In-House VS External Software Development: Pros and Cons

Introduction

There is always a pressing question that businesses everywhere may wonder: Should I build my software in-house or recruit an external development partner?

This can be a challenging question to navigate since your project is not just about lines of code. When deciding between in-house and external software developing partners you should consider factors such as your business needs, available resources, and timeframe for development.

 This comprehensive guide will serve as your compass, navigating the twists and turns when choosing between in-house and external software development.

Pros of In-House Software Development

Communication

A benefit to building your in-house team is the flow of communication. Oftentimes your team is in close range, or even in the same room. This makes communication flow easily and can ensure everyone on your team is always up to date with your business goals.

Expertise

Taking on a project such as software development can be a learning experience for all those involved. If you are interested in building your team's overall knowledge or increasing the size of your company, in-house development can ensure the overall growth of your team as well as their knowledge and expertise on your business software.

Cost

Cost is a factor that is at the top of most business owners' minds. When looking at cost alone in-house development may be an attractive option. If you already have a dedicated IT team, and you are already paying for their salaries. Having an in-house team can be less expensive than hiring an external partner for your project.

Cons of In-House Software Development

Longer Development Time

Now that we’ve discussed the benefits of using an in-house team it is important to consider some of the downfalls when choosing this option.

An in-house team may have other daily tasks or responsibilities that may take priority over your software development project. Sometimes these responsibilities may push back your timelines resulting in a longer completion time.

Skills Shortage

Another potential downfall to consider is the possible gaps in knowledge that your team may have. Although an in-house team may have a deeper understanding of your business wants, needs, and goals, it does not mean they have the expertise to build the software your project may require. This may result in the need for an external software development partner who has the skills and expertise required to build your project.

Cost Overruns

Cost overruns should always be a concern when launching a new project. It is widely known that most projects never go according to plan. New problems can arise from seemingly nowhere and without the proper expertise to solve these issues your project may experience stunts in development and massive leaps in your budget.

Pros of External Software Development

Focus on Business Needs 

Hiring an external software development partner can be beneficial to any IT project. Partnering with experts in software development can give your IT team the space to focus on the everyday needs of your business while your external team is focused on developing your software.  

Recruiting an external team ensures that you are not stretching your current IT team thin and provides the space for your team to focus on daily business operations that help your business run smoothly.

Fresh Eyes and Expertise

With an external team, you are working with seasoned professionals who have completed many other projects and have a proven track record of successful deployments. With an external team, you are paying for knowledge and clarity in moments of uncertainty. In addition, an external team provides a fresh set of eyes when planning the next steps for your business.

Whether you need specialized processes such as automating your business or different approaches to building a software project that works for your business, outsourcing an external team can offer a variety of skills to meet your specific business needs.

Quicker Timelines

It could be argued that the most appealing factor when working with an external partner is the ability to scale your team up or down based on the needs of your business. This allows you to stay ahead of your timelines and complete your project quickly and effectively.

Having a team of experts who know how to turn your project ideas into reality is no doubt a huge benefit to any software project.

Cons of External Software Development

Communication Barriers

Like almost all things, with pros, there must also be cons. A downfall of using external partners lies in the communication barriers. Unlike with an in-house team, external teams can be all over the globe. This can result in both cultural and time zone differences making it more difficult to communicate your business wants, needs, and goals. You can minimize this risk by going with a company that has team members in North American times zones only.

Lack of Control

Another potential downfall to using an external developing partner is the lack of control. Hiring an external team means you must be able to work with a new group of skilled professionals and allow these experts to take hold of some important responsibilities. This means business owners must be open to letting go of some control to ensure the overall success of their project.

Security Risks

Security concerns are always worrisome when working with software especially if you are considering developing a project fit for your business needs.

When dealing with any external partner safeguarding your data should be the first question any business owner discusses. It is important to check out potential partnering companies' security measures and processes for protecting your data. In addition, always be sure to take all necessary legal precautions before sharing your internal data.

6 Step Guide to Choosing In-house vs External Software Development Partners

 

1.     How complicated is your project?

When deciding between in-house software development and external software development, an important consideration is how complex is your project.

If your project has specific requirements that can be challenging to navigate, quick scalability, or extensive resources, an external software development partner may be more beneficial in the long run.

on the other hand, if your project's goals align with the strengths of an in-house team and maintaining control over the entire development process is a non-negotiable, an internal approach might be a better fit for you.

When deciding between internal and external approaches it is important to carefully evaluate your project's complexity, this will guide the decision-making process and will guarantee your primary business goals are at the forefront of your project.

2.     Who's on Your Team?

When making the crucial decision between in-house and external software development, it's important to take notice of who's on your team.

