Make no mistake, the novel coronavirus is as big as a problem as it gets. But the world will eventually come out of it. At that time, would you want your startup to take its time to freshen up and understand the needs of the market? Or would you want to start preparing a great software product so you’re ready when the market needs it most?

I’m pretty sure your choice would be the latter, but most businesses have their hands tied. They’re unable to operate due to lockdowns, disruption in supply chains, unavailability of staff, and out of myriad problems created by COVID-19. Yet, there are few businesses that are fortunately working as smooth as ever, especially in the software outsourcing sector.

So if a business (maybe yours) is unable to work on an in-house software project due to COVID-19, is it a wise choice to outsource it to an offshore software development company? Why outsourcing is important? What are the benefits of outsourcing a software development project?

Say, if you’re a tech startup in desperate need to capitalize on an opportunity and establish a market presence, then:

1- This isn’t the best time to run your business.

2- Once we’re done with COVID-19, the state of the market at the time will present unprecedented opportunities that startups could capitalize on.

But at the same time, your startup could be competing with 100s of established enterprises looking to capitalize on the same opportunities.

Is there something you could to have an edge over potential competitors in such a scenario? Product Development Outsourcing could be the masterstroke for a competitive advantage in the long-run. Here’s why.

As you may know, there are multiple options available in the market to build functional software products. However, when it comes to startups, there’s a conventional line of thought which says that the benefits of outsourcing are for enterprises only.

But you can certainly outsource product development as a startup and this is important to your business as well, especially in this pandemic situation. 

Benefits of Outsourcing

There are multiple benefits of outsourcing IT and software development services. let’s start with cost.

Cost-cutting

Managing a budget is a big challenge for startups. However, outsourcing helps a lot to do it right.

In fact, according to a research, 87% of US companies outsource product development to save cost. 

Outsourcing provides a global talent pool at a low cost. You hire a backend developer (in-house) at  98000 USD/year and it comes down to 22000 USD/year when you outsource.

The risk is lesser

In the case of new products whose market is yet to be tested, outsourcing plays an important role in mitigating the risks of trying out something new.

Since the outsourced teams work on flexible models the risks are definitely lower.

It’s Faster

Outsourcing the development helps in faster development with the Agile model and helps in tremendously reducing the time to market.

9% PEOPLE GLOBALLY outsource only to fasten their process.

Technical Expertise

You may be new to the market. That’s not an issue until you have technical expertise with you. If you already have that, then it’s good, however, if you don’t- then it is better to outsource.

15% PEOPLE GLOBALLY outsource to access expertise

Free up time and more focus

For startups, investing time into high priority things is very important. One of the greatest benefits of outsourcing is that you free up your time for other important things. This helps a lot.  This image will show you some other reasons why is outsourcing important:

You can also check this list from entrepreneur.com about successful startups that leveraged the benefits of outsourcing successfully.

key steps for your startup to effectively outsource product development

Choose the Right Vendor

Choosing the right vendor for outsourcing application development is a must. An outsourcing company with expertise in the required development skills will surely be helpful. Picking up freelancers is definitely not advisable, as they cannot be relied upon, for taking up product ownership.

One of the important points to consider while selecting a vendor for outsourcing development is the flexibility of hiring models.

This helps the startup choose a hiring plan that will optimize the costs of outsourcing in accordance with the development requirements.

It is also important to evaluate the portfolio of the hiring vendor to understand the level of specialization in different business verticals.

Defining The Scope Of The Project

The second most important step in outsourcing your product development is to define the scope of the project. First, you need to convert the business idea into a business plan and then put down what all you need from a successful product. Defining the technology with which you wish to develop your product is another crucial decision. This also helps in defining the skill levels of the teams you wish to hire.

Once the scope of the project is defined and the vendor for product development has been chosen, the service level agreement with the vendor can be created.

This helps in ensuring that the outsourced teams are working according to the plan of action.

