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Software Outsourcing: An Ultimate Guide

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IDS Logic
Software Outsourcing: An Ultimate Guide

Software outsourcing is an arrangement where a company chooses to appoint an external software development agency to handle a software development project effectively.  This practice involves assigning the responsibility of a specific business project to a third-party vendor that is competent of handling required business tasks.

As per the study conducted by Statista, it has been found that the most common IT outsourced function is the software app development. In fact, IT outsourcing market is expecting to grow by $98 billion during the period of 2020-2024. Such strong statistics clearly depict that the demand of software outsourcing will continue to increase in the coming years too.

What are the different models of Software Outsourcing?

There are particular ways for businesses for outsourcing software development projects to third-party vendors all over the world. Let’s understand them in detail:

  • Onshore software outsourcing

In this model, the customer companies collaborate with the development team of software companies that are residing in the same country. Its significant advantage is that it has no language barriers which make the communication smoother.

  • Offshore software outsourcing

This model involves working with the development companies in other countries. This is a cost-efficient option due to less labor costs. Thanks to online communication channels like emails and VoIP phones, it has become easy to manage the remote projects.

Why is Software Outsourcing essential?

Outsourcing software development aids companies to address different challenges of decreasing overhead spending, building a remote team faster, and thereby accelerating the product’s time to the market. Here are some top advantages of the software outsourcing:

  • Less development cost and overhead spending

This is one of the most common reasons why leading businesses are opting to outsource their development project. With drastic saving on development cost and staying within the budget, businesses can scale themselves effectively and keep up with the market’s demand.

Also Read: How Outsourcing can transform Business?

Beside this, choosing a third-party enables the companies to cut down their labor costs, including several employee benefits like training leaves, insurance, and a lot more. Outsourcing companies charge on an hourly basis for the development, which also helps businesses to save a lot on the overall development cost.

  • Flexibility

With software outsourcing, the customer companies have the flexibility to engage with third-party vendors whenever required. Unlike permanent employment, they are not legally bound to maintain a long-term contract which allows customers the flexibility to pay for outsourcing during the project works. This is beneficial in contrast to hiring full-time in-house developers all year round.

  • Accelerates development and product time to market

As the outsourced workforce is already experienced in the development process, there will be no requirement to spend on training and on-boarding. This saves ample time for the customers to speed up the development process. This is advantageous in the context of the big international corporations where the process of decision-making and approvals take a longer time than usual.

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