Consider who is on your internal team, do you have the resources and the knowledge you need to build your dream software project? 

If you are fortunate enough to have a large IT team, with experts in multiple areas of software development you can dedicate certain people to specific projects.

Although this is the dream, most companies cannot afford such a team as this would be very costly. Most teams are made up of skilled workers who perform multiple different tasks and influence the way you choose to structure your team or build your software project.

3.     What Is Your Budget?

Cost is a factor that is always important to consider when delving into any new projects. This can be overwhelming to any business owner as cost is not always black and white. Many factors can impact your overall budget other than just the cost of your team.

when opting for an external partner, you will have access to many different experts, this means you will not have to invest in other tools that you may need to complete your project. This can include testing and designing expertise.

If you have the overhead to develop your own in-house team of experts your business will surely benefit. However, for a more budget-friendly option for software development that produces quality projects consider finding an external software development partner that matches your company's goals and values.

4.     What Is Your Timeline?

When deciding between in-house development and external software development partners, a crucial factor to consider is your time-to-market timeline.

You must be sure to measure the urgency of getting your product or solution to market and the time needed for development. If convenience is at the forefront and a quick launch is critical, an external software development partner with a proven track record of quick and accurate delivery may be the best choice for you.

on the other hand, if you have the luxury of a more flexible timeline and would like to maintain a higher degree of control over the development process, building an in-house team might be a strategic decision.

Internal teams often allow for more smoother and accurate communication, which can be beneficial for specialized projects that need close teamwork.

Overall, when choosing between in-house or external development partners make sure to be highly considerate of your business's time-to-market goals.

5.     Communication Barriers

When developing your software project, communication plays a critical role, and understanding how your team communicates can make or break the success of your project. 

As discussed above, an in-house team benefits from the closeness and a shared physical workspace that provides quick and direct communication. Team members can quickly address unexpected issues and share insights with your whole team regarding your project. In addition, an in-house approach allows your team to problem-solve while pushing a real-time and collaborative work environment.

On the flip side, external software development partners may present potential communication barriers. This can include time zones, language, and cultural differences.

It is important to consider that managing projects remotely demands a specific approach to communicating. This can be done by using different tools, and protocols to establish clear channels of communication. To ensure these barriers have a minimal impact on your project be sure to discuss these protocols with potential external partners.

Finding the right balance between the ease of communication you get with an in-house team and the strategic coordination used by a successful external team is key to navigating the challenges you may face when developing your software project.

6.     Long-Term Strategy and Control

When considering long-term strategy and control for your software development project, the choice between in-house and external development partners is crucial.

Opting for an in-house team allows for a higher degree of control over the entire development process and can be beneficial when immediate adjustments are needed. 

In addition, in-house development provides the space to change direction strategically and seamlessly to align with everyday business goals and needs. This encourages the alignment of company culture with long-term objectives and creates an environment of in-house expertise.

However, this approach may require a costly upfront investment for recruiting workers for your skilled team. In addition, large investments may also be needed for infrastructure.

On the other hand, when recruiting an external software development partner, you can benefit from the cost reductions in talent recruitment. Moreover, external partners promote quick scalability for your software project while also giving you access to the skilled workers that will lead your project to success.

Finding the right balance for your project requires a careful assessment of your strategic priorities, the specialized skills needed for your project, and your organization's overall goal for growth and innovation.

Other Considerations

Security considerations should always be a primary concern when deciding between in-house or external software development partners. 

In-house development gives business owners a higher level of control over how and what security measures are used to keep their data safe. In-house development provides organizations with the power to use personalized protocols and the ability to closely monitor access. In-house development also gives you the ability to conduct regular security audits and quickly address any vulnerabilities that may impact the security of your project.

On the other hand, hiring an external software development partner presents an additional layer of challenges. While reputable external partners usually stick to rigorous security standards, trusting an external team with your sensitive data and intellectual property can be scary and overwhelming. It is crucial that you properly vet your potential partners and make sure that your ideas surroundings security protocols and safeguarding of your data are in alignment.  

Furthermore, it is important to make sure that contractual agreements are made and are in line with industry standards and regulations. Additionally, enforcing transparent communication with external partners on security protocols will ensure minimal risk potential.

Conclusion

Now equipped with this comprehensive guide, your software journey will not just be a success, but also a thrilling adventure! Make informed decisions, navigate the challenges, and watch your digital dreams unfold with confidence.  

The world of software development is big and dynamic, and with the right knowledge in hand, your project will be nothing short of a success, allowing you to scale your business!

What are your thoughts? Which option would you choose? Let us know in the comments.

