Your ultimate guide to choosing the right outsourcing type for your business

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Outsourcing has become a familiar word to many business owners. But what exactly does it mean? The term itself carries a lot of definitions. In this article, we review the main types of outsourcing and how each type can bring value to your business. 

So what is outsourcing? 

Outsourcing is a general term that indicates delegating certain tasks to a third-party individual or an organization. When it comes to software outsourcing, businesses hire a third-party organization to handle certain software requirements. By doing so, companies, big and small, are able to grow and expand faster and to leverage world talent. 

Under this umbrella, there are also different types of services which we are going to highlight in this article. 

  1. Project-based outsourcing 

You are running an MVP and looking to build a team of developers and software engineers. Local developers are pretty expensive and freelancers are not committed, therefore, you hire a software outsourcing agency who takes care of your product development from A to Z. Meaning that they will form the development teams, carry out specific tasks, and monitor quality. In this case, you won’t have direct contact with the development team itself, but rather with the project manager.  

This is called project-based outsourcing as you pay the outsourcing agency a predetermined amount of money and in return, they take care of a large bulk of the work. 

2. Hiring a remote dedicated software team

Let’s imagine that your company is working on developing a mobile application but there’s a lack of local iOS and Android developers. In this case, you will use an outsourcing partner to connect you with remote developers who will report directly to you and become part of your team. By hiring a dedicated remote software team, you ensure that you stay in control over the project costs and milestones. Also, you will have the freedom to change the project requirements along the way. 

Which one does your business need? 

Now that you know the difference between project-based outsourcing and hiring remote developers, you need to know which type would work best for your business. Let’s recap by asking yourself the following questions: 

  1. Are you an MVP? If yes, jump to question 4 
  2. Do you need an extension to your in-house development team? 
  3. Do you have a CTO? Or senior tech expertise? 
  4. Are you a tech-oriented business? 
  5. Do you have the management necessary to handle a remote team? 

Generally, if you’re looking for long-term support or have an existing in-house development team and need an upgrade with new skills and technology, then I recommend you hire remote developers.  If you are an MVP or have a short-term project, I recommend that you hire an outsourcing agency that takes care of your product from start to finish 

Why should your software team be remote? 

In 2020, and after the spread of the novel COVID-19, companies have started to realize the impact of technology on business continuity. Resilient businesses who took advantage of the technology were able to thrive and find new ways to grow. Many companies started to embrace global talent and work with specialized professionals across the globe.  Regardless of which outsourcing type you choose to proceed with, there are endless benefits to leveraging talent outside your local pool, for example: 

  1. Cost savings 

The most obvious reason for hiring remote IT professionals is the reduced cost. Companies manage to significantly reduce their recruitment costs by hiring remote talent. This is due to the lower labor costs in the outsourcing location.

2. Fresh perspectives 

Innovation can mean different things to different people. Bringing in new creative blood to your startup or organization allows you to have a fresh set of eyes, someone from a different background and culture who will be looking at problems from a fresh perspective. This can definitely challenge the entire team and motivate them to think, act, and perform more creatively. 

3. Increased efficiency 

Countless studies have reported that remote developers are more productive than their on-site counterparts. One study found that 77% of employees are more productive when they work remotely. Remote software developers and engineers gain the privilege of working wherever they’re most productive, that thing that is translated into more and better output. 

Where do companies outsource?

The past decade has seen an increase in outsourcing software development to Eastern European countries that offer competitive prices and a huge pool of talent. Countries like Poland and Romania are supplying Silicon Valley with remote qualified developers and software engineers. Luckily, there are promising destinations in North Africa that provide the same quality of the talent with lower costs. Egypt, for instance, has been awarded the best outsourcing destination in 2016. While all the options might be efficient, there are many factors to consider before choosing an outsourcing destination. Certain businesses may want to look for, cultural differences, time zone differences, cost, and English language proficiency. Once you figure out what is a priority to you and to your business, you can start collaborating with an outsourcing partner from the desired location. 

The bottom line 

As you can see, outsourcing comes in different shapes and forms. Businesses everywhere in the world are utilizing technology to take advantage of global talent. Project-based outsourcing and hiring a dedicated team are just two different ways of reaching the same goal; delivering your product to the market. Each has its pros and cons, so what we advise businesses to do is to always look at the long-term benefits. By asking yourself the aforementioned questions you can put your business on the right track. 

About SDEX 

SDEX is a one-stop-shop for all your software executions. Whether as your partner software agency who handles your product development, monitors quality, and controls your milestones, or as a recruitment partner who supplies you with professional tech talent. We have a network of developers and software engineers who are managed and instructed by our Danish consultants to ensure you never experience a drop in quality. Depending on your project needs and specifications, we are ready to help you take your business to the next level. Contact us: 

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