Software development outsourcing is rampant and on the rise. It involves hiring a third party to handle some or all of a company's software development needs. This could mean end-to-end development, which includes the whole process of a product's development, or can pertain to specific tasks like updating a feature. Ongoing support is a third kind of outsourcing where the hiring is specifically for ongoing support for a project.
Numbers speak: The global IT services outsourcing market size was estimated at USD 525 billion in 2022 and it is expected to hit around USD 1,149.24 billion by 2032, poised to grow at a compound annual growth rate (CAGR) of 8.2% during the forecast period 2023 to 2032. (Source: Precedence Research)
India’s Advantage in the Outsourcing Market
India has become a premier IT outsourcing destination of the world, with the US dominating the Indian IT outsourcing. Three major reasons for this, as researched by Statista, are:
Customer preferences: Clients are looking for high-quality, wide-ranging and customized services at a reasonable price. India has it all!
Trends in the market: The shift towards digital transformation and thus increase in demand for new technologies like cloud computing, big data analytics, and artificial intelligence is taking clients to Indian companies. India is extremely experienced in software development, data migration, and system integration, along with Agile and DevOps methodologies.
Local special circumstances: Many Indian universities/training centers are focused on producing graduates with IT skills. A strong talent pool and a business-friendly environment, ensured by supportive government policies, has led to a teeming IT ecosystem making India all the more inviting for those looking to outsource to a good software development company in India.
From 2005 to 2022, India doubled its share of global commercial services exports from 2005 to 2022, from 2.0 per cent to 4.4 per cent. (World Trade Organization)
Benefits of Outsourcing Software Development
A data-driven approach is always more reliable and comprehensive. Hence, before we dive into the enormous benefits of outsourcing, let's start with a statistic.
Revenue in the IT Outsourcing market is projected to reach US$541.10bn in 2024. (Source: Statista)
The high projected growth rate makes it evident that companies resort to IT outsourcing for its numerous benefits. The advantages include -
1. Reduced labor costs
By outsourcing work to other companies, businesses can hire specialized people to do their tasks while cutting down labor costs significantly.
2. Saving money on resources
Outsourcing offers businesses save on technology, infrastructure, and tools - no actual offices required, no need to purchase subscriptions or even software.
3. Access to specialized skills
Outsourcing comes with access to a global talent pool that may not be available within a company so any business looking for a specific skill set can always outsource.
4. Accelerated time-to-market
Software outsourcing companies hold a workforce that has specialized skills and years of experience that aim to expedite project timelines and help businesses get products to market faster.
5. Increased productivity
Outsourcing improves productivity and efficiency when companies outsource repetitive or complex tasks. This is done so that their staff can manage their own time better and focus on their core competencies that contribute towards innovation and growth.
6. Greater flexibility
Outsourcing allows businesses to scale up or down as needed, providing them greater flexibility. Businesses can meet changing resource requirements in consideration of fluctuating customer or market demands.
7. Access to innovation
Outsourcing enables companies to utilize advanced technologies and tools that may otherwise be beyond their budget. This can accelerate innovation and allow them to introduce new products to the market.
8. Access to intellectual property
Software outsourcing companies provide their services backed by a joint intellectual property protection guide that avoids unlicensed access or duplication of proprietary technologies, processes, or creative works. It ensures confidentiality and trade secrets are maintained.
Disadvantages of Outsourcing
Every coin has two sides. Likewise, outsourcing also has its shortcomings.
1. Lack of Consistency
Outsourcing companies deliver services in a variety of different ways which are not always consistent with your brand. Also, change in staff or management can lead to inconsistency and delayed deadlines.
2. Communication challenges
Communication challenges could arise due to differences in time zones, communication methods, and dependable internet infrastructure.
3. Loss of oversight
Working from a distance can lead to challenges in maintaining the desired level of supervision over the work being performed.
4. Fewer employee growth opportunities
When a business outsources, it takes away the opportunities from in-house employees to learn new skills and develop their expertise, which ultimately harms their growth.
5. Lack of dedication
There may be a difference in the level of dedication and commitment between the outsourcing team and the in-house staff, since the teams may be working on multiple projects at the same time.
Despite all the challenges, software outsourcing is here to stay. A well-structured outsourcing plan, a systematic approach, and a clear objective can help businesses ensure successful outsourcing.
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Software Development Outsourcing Models
Hiring a dedicated team
Companies hire a dedicated software development team for continuous service and support for a specific long-term project. They hire individual people with skills and expertise for specific roles to match a project’s requirements. In this kind of dedicated team model, the project is driven by the strength of the outsourcing team members, providing the client greater flexibility and control.
Staff Augmentation model
This is a business model where companies, despite having a team of their own, hire software development outsourcing companies to carry out different roles and augment their team’s capacity. This helps increase the flexibility and scalability of the client, without the requirement to be completely dependent on a service provider. In the longer run, the company and its team get to focus on the organization’s bigger goal.
Time and Materials contract
The time and material engagement model, the project requirements keep changing over time and thus the payment is made for the result based on the man-hours spent. This approach offers great flexibility and scalability to the client and offshore software development outsourcing company. Most outsourcing companies in such a case give an estimate to the client that may change the final cost if there are any new requirements.
Fixed price contract
A fixed price model comes with a standard rate that is put forward by the service provider on a monthly or annual basis depending on the project’s requirements. The rates in this working model can change if factors like salary, incentives, targets, etc. come in. Here, the scope, duration, deliverables, deadlines, and cost of the project are decided well in advance before the team starts working on the project. This helps provide security to the client as well as the outsourcing company.
Popular Types of Software Development Services
Many good software development companies in India offer custom software development services and solutions to match different business requirements, for clients globally. Evon Technologies is known for its transparent working model, reduced time to market, and minimized costs of hiring, training, and retention, with innovative staff augmentation solutions.
Sought-after services include -
- Custom Web Design and Development - tailored to unique business visions and needs backed with evolved tools for project management, bug tracking, and communication.
- Custom Mobile App Development with an approach to streamlining software development processes with AI automation, enhanced efficiency, and reduced time-to-market.
- Cloud Consulting, to help unleash the full potential of the cloud with customized strategies for your business needs, digital transformation, and scalability.
- Digital Transformation consulting services to help clients create outstanding customer experiences using analytics, automation, and AI.
- DevSecOps to deploy applications and services faster, and more efficiently, with security at every step of the development cycle.
- Enterprise Resource Planning (ERP) to boost productivity across all businesses with automation solutions—simplifying inventory management, sales reporting, and logistics.
If you’re looking for high-quality, scalable, and customized software solutions that cater to diverse needs across industries, please write to us at This email address is being protected from spambots. You need JavaScript enabled to view it..
The Future of Outsourcing Software Development
An overarching demand for cloud computing, remote work gaining momentum, integration of AI, and intelligent automation, wide adoption of agile frameworks, and rising focus on cybersecurity have made it all the more easier for businesses to accept, adopt, collaborate, and innovate with outsourcing. Technology advancements are what are driving software development outsourcing and its future will also be insistent on technological innovation and development.
The global business process outsourcing market size was estimated at USD 280.64 billion in 2023 and is projected to grow at a CAGR of 9.6% from 2024 to 2030. (Source: Grand View Research)