If you need any help or guidance with choosing in-house or outsourcing software development, feel free to contact us. We are a team of experts who can help you design and implement the best custom software solutions for your business.

Written by Natalia Duran

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ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries, providing cost-effective custom software development, technology management, and IT outsourcing.

Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs, to produce the best ROI. Find out why startups, all the way to Fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.

IT Outsourcing & Software Development in 2023 Guide

Have you ever had a brilliant idea, but were left with no way to make it happen? There’s nothing more frustrating than knowing you could solve big issues— whether in your personal life, work life, or for the world at large— but not have the resources to bring it to life. Imagine you could take this idea and bring it to a group of people that know exactly how to build your solution. This is called outsourcing.

IT outsourcing has become increasingly popular over the years as technology continues to play a critical role in streamlining processes and improving operations for companies of all sizes. In simple terms, IT outsourcing refers to the process of hiring external vendors to handle specific technology-related functions for a company. This could include software development, web design, network management, and technical support, among others. The concept of outsourcing itself is not a new one, but the rise of technology has made it easier for companies to leverage the expertise of external partners in areas where they may lack in-house skills or resources.

IT outsourcing has a rich history dating back to the 1960s, when large companies began to outsource certain tasks such as data entry, payroll, and accounting. With the advent of the internet and other technological advances, outsourcing has evolved to include a wide range of IT services. Today, companies can outsource everything from basic web design to complex software development projects, and everything in between.

One of the primary benefits of IT outsourcing is cost savings. By outsourcing, companies can reduce the cost of hiring and maintaining an in-house team, as well as avoid expenses such as office space, equipment, and software licenses. Additionally, outsourcing allows companies to tap into a global talent pool, gaining access to specialized skills and expertise that are hard to find independently. Finally, outsourcing can help companies focus on their main purpose, allowing them to remain agile and responsive to market changes. These benefits have made IT outsourcing a popular choice for businesses of all sizes and industries.

Here is a clickable overview of everything this guide covers:

1. What is IT outsourcing?

2. How does IT outsourcing work?

3. Where is the best place to outsource?

4. Why should I consider IT outsourcing?

5. What should I look for when choosing an outsourcing partner?

6. What industries can benefit from outsourcing software services?

7. What are IT trends to look out for?

8. What exactly can be outsourced?

9. How do I know if outsourcing is right for me?

What is IT Outsourcing?

To reiterate, IT outsourcing is the practice of hiring a third-party company or service provider to manage and perform IT-related needs.

IT outsourcing can be categorized into three main types:

• Offshore: Outsourcing to a company in a different country

• Nearshore: Involves hiring a vendor in a neighbouring country

• Onshore: Outsourcing to a company located within the same country as the company.

When comparing IT outsourcing with in-house development, there are several advantages and disadvantages to consider. In-house development can offer more control over the development process, better alignment with the company's goals and values, and potentially better communication and collaboration between team members. However, it can also be more expensive, time-consuming, and may not provide access to specialized skills that are required for specific projects.

On the other hand, IT outsourcing can offer higher ROI, access to specialized talent, and scalability. By outsourcing, companies can reduce the cost of hiring and maintaining an in-house team, gain access to a larger talent pool, and scale up or down quickly based on business needs. However, outsourcing— particularly, offshore outsourcing— can also present challenges such as language barriers, cultural differences, timezone differences, and potential communication issues. Ultimately, the decision to outsource or develop in-house will depend on the specific needs and goals of the company.

How Does IT Outsourcing Work?

The IT outsourcing process is a complex one that requires careful planning and execution. The first step is to define the scope of the project during the project planning phase. This includes:

• Outlining the features required

• Determining the ideal timeline for delivery and

• Calculating the allocated budget

Once the scope is defined, the company evaluates potential vendors based on their experience, expertise, and quality assurance processes during the vendor selection phase. The company then negotiates the terms of the agreement, including the scope of work, pricing, and timelines, during the contract negotiation phase. Finally, in the project management phase, the company manages the relationship with the vendor, ensuring that the project is delivered on time, within budget, and to the required quality standards.

Effective communication and collaboration are crucial to the success of IT outsourcing. The company should maintain an open line of communication with the vendor to ensure that the project is progressing as planned. Regular status updates, progress reports, and milestone meetings can help keep the project on track. The company should also establish a robust project management methodology to ensure that the project is managed efficiently. If the vendor is highly experienced, they will come to the table with established methodologies that have been proven to work through past successful projects.