The outsourced teams must be clearly communicated about the expectations and the milestones. This helps in developing mutually beneficial relationships with the outsourcing partner.

Communication

Keeping in touch with the outsourcing partner on a regular basis and reviewing project work in progress on a constant basis is important. This is helpful in improving project productivity levels. Motivating remote teams with incentives and appreciation is helpful in getting better business results.

Overall, a continuous communication helps you to finish tasks smoothly.

Wrapping Up

Looking to outsource your startup project? Here are some key benefits of outsourcing you software development needs to ValueCoders:

1. Flexible hiring models
2. Advanced technical project consultation
3. Agile methodology and timely project delivery

ValueCoders( a leading software development company in India)provides expert agile teams for all kinds of startup site and application development. We have teams across all our departments, all 350 of them working remotely to assist all your software development outsourcing requirements.

We know these times are rough, but our entire team is working through it. And we are doing it for small businesses, startups, and enterprises like yours; so everyone could come out safely this pandemic, together!

The post Why Outsourcing is Important For Startup Product Development? appeared first on ValueCoders | Unlocking the Power of Technology: Discover the Latest Insights and Trends.

For example, if company A hires company B to create a website in the United States, company A has outsourced this work to company B, while if company C is based in India, hires company D in Singapore to do the same work, then company C has offshored this work. 

This post will discuss the pros & cons of both outsourcing vs. offshoring your business, so you can decide which is best for your business.

What is Offshoring?

Offshoring, also known as offshoring trade or outsourcing, transfers portions of a business process to another country with lower costs. It occurs when a company moves its operations to another country. Offshoring can be partial or complete. 

Partial offshoring includes such practices as shipping goods from one country to another for final production and then sending the finished goods back to their home market. Complete offshoring refers to shifting all production tasks overseas, including research and development.

It was first used in the 1980s by IBM, which sent software jobs to India’s HCL Corporation. Offshoring has become more popular today as technological advances have made it easier for companies to do so.

Also Read: Staff Augmentation Vs. Project Outsourcing Vs. Managed Services: Which One Is Right For You

What is Outsourcing?

Outsourcing is shifting work to a third party, like an Offshore IT Company in India, who will carry out the work. Outsourcing allows businesses to focus on their core business and eliminates redundancies. For example, if a company outsources its payroll function to an offshore company in India, it could pay for the service once instead of paying salaries.

Businesses outsource to save money and eliminate redundancies. There are many advantages to outsourcing, but there are also disadvantages as well. Many companies need more time or resources, so they need to allocate funds to hire additional staff or personnel outside the company, which can be expensive. We can talk about that in more detail.

Understanding the Differences between Offshoring and Outsourcing

According to Statista the global information technology (IT) spending on devices, including PCs, tablets, mobile phones, printers, as well as data center systems, enterprise software, and communications services came to 4.26 trillion U.S. dollars in 2021 and is expected to increase to around 4.43 trillion U.S. dollars in 2022.

When comparing Offshoring Vs. Outsourcing, we can see that the best option will depend on the needs of your business and how you want to approach this process.

However, offshoring companies are more likely to offer a higher level of expertise than outsourcing companies, while the latter may provide faster and less expensive services. Let’s look at the detailed comparison:

Pro’s and Cons of Offshoring and Outsourcing Software Development

Many Software Development Companies offer both services; however, it is up to you and your requirements which service would be ideal for you. To understand this better, below are the pros and cons of outsourcing & offshoring software development services. 

Pro’s

Although outsourcing might be different from offshoring, both services have specific advantages that make companies choose them; let’s look.

Cons

Offshoring vs Outsourcing Which One is Best? Watch This Video:

Importance of Offshore Software Development

The reasons offshoring is essential are numerous; some of them are:

1. It can save labor costs by hiring cheaper workers abroad.
2. It will take less time to complete a project since your overseas developers have 24/7 access to the project they’re working on. They’re usually able to work on them during their time zone rather than waiting for you to be available.
3. You’ll have access to highly qualified workers with skill sets that you may need for a particular project but don’t have locally.
4.  Between Offshore vs. Outsourcing, offshoring is always better because it gives you access to resources in other countries with no negative impacts of outsourcing. One major difference between outsourcing and offshoring is where your staff works.

