Time Zone
The benefit of outsourcing is that you can work across multiple time zones. The productivity and overall efficiency are significantly boosted when you carry out 24/7 operations. A great example here would be US-based companies that can utilize their internal teams during the day and shift their operations to India at night to provide always-available customer support.
Government Support
India was recently ranked highly among the top 100 countries in regards to ease of doing business. There are sustained efforts in the country to push positive business reforms and embolden its position as one of the preferred destinations for IT outsourcing. The security and IT laws have also been strengthened to help in preventing data leaks and theft.
Cons of Outsourcing Software Development in India
Language barrier
Despite language being positive when outsourcing software development in India, it can also be detrimental. Often the writing skills of Indians will surpass their comprehension and speaking skills. That means when you convey messages through telephone or video calls, it is likely that certain phrases or words can be misinterpreted. That is because the tone, intonation, and pronunciation vary from how Indians speak English.
Quality of Results Can Suffer If You Choose Unreliable Agencies
The outsourcing industry in India is thriving, and there are thousands of companies. However, that does present a challenge for external companies to choose the best one as only a few of these outsourcing firms can deliver high-quality results. Thus, you must be cautious at companies that look too eager to work with you and have very low offers. A
Different Work Culture
The work culture in India is unique in that some companies can compromise on work quality to achieve their targets. That is because certain outsourcing companies may have limited people management skills and may hire unskilled developers. Also, Indians don’t give too much value to time, which may lead to delays in the entire project.
Philippines
Another popular outsourcing destination in Asia is the Philippines. Many international companies choose this particular country for their IT outsourcing needs since it has numerous, top-tier software development vendors that give access to an excellent and skilled talent pool. Furthermore, like India, the Philippines software development outsourcing industry is backed by firm governmental support.
Based on data from the Philippine Software Industry Association or PSIA, the nation currently has over 120,000 software developers. The PSIA predicts that a high number of experienced developers will rise to more than 200,500 by 2020. Also, the country’s software industry, which is currently valued at $3 billion, is projected to rise to 7 billion dollars by 2020.
According to Jonathan De Luzuriaga, the PSIA President, the country will also increase its market share in the universal IT sector from 12% to 15%. Currently, the IT sector in the Philippines is going to generate approximately 10% of the nation’s GDP. Overall, the sustained growth of the IT industry here is supported by strong government incentives.
A crucial factor that helps outsourcing software development ventures in the country is the English language fluency, which is critical for successful communication and cooperation. The nation is even listed amongst the top 30 nations in the world with high numbers of software specialists that can communicate fluently in English. However, despite the country making significant progress in various domains like software engineering, the volatile political situation hurts the economy.
Facts about the Software Outsourcing Industry in the Philippines
Culture and communication
The people of the Philippines spent four decades under colonial rule by the US. Hence, the nation is quite westernized, and the English language is widely used across the country. This outsourcing destination is regarded as a US-friendly country in Asia, and it is ranked highly in similarities to Western cultures.
Focus on Emerging Technologies
In addition to having a strong economy, the IT sector is one of the fastest growing and dynamic industries in the Philippines. Many companies specialize in various aspects of software development as well as emerging technologies like blockchain and AI.
Skills and Education
The Philippines is ideal for outsourcing due to its highly-educated labor pool. They have an internationally-respected education system that produces highly quailed graduates. Furthermore, there are more than 15,000 graduates from technology courses, which is among the highest rates across the world. That access to expert skills has led the state to be identified as among the leading outsourcing destinations for software development.
Pros of Outsourcing in the Philippines
- Outstanding Understanding of the Western Culture
Once the Americans successfully liberated the Philippines during World War II from Japan, the citizens have adapted and embraced Western cultures in their daily lives. English is taught as one of the primary subjects within their education system and a large percentage of advertising, business and television are also done using English.
- The American Accent
Communicating speaking to Filipinos is possible thanks to their American accents. That strong influence by America on the Philippines wired the citizens to speak with better accents, especially when compared to a country like India.
- Cheap Labor Costs
The economy in the Philippines is not the strongest due to successive corrupt governments. In the last two decades, two previous presidents faced corruption charges and are currently under investigation. Corruption and a low performing economy mean that the American dollar is quite influential in the country compared to the Pesos. Hence, organizations interested in offshoring and outsourcing software development to this country can end up saving more than 70% thanks to cheap labor costs.