Best Place to Outsource Software Engineers: Latin America

When it comes to outsourcing software development, Latin America is quickly emerging as a popular destination for companies looking to reduce costs, access top talent, and benefit from cultural similarities. With a rapidly growing tech industry and a highly skilled workforce, Latin America offers several advantages over other outsourcing destinations. In this section, we will explore why Latin America is considered one of the best places to outsource software engineers and what makes it an attractive option for companies looking to outsource their software development needs.

Similar Time Zones: One of the biggest advantages of outsourcing to Latin America is the minimal time difference from North America. This means that communication between the outsourcing company and the vendor is more convenient, as they can coordinate meetings and calls without significant disruptions to their workday.

Cultural Affinity: Latin America shares a similar culture with North America, which facilitates communication and helps to bridge the gap between teams. Latin Americans are also known for their hospitality, making it easier to build lasting relationships.

High-Quality Work: Latin American countries, such as Argentina, Brazil, and Mexico, have a long history of producing high-quality software engineers, with many top-tier universities and tech schools throughout the region. This means that companies outsourcing to Latin America can expect to work with skilled professionals who produce quality work.

Competitive Pricing: While Latin American developers are highly skilled, the cost of living is generally lower in the region than in North America. This translates into more affordable pricing for outsourcing companies, which can help them save on costs while still accessing top-quality talent.

Language Fluency: English is widely spoken and taught in many Latin American countries, making it easy for outsourcing companies to communicate effectively. Additionally, many Latin American software engineers are bilingual, which can help to facilitate communication and prevent misunderstandings.

Proximity: Latin America is geographically close to North America, which makes it easy to travel for in-person meetings, project planning, or other important tasks. This close proximity can help to foster closer relationships between the outsourcing company and the vendor, leading to better collaboration and more successful projects.

Reasons to Consider IT Outsourcing

IT outsourcing has become a popular choice for companies that want to remain competitive in today's fast-paced business world.

Cost Savings

One of the primary reasons to consider IT outsourcing is cost savings and higher ROI. Outsourcing software development can help companies save money on salaries, benefits, and office space that would have been required to maintain an in-house development team.

Recruiting for Specialty Skills

Access to specialized skills is another reason to consider IT outsourcing. Software development requires a diverse set of skills, from coding to user interface design to quality assurance. IT outsourcing allows companies to tap into the expertise of specialized professionals who have experience in a particular area of software development. This can result in higher-quality software and faster development times.

Scalability

Scalability is another reason to consider IT outsourcing. Businesses are often subject to fluctuating demands, and outsourcing provides the flexibility to scale up or down quickly based on those demands. By outsourcing, companies can remain agile and responsive to market changes, without being weighed down by the costs and logistical challenges of maintaining an in-house development team.

Minimal Company Disruption

By outsourcing non-core functions such as software development, companies can devote more resources and attention to their core business functions, such as sales, marketing, and product development, or services.

Flexibility

Finally, outsourcing software development can provide businesses with greater flexibility. IT outsourcing allows companies to respond quickly to changing market conditions and adjust their software development needs accordingly. This can help companies stay ahead of the competition and remain relevant in an increasingly digital world.

Factors to Consider When Choosing an IT Outsourcing Partner

Choosing the right IT outsourcing partner can be a challenging task, as there are considerable factors that weigh in. When evaluating potential partners, one of the most important aspects is their experience and expertise. It is important to choose a partner that has a proven track record of success in the specific areas of software development that you require. Look for a partner who has experience working with companies similar to yours, and who can demonstrate a deep understanding of your industry.

Another important factor to consider is the quality assurance processes that the outsourcing partner uses. Make sure that they have a rigorous testing process in place to ensure that your software is delivered bug-free and to your satisfaction. A good partner will have a strong focus on quality and will take the time to thoroughly test and debug your software before delivery.

Communication and collaboration capabilities are also critical factors to consider when choosing an IT outsourcing partner. Look for a partner who has a strong communication strategy in place, and who can provide regular updates on project progress. The ability to collaborate effectively and openly with your partner is key to the success of your project.

Project management methodology is another important element to consider. Make sure that the partner you choose has a well-defined project management process in place, and that they can provide clear timelines and deliverables. You should also ensure that they have a project manager dedicated to your project, who will act as your primary point of contact throughout the development process.

Data security and privacy are also crucial to consider when choosing an IT outsourcing partner. Keep an eye out for a company that takes data security seriously and that has robust security measures in place. You should also ensure that they have strong privacy policies and procedures and that they comply with all relevant regulations and standards.

Overall, when choosing an IT outsourcing partner, it is important to carefully evaluate each potential partner based on their experience, quality assurance processes, communication and collaboration capabilities, project management methodology, and data security and privacy. By doing so, you can ensure that you choose a partner who can deliver high-quality software development services that meet your specific needs and requirements.