Also Read: Offshore Resource Hiring-E-Guide

Reasons Why Companies Outsource

  There are several reasons companies prefer outsourcing, such as:

• To reduce costs. It is more affordable for a company to outsource its software development needs than to do it in-house. 
• The company might need more software development expertise for the project’s specific requirements. 
• Outsourcing is convenient for companies with no dedicated software development department, so they outsource their projects to offshoring vendors. 
• Companies might use outsourcing as market research. You can do this if you are looking for different opinions from an outside source on your product or website before launching it.

Reasons Why Companies Offshore

There are many reasons companies go for offshore software development services:

• Due to the low cost of hiring developers in the country, companies opt for offshore. 
• Third-world countries could lack qualified professionals in a company’s very own country. 
• Offshore teams often have much more experience in specific technologies than those from average developed countries like US or Canada, so they may be able to finish projects much faster than teams from developed countries with less experienced developers on board.
• Offshoring can provide peace of mind due to geographical distance. If anything goes wrong, it won’t affect the company as badly as if there was no separation between them and their outsourced team.

Lastly, top offshore software development services companies offer detailed pricing policies. You don’t have to worry about paying extra fees after your initial contract expires or being forced into unnecessary upgrades at every turn.

Business Processing Outsourcing (BPO)

BPO or Business Processing Outsourcing is when a company outsources the operation of its business processes to a third party. Unlike offshoring, BPO works with the customer’s internal staff rather than transferring employees. 

Hiring a Top Offshore Software Development Services Company can offer many benefits, such as lower costs and faster implementation times. Whether you are considering offshoring or BPO, it is important to research beforehand to find out which option best fits your needs.

Choosing the Best Option

Well, that is not an easy question to answer because both services  have advantages and disadvantages. For example, if you are looking for a software development company in India, you can go with the offshore IT company in India. 

But if your company needs a solution such as software development outsourcing services from Top Offshore Software Development Services Company, then it might be better to outsource the project.

Hence it depends on the business requirements. In short, they both have their own set of benefits and shortcomings. Which one should we choose? The answer is: It all depends on what is more important to you!

What Are Your Requirements For An Outsourcing Company?

Offshore vs. outsourcing requires much research when deciding which option to go with. Each outsourcing company has specific requirements for its prospective clients. Let’s look into the following:

1. If you need cost-effective solutions, focus on Indian companies, as they are known to provide reasonable rates.
2. If you want to hire somebody who can understand your business culture, ensure that the provider is from your home country.
3. Always get references from other provider customers before making any commitments.
4. It is essential to determine how much time it will take to complete a task before deciding which provider to work with.
5. It is also crucial to determine if any guarantees are in place in case anything goes wrong with the project.

Questions may help you determine whether an outsourced company would suit your needs:

• What does it mean to outsource?
• What does it mean when something gets offshored?
•  Do I need an offshore development team?

Also Read: Offshore Vs Nearshore Outsourcing: A Detailed Comparision

Conclusion

Offshoring is when a company sends work to another company in a different country. It’s typically used by companies who want to stay competitive in the global marketplace but do not want to relocate their operations. Outsourcing‌ is when a company contracts with another organization or individual to provide a service or product. 

When comparing Offshore vs Outsourcing, choosing one of these depends on what you’re looking for. Outsourcing may be your better choice if your business needs a single job. But offshoring might be more advantageous if you look for a long-term relationship that will grow as your business grows.

The post Offshoring vs Outsourcing – Differences and Comparison appeared first on ValueCoders | Unlocking the Power of Technology: Discover the Latest Insights and Trends.