6 key benefits of outsourcing software development

Are you thinking about outsourcing development but you’re still not ready to take the plunge?

That’s understandable, it’s not a decision you should take lightly.

But, outsourcing software development comes with a lot of benefits you should know about.

Here, we’ll discuss the 6 key benefits of outsourcing software development and how it can help your business.

Let’s dive in!

What is software development outsourcing?

Software development outsourcing is when you hire an external company or team to manage your software development tasks and projects.

This includes everything from temporarily contracting a few freelancers to help out your in-house team to fully outsourced software product development.

It’s a massive market, too.

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The global software outsourcing market is valued at $585.5 billion in 2024 and is expected to grow to a staggering $897.9 billion in value by 2031.

Of course, this is no surprise since some of the biggest players in the game like Google and Facebook outsource their development efforts.

But, as great as outsourcing is (and we mean it!), it isn’t always the right choice.

Next, we’ll discuss when and why you should outsource development.

When should you outsource development?

So, how can you tell if outsourcing software development is the right choice for your business?

Here’s when you should consider outsourcing:

• You’re on a tight budget – if you have a limited budget, outsourcing development will help you save substantially lower development costs
• You need access to specialized skills – if you need talent with specialized skills, outsourcing development will help you find and hire them much more easily
• You want to get your product to market faster – if you need to get your product on the market quickly, outsourcing its development is your best bet
• You need to quickly scale your team – outsourcing is the quickest and cheapest way to quickly scale your in-house team to meet new demand
• You’re facing a shortage of local talent – if you can’t find the right talent in your local area, outsourcing development will give you access to a global talent pool

And that’s just scratching the surface.

But, outsourcing isn’t always the right choice.

For example, if you’re building a product that handles sensitive data, like financial or healthcare information, or you need full control over development, outsourcing might not be the right fit.

Of course, this doesn’t mean you can’t outsource – you just need to be really picky about the software development company you partner with.

6 benefits of outsourcing software development

Now, we’ll dive into the top benefits of outsourcing software development and discuss them in more detail.

Lower development costs

When you think about outsourcing, the first thing that comes to mind are cost savings.

And for a good reason, too.

Outsourcing software development can cut your development costs by up to 53%, according to a study by Existek:

source: Existek

In fact, cost reduction is the main reason why companies outsource development.

According to Deloitte’s survey of business leaders, 70% of them named cost as the key reason why they outsource:

source: Deloitte

There’s a few reasons why outsourcing reduces costs, like:

• Lower training and onboarding costs
• Reduced administrative overhead
• No long-term employment commitments
• Lower infrastructure costs

But, by far the most important reason why outsourcing is cheaper is lower labor costs and hourly rates.

For reference, here’s a comparison of the average hourly development rates by role and region:

Average hourly development rates by role and region

So, if you’re based in Western Europe or North America and you outsource development offshore to Asia, you’ll pay up to 5x lower hourly rates.

If you do the math for a whole development team, the savings quickly add up.

And that’s why outsourcing is a good call.

How lower development costs benefit your business

Access to a global talent pool

Finding the right talent to hire is tricky at the best of times.

And it’s especially difficult if you’re limited by geography.

But, when you outsource development, you get access to a huge global talent pool.

source: Springs

And since the IT skills gap will only continue to grow in the future, finding the right talent will be even more difficult.

That’s where outsourcing comes in.

It’s the best option if you’re struggling to find experts in your local area, like:

• AI engineers
• Cloud engineers
• Cybersecurity engineers
• Data scientists
• Subject matter experts (SMEs)

But, there’s another underrated benefit to hiring experts from around the globe – increased cognitive diversity.

Here’s a few benefits you get from better cognitive diversity in your business:

source: Herrmann International

And research backs this up, too.

A Harvard Business Review study found that cognitively diverse teams solve problems faster and adapt better to change.

And that’s a pretty good reason to outsource development.

How access to a global talent pool benefits your business

Faster development and time-to-market

When you outsource development to the right company, one major benefit you get is faster development.

And that means you’ll get your product to market faster.

But, why is this so important?

If you get to market faster, you’ll generate higher revenues and profits – at a similar cost to taking longer to get to market.

And on top of that, with a shorter time-to-market, you also get an edge over your competitors.

source: TCGen

So, a shorter time-to-market is a no-brainer – but, how does outsourcing development help speed it up?

For starters, it’s much faster to hire an outsourced team than it is to build an in-house team from scratch.

Hiring, onboarding, and training an in-house development team could take months (and cost a fortune) while hiring an outsourced team takes only a couple of weeks.

Also, the best software development companies will have high-caliber developers and use Agile methodologies like Scrum, which will speed up development, too.

Scrum’s iterative approach not only helps them work faster but also makes it easier for them to pivot mid-development.

And that’s key to successful development.

How faster development and time-to-market benefit your business

Easy team scalability and flexibility

Scaling an in-house team is very difficult and time-consuming.

Just think about all the different steps you need to take: sourcing and screening candidates, paying for ads, setting up interviews, negotiating salaries, onboarding and so on.

And that’s just the tip of the iceberg.

But, when you outsource development, you don’t have to deal with any of that.

Let’s say you’re a startup with a small core team and you want to start building your MVP.

Instead of wasting precious weeks or months on finding the right talent, you could just augment your team with the talent you need.

And let’s imagine your product starts getting traction in the market and you need to quickly scale the team to keep up with demand.

You can very easily expand the extended team into a full dedicated team that will iterate and update your MVP.

If you work with the same vendor, you can expand the team in days and they can start work immediately.

Also, if things take a turn and you need to scale down, you won’t suffer reputational damage from layoffs – you’ll just be scaling down your commitment to a vendor.

And that’s why outsourcing is a great choice.

How easy team scalability and flexibility benefit your business

Access to domain knowledge and expertise

Another benefit of outsourcing development is that you get access to domain knowledge and expertise.

Of course, that’s only true if you hire the right vendor.

But, if you get it right, you’ll be working with a team that already has experience building similar products – and that expertise can mean the difference between success and failure.

Let’s say you have an IoT device and you want to build a companion app.

Finding and hiring a whole team of developers with experience in IoT app development would be very difficult and time-consuming

On the other hand, hiring a company that’s built IoT apps in the past is much, much easier.

And the best part?

They’ll have exactly the skills you’re looking for, will understand the risks involved, and will be able to build your product faster.

And you can’t beat that.

How domain knowledge and expertise benefit your business

Lets you focus on your core business

Outsourcing development isn’t just a cost-cutting measure, but a strategic business decision.

That’s because when you outsource development, you’ll free up resources and you’ll be able to focus more on your core business.

And that’s especially important if your core business isn’t related to software development.

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Here’s a good example – you’re a retail company that wants to build a proprietary e-commerce platform.

Building it in-house from the ground up would break the bank and take up a lot of resources that could be better spent elsewhere.

If you outsource development, you’ll be able to focus more on:

• Brand strategy
• Sales and business development
• Marketing
• Customer service

In short, your team will get to spend more time on impactful tasks while development experts handle the technical side.

And that’s the recipe for successful software development.

How focusing on your core business benefits your business

Benefits of outsourcing software development: FAQs

Are you looking for a reliable outsourcing partner?

Are you looking for a reliable outsourcing partner but haven’t found the right fit yet?

Well, you’re in the right place.

We’re a full-service, high-caliber software development company and we pride ourselves on our rigorous QA standards and fast delivery, so you’ll be in capable hands.

We can handle all of your development needs, from building your product from scratch to regular maintenance and updates.

If you want to learn more, feel free to reach out and our team will be happy to discuss your specific requirements in more detail.