What industries can benefit from outsourcing software services?

Outsourcing is a major resource to tap into, no matter what sector a business is in. Here's a breakdown of how different industries benefit:

Insurance: Insurance companies can benefit from outsourcing software development to create customized applications that support their underwriting, claims processing, and customer service functions. This can help them improve their speed and accuracy in handling claims, while also reducing costs and enhancing customer satisfaction.

Technology: As mentioned earlier, technology companies frequently outsource software development work to supplement their in-house teams and access specialized skills. Outsourcing can help these companies stay competitive by accelerating time-to-market and reducing expenses.

Finance: The finance industry can benefit from outsourcing software work to build solutions related to tasks such as data analysis, risk management, and compliance.

Healthcare: Healthcare organizations can benefit from creating customized applications and platforms that support their clinical and administrative workflows. This can help them improve patient care and operational efficiency & organization.

Retail and eCommerce: Retail and eCommerce companies can benefit from creating customized websites, mobile apps, and other digital platforms that support their online sales and marketing efforts. This can help them improve customer engagement and increase sales, and accelerate time-to-market.

Education: Education institutions can benefit from creating customized e-learning platforms and other educational technology tools. This can lead to higher student engagement, accessibility, and student performance.

Transport: Transport companies can benefit from creating customized logistics and supply chain management systems. This could improve their efficiency in managing transportation and logistics operations while increasing profitability.

Laboratories: Laboratories can benefit from outsourcing software development to create customized laboratory information management systems (LIMS) and other tools that support their research and analysis workflows. This can help them improve the accuracy and efficiency of their laboratory operations, while also reducing costs.

Overall, outsourcing IT & software development can be highly effective for companies across every industry. Technology keeps moving forward, and the companies that thrive tomorrow will be the ones that keep up with it today.

Software Development Outsourcing Trends for 2023

The world of software development outsourcing is poised for continued growth and innovation. While it's difficult to predict exactly which trends will dominate the industry in the coming months, there are a few areas that are likely to see significant evolution and expansion.

New digital technologies will continue to shape the landscape of software outsourcing. From artificial intelligence and machine learning to blockchain and the Internet of Things, emerging technologies are providing exciting new opportunities for companies to outsource specialized software development work.

Outsourcing services are emerging to meet the evolving needs of clients in a variety of industries. For example, managed services providers are offering end-to-end solutions for software development, testing, and maintenance, while cloud-based outsourcing is providing greater flexibility and scalability for companies with fluctuating software development needs.

New actors are entering the outsourcing landscape, including niche providers with specialized expertise in areas such as cybersecurity, data analytics, artificial intelligence integration, and mobile app development.

Here are some vital statistics to keep in mind:

1. The IT outsourcing industry is expected to grow annually by 8.07%, resulting in a market volume of US$587.30bn by 2027.

   So, what does this tell us? This unprecedented growth in outsourcing means more and more companies are utilizing this resource. Businesses are catching on, and those that continue using outdated or in-house IT strategies will feel the consequences. Companies that use outsourcing are more agile, flexible, and scalable than those that don’t.

2. A 2022 study indicated that more than 68% of businesses spend one month or more to hire one developer.

   The labour shortage is real, and that applies to the technology sector. The hidden costs of in-house IT services include turnover (this same study found that 1 in 5 new recruits need to be replaced), training time, hours needed for talent acquisition, and more. The bill racks up quickly, and that’s money that could be placed into a company that already has the right people for your project.

3. Outsourcing for software development specifically is expected to grow by 70%.

   Building mobile apps, web apps, enterprise applications and more is complicated and time-consuming, especially if you’re starting from scratch with no dedicated in-house software engineers. When it comes to building technology, hiring a software company that’s already done all the work of hiring experts is the way to go.

4. The demand for software developers will grow by 22% between 2020 and 2030.

   Businesses looking to build technology will be facing fierce competition when it comes to finding the right talent. This makes outsourcing companies an invaluable asset to those looking to start a project.

5. According to a survey conducted by Deloitte, 70% of businesses looking to outsource are doing so for cost savings.

   Return on investment (ROI) is a critical factor in the decision-making process. This survey also cited agility as being a critical reason for outsourcing as well. In a post-pandemic world that is seeing a higher rate of globalization, businesses need to be ready for global changes at any moment. Technology is the only way for companies to stay at the top of the competition, as those that are innovating will lead in customer accessibility, trust, and reputation.

At ISU Corp, we are committed to staying at the forefront of emerging trends in software development and IT outsourcing. Contact us today to learn how we can help your business thrive in the ever-changing world of technology.