- Remarkable Talent and Unique Recruitment Processes
The leading software outsourcing companies located in the Philippines hire candidates who have college degrees and proven experience in their respective fields. Additionally, the country has a unique recruitment process. Employers here can request potential candidates to sit for additional IQ exams and also to categorize the candidates using various criteria like marital status, gender, and age.
- World Class IT Infrastructure
Due to significant investments and ongoing improvements, the Philippines boasts of similar world-class IT infrastructure as other Asian giants like South Korea, Hong Kong, and Japan. Numerous established ISPs are offering high-speed, dedicated fiber optic internet connections all over the country. Various leading technology firms like Avaya and Cisco even have local offices located in Manila to provide expert networking and data solutions for software outsourcing organizations.
Cons of Outsourcing in the Philippines
- Unpredictable Weather Conditions
The country experiences an average of twelve tropical typhoons per year that can cause floods and other disasters. That means there is a potential that works in specific areas could be affected by such types of weather, which could delay ongoing software outsourcing projects.
- Numerous Holidays
While the US only has eleven official holidays, there are 18 non-working holidays in the Philippines. Also, since most Filipinos are Catholics, the Holy Wee represents the most extended holiday within the country. These extended breaks could be quite costly, especially when working on time-sensitive projects.
- Labor Codes Favor Employees
The labor codes here greatly favor the employees. For instance, an employer can’t fire a non-performing worker at will before providing proper documentation and cause. The termination of workers also demands that the organization offer the prescribed severance pay and any other dues.
- Extra Pay for the 13th Month
The other fascinating thing about the Filipino labor code is that it requires organizations to pay workers for an extra month annually. That incremental 13th-month pay must be paid out in December, and it acts as a compulsory bonus to employees.
VietnamDespite being a moderately new concept that was started more than one decade ago, the software outsourcing industry in Vietnam has grown quite significantly.
Also, the government has implemented attractive policies to attract IT entrepreneurs along with substantial investments in the STEM fields to create robust and qualified technical engineers.The technology industries in Vietnam and subsequent outsourcing services have experienced remarkable growth over the last few years.
Also, the government encourages continued investment in software parks, dedicated tech zones and provides tax incentives for the establishment of IT firms.
Today, Vietnam is gradually developing its young workforce to obtain the necessary technical skills and easily compete with other Asian countries.
In comparison, India has an 80% retention rate, with many Indian skilled engineers willing to relocate outside the country to pursue IT careers abroad.Economic and Political StabilityVietnam is considered as the black horse within the software outsourcing industry, as it is one of the famous, most consistent and fastest growing BPO markets.
Hence, if they don’t have sufficient dedication and stronger work ethics, then they could end up losing out to their Indian counterparts.Lack of Soft Skills and Practice in EducationDespite all the extensive efforts to improve the Vietnam education system, the country still lags in overall soft skills and practice.
The software application development outsourcing market has outstretched from $45 billion to $85 billion in just the last five years.
These numbers significantly show that both startups and enterprise-level businesses are embracing the idea of outsourcing software development services through IT outsourcing companies with open arms.IT outsourcing involves farming out or sub-contracting certain IT functions to independent companies, third-party organizations or individual developers.
There is no need for an in-house team unless you want it -that is the beauty of outsourcing IT solution requirements to a software development company.
Let’s dig deeper into it and find out the many positive aspects of outsourcing software development services.Types of Outsourcing Software Development ServicesThe type of software development outsourcing is categorized by where the development is executed and is often location-based and relationship-based.
Broadly, there are three types of outsourcing agencies mentioned along with their advantages:Onshore outsourcingWhen you obtain software development services from a service provider outside your company but within the same country, it is known as onshore outsourcing.
If you choose onshore outsourcing, you are open to advantages as such:Easier to communicateNo cultural differenceSame time zonesEasily accessibleOffshore outsourcingWhen software development operations are performed in another country altogether is known as offshore outsourcing.
ou are aware that the IT sector is continually evolving.
Because it will often be difficult for you to meet all the requirements of the field and all the needs that you will have to face, calling on external IT skills would be a wise choice.
Indeed, using a software development company means choosing a trusted partner to help you achieve the success of your projects.
In general, software and IT, development companies are responsible for meeting your requirements.
We present below a summary of the progress of your future development project.
A computer development box worthy of the name makes it a point of honor to define your exact needs.
