Currently, the global market of outsourced services amounts to a $92.5 billion industry. Custom software development outsourcing has already become a solid business solution to increase production capacity, gain extra flexibility, and optimize expenses. Over 44% of CIOs admit they are more likely to outsource the software development processes now than they were five years ago.

Even though IT outsourcing is a common practice, many companies still hesitate to adopt it. They have concerns about how to successfully outsource IT development and what IT outsourcing model to choose. Well, since there is no universal solution that suits every case, you will need to research different options. Let’s do this together in today’s IT outsourcing services guide about:

What is IT Outsourcing? Types of IT Outsourcing Services, Team Models, and Who Should Consider Hiring a Development Team Remotely

Before talking about Ruby on Rails, PHP, .NET or other specific development outsourcing services you need to clarify what software development outsourcing is all about.

What is IT Outsourcing?

IT outsourcing refers to the practice of hiring a third-party software development provider that fully or partially handles information technology functions of a company. For example, you can hire a remote team of software engineers to develop a fitness app or engage several tech specialists to migrate legacy IT solutions to a more advanced platform.

Remote collaboration is a primary characteristic of programming outsourcing. Generally speaking, there are three types of outsourcing (based on the geographical distance) to choose from:

  • Onshore. A customer and an IT outsourcing provider are located in the same country.
  • Nearshore. An IT outsourcing provider is located in a neighboring or nearby country
  • Offshore. An IT outsourcing provider resides in another time zone and a distant location.

Types of outsourcing

Deciding on the location of IT outsourcing services, many companies focus on nearshore or offshore destinations since this gives them access to local talent pools and allows for hiring skilled tech specialists at a lower hourly rate. To pick where to outsource software development, check a detailed overview of the main outsourcing hubs in 2020. It covers the top destinations and compares them by the key factors, such as software development cost, labor market, time difference, technical and English skills. Once the destination is chosen, it’s time to think about a team model.

Who should consider custom software development outsourcing

To better understand if you should be one of the companies that outsources IT, analyze your current performance and needs. Most businesses use custom software development outsourcing to reduce expenses, focus on more critical business processes, boost capacity, improve service quality, and tap into the global intellectual capital. If you pursue one of these goals, programming outsourcing may be an effective solution for your business.

The size or industry of the company doesn’t matter. Startups hire remote developers to speed up product launches and reduce operational costs. Medium and large enterprises cooperate with a custom software development company to reduce the workload of in-house teams and optimize business processes.

Summing up, IT outsourcing solutions are right for you in the next 5 cases:

  1. You want to optimize software engineering expenses without sacrificing the quality of the IT services that can be outsourced
  2. You need to power your current team with tech experts or launch a separate dedicated team
  3. Your local market lacks a skilled workforce, and you cannot find the necessary specialists
  4. You want to diversify your business and increase its stability during and after the economic downturn
  5. You need to launch software development as soon as possible and avoid the tiring recruitment and onboarding process

How IT Outsourcing helps businesses

Types of outsourcing models offered by software development providers

Software development companies that specialize in IT outsourcing generally offer three contract types: Dedicated Team, Time and Material, and Fixed Price. These models are tailored to different kinds of engagements and are usually discussed at the project evaluation stage. When you contact IT outsourcing companies, they clarify the requirements and estimate the scope of work to advise on the most suitable approach. Here’re the takeaways about all these models to note.

Dedicated team model

It’s a prevailing custom software development outsourcing approach for long-term and complex projects consisting of multiple steps. At customers’ request, a software development provider assembles a remote team of specialists. It can have any size and composition depending on the scope of the project and change during the cooperation. The hired tech specialists operate as a part of the internal staff of the outsourcer. They communicate with the project manager of the customer, attend daily meetings, and are heavily involved in the development process.

Time and Material

This model works well for small projects that require part-time engagement and are easy to estimate. For example, a customer that doesn’t have an in-house UX/UI specialist may contact an IT consulting outsourcing agency to hire one for a short period of time. This will save the outsourcer from wasting resources on the recruitment process and satisfy their corporate needs. Another hallmark of a T&M contract is System Requirements Specification Document that details all the functionality with time, cost, milestones, and deliverables. It serves as a guide to the hired specialists and allows the customer to estimate the final cost of IT outsourcing services.

Fixed price model

In this type of outsourcing agreement, you pay for the whole project. The final cost is agreed on beforehand and doesn’t depend on the amount of time and resources spent. Outsourcing providers offer this approach when the scope of the future work is predictable and unlikely to change. The customer shares detailed requirements and specifications based on what the vendor estimates the cost of software development services.

Have any questions about your current projects or ideas? Contact us and let’s overcome challenges together.

IT Outsourcing Can Save Your Business: Benefits of IT Outsourcing Services During the Crisis

Apart from the usual motives, many businesses have started to use outsourcing services to withstand the economic crisis. The cost-cutting potential of IT outsourcing is so lucrative that enterprises that have never outsourced consider transferring their technical projects to remote teams. Given that the impact of remote work is rapidly increasing, the location of teams no longer matters. With video conferencing and project management software, remote teams can work side by side with in-house staff. This brings a range of undeniable advantages of outsourcing IT:

#1. IT outsourcing lets you redistribute the budget

In times of economic decline, every company should reevaluate its expenses and find a way to use the budget with maximum efficiency. Since business spending on tech goods continuously increases, optimization of software development and maintenance expenses makes a difference.

This is actually a chance to see the crisis as an opportunity to upgrade your business and make it better prepared for future market challenges. For some, optimization of IT services that can be outsourced may even be the only way to deal with reducing revenue and slowed down growth rates.

#2. Outsourcing company has extensive remote development expertise

With the shift to a remote economy, many businesses are faced with the need to quickly switch to the work-from-home mode. Compared to a qualified software outsourcing vendor with hundreds of completed projects, they knew nothing about remote cooperation and experienced a lot of difficulties. By hiring a software development provider, you not only transfer a part of your tasks but also benefit from their experience. The outsourcing model allows customers to instantly work with a team that is accustomed to remote development and has the necessary tools and processes in place.

#3.  IT outsourcing solutions increase productivity and agility

To deal with a perfect storm, you must be ready to adapt to the changing conditions. Partnering with a web and mobile application development outsourcing company gives businesses extra agility and quick access to remote resources. For example, you can scale your team with new tech specialists whenever needed, choose the most suitable model of cooperation, avoid hassles associated with renting offices or arranging taxes, and more. In addition to flexibility, outsourcing also enables you to focus on more important business processes and anti-crisis management.

How to Successfully Outsource IT Development With Leobit

Leobit is a full-cycle web, .NET, and mobile application development provider that has completed over a hundred projects remotely. Thus, if you have an idea of an outsourcing project and are looking for a qualified partner, we have something to offer you. Our 130+ tech experts specialize in Ruby on Rails development outsourcing, PHP development outsourcing, .NET software development services, and many technologies for the web, Microsoft, and mobile stacks. We also offer different partnership models, including dedicated development teams, T&M, and fixed price, to tailor IT outsourcing services to every customer.