IT Services: What exactly can be outsourced?

When it comes to information technology (IT) services, outsourcing offers a highly customizable practice. Each project has unique requirements, and as it scales, new requirements develop that aim for higher goals. Outsourcing companies assign dedicated teams of highly skilled software engineers to assess, develop, implement, and provide support for clients, ensuring high-quality custom solutions.

Based on our experience, the most commonly requested IT services include:

Custom Software Development: Organizations outsource custom software development to achieve their ideal technology solution, whether it involves customizing an existing platform, developing simple applications for small businesses, or creating complex solutions for enterprises.

QA Services & Software Testing: Outsourcing quality assurance (QA) helps ensure that your product meets the highest quality standards in the market, drives innovation, and adds valuable insights to the software development life cycle.

Cloud Computing: By outsourcing cloud computing services, organizations can accelerate their digital transformation while increasing business agility, reducing costs, and simplifying IT complexity.

Mobile & Web Development: Developing highly engaging websites, authentic user engagement, and successful brand experiences is the result of top-notch web and enterprise app development services.

IT Maintenance & Support: Working with highly skilled software developers and support engineers makes it easy to manage IT processes with accuracy, flexibility, and structure.

Blockchain Consulting: Blockchain's powerful and verifiable network is helping organizations across every industry maximize efficiency and reveal new business opportunities while guaranteeing the validity of information through an immutable system of registers.

Big Data & Analytics: Capitalizing on the massive amounts of data resources available is a key factor for success. Data-driven strategies are the future (and the present) of business operations.

IoT Solutions: More and more companies are taking advantage of the Internet of Things to operate more efficiently, gain a deep understanding of their customers' buying patterns, and increase the value of their business.

UI/UX Software Design: Every company should strive to achieve a great User Experience (UX) strategy supported by an engaging User Interface (UI) design.

MVP Development: Working with a top Minimum Viable Product (MVP) development team will guide you through the bumpy road of new product development and ultimately turn your raw ideas into usable software in record time.

Outsourcing IT services can benefit organizations by allowing them to focus on their core competencies while leveraging the expertise and experience of specialized software development teams.

Questions to ask if you’re considering whether your business needs to outsource custom software:

• Does your company have the necessary expertise and resources to develop custom software in-house?

  Yes: Develop custom software in-house.

  No: Consider outsourcing software development.

• Is cost a significant factor in your decision-making?

  Yes: Evaluate the cost of outsourcing versus developing in-house.

  No: Evaluate other factors such as time, focus, scalability, risk management, and technology.

• Is time a significant factor in your decision-making?

  Yes: Consider outsourcing to ensure timely delivery.

  No: Proceed to the next question.

• Is software development a core competency of your company?

  Yes: Evaluate whether outsourcing aligns with your company's long-term strategy.

  No: Consider outsourcing to focus on your core competencies.

• Do you require significant scalability in your software development project?

  Yes: Consider outsourcing to rapidly deploy resources to meet changing demands.

  No: Proceed to the next question.

• Do you want to mitigate the risks associated with software development?

  Yes: Consider outsourcing to leverage the expertise of experienced professionals.

  No: Proceed to the next question.

• Do you require access to the latest technologies and tools for software development?

  Yes: Consider outsourcing to access state-of-the-art software development tools.

  No: Proceed to the next question.

• Final Decision

  If you’re still unsure, contact us for a free 30-minute consultation to see if outsourcing is right for you.

The Takeaway

IT outsourcing has become a popular option for businesses seeking cost-effective ways to access specialized skills and technology. From its humble beginnings as a cost-saving measure, IT outsourcing has evolved into a strategic tool for achieving business goals.

By outsourcing software engineering services to Latin America, businesses can benefit from the region's pool of highly skilled and cost-effective talent. However, when choosing an IT outsourcing partner, it is essential to consider factors such as experience, quality assurance processes, communication, and project management methodology. Successful IT outsourcing requires clear goal setting, regular communication, the use of project management tools, and thorough testing and quality assurance. In summary, IT outsourcing offers numerous benefits, including cost savings, scalability, and flexibility, making it a valuable option for businesses looking to focus on their core business functions while accessing specialized skills and technology.

Not sure if outsourcing is right for you? It can help to talk to an expert. Sign up for a free 30-minute consultation to discover how IT outsourcing could help your business thrive in the ever-changing digital landscape.

Written by Natalie Mansilla

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ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries, providing cost-effective custom software development, technology management, and IT outsourcing.

Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs, to produce the best ROI. Find out why startups, all the way to Fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.

