Software Development Outsourcing is a path for companies to build Engineering capacity without the ongoing costs of hiring permanent employees. The costs associated with finding and hiring permanent employees—particularly Software Engineers—are high. Employees require investments in recruiting, infrastructure (office space, equipment), and benefits.
Many successful companies have both permanent employees and flexible outsourced developers. Employment in technology occupations has grown this year to a record 6.39 million according to government records.
ADVANTAGES OF OUTSOURCING SOFTWARE DEVELOPMENT
There are several advantages to outsourcing software development. Some of the most notable ones include:
- Cost savings: Outsourcing can often be more cost-effective than in-house development, as it allows companies to access a wider pool of talent at lower rates. This can be especially beneficial for companies that need to develop specialized or complex software.
- Access to expertise: Outsourcing can provide access to a wider range of expertise and skills that may be available in-house. This can be especially useful for companies that need to develop specialized or cutting-edge software.
- Flexibility: Outsourcing allows companies to scale their development efforts up or down as needed, without having to hire and manage additional in-house staff. This can be especially useful for companies that have fluctuating development needs.
- Time savings: Outsourcing can save time by allowing companies to access skilled developers and resources quickly, without having to go through the time-consuming process of hiring and training in-house staff.
- Focus on core competencies: By outsourcing software development, companies can focus on their core competencies and business operations, rather than having to divert resources and attention to software development.
TRENDS IN OUTSOURCING SOFTWARE ENGINEERING
Software Development Outsourcing Trends that are likely to accelerate in 2023 include:
- Growth in demand: The global market for software outsourcing is expected to continue to grow in the coming years, driven by factors such as the increasing adoption of digital technologies and the need for specialized and complex software. As a result, the demand for software outsourcing services is likely to continue to increase in 2023 and beyond.
- According to a recent report CIO Outlook: Economic Challenges and Outsourcing, more than 4 in 5 CIOs reported that it’s likely they’ll outsource technology-related functions as part of their growth and resourcing strategy.
- Shift to nearshore outsourcing: There has been a trend in recent years towards nearshore outsourcing, as companies seek to access skilled talent at lower rates, while also benefiting from closer cultural and time zone proximity. This trend is likely to continue in 2023, with companies increasingly choosing nearshore partners in locations such as Latin America (e.g., Costa Rica).
- Focus on quality and value: As the market for software outsourcing becomes more competitive, companies are likely to focus more on quality and value when choosing outsourcing partners. This means that software outsourcing companies that can demonstrate a track record of successful projects and satisfied clients are likely to be in high demand.
- Rise of artificial intelligence and automation: The adoption of artificial intelligence and automation technologies is expected to continue to grow in the coming years, and this is likely to have an impact on the software outsourcing market. Companies may increasingly seek software outsourcing partners with expertise in these areas, and outsourcing providers may need to invest in AI and automation technologies to remain competitive.
- Increased use of agile development methodologies: Agile development methodologies, which focus on rapid, iterative development and collaboration, have become increasingly popular in recent years. This trend is likely to continue in 2023, with more companies adopting agile approaches and more outsourcing providers offering agile services.
SUMMARY
Overall, outsourcing software development can provide a range of benefits, including cost savings, access to expertise, and flexibility. However, it’s important to carefully evaluate the potential risks and drawbacks of outsourcing and to choose a reputable and experienced outsourcing partner.