11 Ways to Reduce Software Development Costs

Too often, a company will go into a software development project with a murky idea of what needs to be accomplished by the end of it. This can slow down communication on the requirements and ultimately delay the entire process. If developers don’t know what needs to be done, you’ll wind up paying for more of their time and adding up months or even years of extra work time.

While the cost of custom software development varies from project to project, there are 11 ways to minimize the risk of additional costs.

1. Confirm there’s a need for your application

While it may be tempting to jump head-first into what feels like a revolutionary app idea, resist the urge to invest your money in a project until you’ve done some preliminary research.

As someone creating a tool, it’s imperative that you think backwards from the user end of your solution. Think thoroughly about the issues and obstacles facing the people who will ultimately be using your completed software application. Make a comprehensive list of things to consider and determine if the market truly does need your application.  

No one wants to invest thousands of dollars in something only to find out that no one really has any use for it. This is why a market study could save you (and make you) a lot of money. Completing thorough research on your target audience can not only show you that there’s a need for your project, but it could also help you identify key elements that should be included in your product. It’s always a better idea to start with the end in mind.

2. Finalize your project requirements

Now that you’ve determined there is a need for your application, you should have enough information to form a fleshed-out plan for your project. Being as clear and specific as possible on your requirements will give your software project a massive boost. With clear requirements, the right IT team can make your idea shine in less time and with fewer complications. The simpler the process becomes, the more money you save on your project. Plus, it saves developers the headache of guessing what it is you need.

If you bring a clear plan to the table, your software development team will also be more inclined to go above and beyond since you’ve removed unnecessary complications from the get-go.

3. Consider the pros and cons of where you outsource your software development team

There are a few ways to get a software application made, but the most popular way among companies is to outsource—you can read why this is the best option here.

When outsourcing, a vital factor is the location of the company you choose. Offshore outsourcing is when you hire a company abroad, often reducing the cost of hired work. However, doing so can also reduce the quality of the work you receive. The phrase, “You get what you pay for” always holds true. You may get cheaper labour, but due to time differences and communication barriers, the product may suffer as a result. These complications can also delay fixes that would otherwise be solved sooner with nearshore companies. 

Nearshore outsourcing is when you hire from neighbouring countries. This can be more expensive, but it can also increase the likelihood of success for your end-product thanks to sharing a time zone and language. A mistake that’s been made can be fixed within the day rather than having to wait in eight-hour shifts to get it resolved. 

The trick here is to determine the flexibility of your budget and time investment and find a company that can give you a high-quality project for a minimal cost.

4. Choose the right kind of contract

The first step is so critical to the success of your project that it will make a difference even in choosing a contract style with a third-party development team. How complex is your project? How many people will it take to build? How many additional changes or features are you factoring in?  

If your idea is small in scale and fairly simple, you’re safe opting for a fixed-price contract. This is when you agree to pay a certain price to get the project done. This is comfortable, since you know there won’t be any surprises when the bill comes in. A straightforward project makes this kind of contract possible and desirable.

If your idea is more complex and requires flexibility, you’ll want to choose a T&M (time-and-materials) contract. A project of larger scope will need flexibility in time and budget since it’s nearly impossible to create an accurate estimate for something with many moving parts. Making the mistake of choosing a fixed-price contract for a complex project will result in a poorly built solution that may or may not work as expected. This is a quick way to drain money, as you’ll be left with a low-quality outcome.

Having flexibility can result in a bigger expenditure than expected, but that’s why planning and organization will have profound effects when it comes to minimizing project costs.

5. Choose the right software development team

You might be surprised how a team with a good culture can impact the development of your app. A positive workplace culture is a must for any business, but this is especially true for software development work, which requires an above-average level of teamwork and synergy. There are multiple pieces going at any given time, and with a crunch for deadlines, you want a team that can rely on each other to get the work done and pass the baton on time.

A bad work culture can lead to miscommunications, mistakes, and missed deadlines. Additionally, a team like this can just be awful to work with. A combination of bad attitudes, a lack of camaraderie, and minimal discipline will produce less-than-desirable results. This is why it’s important to be thorough in your search for a development team. Here are a few key things to look out for when in the hiring process:

• There is clear leadership in place

• They have solid recommendations from reputable past clients

• Team members seem eager to hear about the project and find solutions for it

• The company has a set of values that they work by

• The company prioritizes the health and happiness of their employees

The general feel of the people you first interact with will hint at the inner workings of a company; pay close attention to how they talk to each other and about other colleagues.

6. Value clear communication above all else

From the moment you get an idea for an application to the day it launches, if you hold communication as your #1 priority, the in-between will be a positive, enriching and fulfilling process. It’s up to you and everyone involved in the process to keep a strong chain of command, and one way to ensure this is by understanding the value chain.

The value chain is a practice that details the proper way to pass a task along. Each person in the chain is responsible for their own task, but the emphasis of the value chain dictates that each person must follow up with the next person in the chain in order to confirm that they have received what they need to complete their task and that they are doing so. This should repeat from the beginning of the process all the way to the end. If there is something pending, the value chain will help ensure every critical task is completed on time, and any blockers that come up are resolved.

7. Determine the best methodology for your project

There are several methods available that software development teams use as a way of organizing their efforts and implementing changes in the plan as it is being developed. Here is a brief rundown of some of the top choices:

Waterfall

This method follows rigid steps: determine the project’s requirements and scope, analyze those requirements, design, implement, test, deploy and finally, maintain. 

Feature-Driven Development (FDD)

Similar to Waterfall, FDD is viewed as an older methodology, a sort of precursor to modern Lean/Agile implementations. FDD still focuses on the goal of delivering working software frequently and is an especially client-centric approach, making it a good fit for smaller development teams. 

Agile

Agile is a process by which a team can manage a project by breaking it up into several stages. Constant collaboration with stakeholders and continuous improvement at every stage is the focus of Agile. This works by breaking projects down into little bits of user functionality called user stories, prioritizing them, and then continuously delivering them in short two-week cycles called iterations.

Scrum

Scrum emphasizes decision-making from real-world results rather than speculation. Time is divided into short work cadences, known as sprints, typically one week or two weeks long. At the end of each sprint, stakeholders and team members meet to see a demonstrated potentially shippable product increment and plan its next steps.

Find more info on software methodologies here.

8. Use a pre-built software foundation platform instead of starting from scratch

A solution to limited time and budget is to use a foundation platform that already has basic features built in. Depending on the nature of your idea, a solution like the ISU Core could save you up to 70% of the implementation cost of your project.  

A large percentage of software projects share the same requirements. Custom software developers have to rebuild these requirements on every new project, leading to a loss of time and money that can be avoided. With the main structure already set up, you will have the first version of your application in record time. This works for a wide range of projects, from simple solutions all the way to Enterprise applications. You can rest assured your needs are covered no matter the scale of your project. The ISU Core is used to create modern cloud, mobile and SaaS solutions/products, so consider using this if you’re looking to get started on a project of similar scope.

9. Invest in learning about software development 

Having a baseline understanding of how software development works can help you get the most out of your project. One vital concept to keep in mind is another methodology called DevOps.

This term comes from the combination of development and IT operations. DevOps is a set of practices and tools that aim to reduce the length of the software development life cycle, streamlining your project while keeping high quality and high output volume. This method complements Agile, as it emphasizes rigorous testing and re-assessment of the project as it is being developed. This certifies that the end product fulfills the requirements that were set out from the beginning.

When you outsource a project, knowing these strategies can help you communicate about them with your chosen team and ensure that best practices are being implemented throughout your project lifecycle.

10. Don’t be afraid of launching a minimum viable product (MVP)

Launching your product with only the essential features can allow you to receive crucial feedback on your project. There are no better people to receive feedback from than your target audience.

Doing this can give you a trail of evidence that will lead to your project’s success, as you’ll have access to data that will give you the positive and negative aspects of your application so far. This can help you pivot your development toward creating the tool that your audience wants. You can also determine more accurately if your project is worth pursuing. If no fish bite the hook, reeling it back in can save you the extra time and money that comes with keeping it in the water, so to speak.

11. Don’t get too caught up in design

While it may be one of the more exciting aspects of building an application, focusing too much on the look of the app can be a detriment to the usability of it. Keeping a balance between beauty and usefulness is an art, and both are important for your end user. Your app must be modern and inviting to your user, while also being intuitive and logical. The best way to strike that balance is to work with a team of experts with experience in creating stunning designs with top-notch useability.

In The end

Each step when done together can save you thousands in the long run. It’s entirely possible to avoid the potential turbulence every software project could face. Remember, clear requirements, thorough communication, brushing up on software knowledge and methodologies, and knowing the best outsourcing practices for your project can all contribute to a smooth and successful launch. Give your idea the expertise it deserves by hiring experienced professionals.

ISU Corp is an award-winning software development company, with over 17 years of experience in multiple industries providing cost-effective custom software development, technology management, and IT outsourcing.

Our unique owners’ mindset reduces development costs and fast-tracks timelines. We help craft the specifications of your project based on your company's needs to produce the best ROI. Find out why startups, all the way to Fortune 500 companies like General Electric, Heinz, and many others have trusted us with their projects. Contact us here.

Written by Natalie Mansilla