5 signs you need to outsource your software development

Did you know that 9 in 10 Fortune 500 companies have long-term contracts with outside service providers to handle their IT needs? Big companies like Google and McKinsey & Co. are choosing to outsource important tasks, and for good reason. These and the other 80% of businesses worldwide use software development outsourcing services to make their work easier, save money, and get special skills that they might not have in-house.

As a result, over 1 million new workers join the outsourcing industry each year, showing great demand for outsourcing. Now, even small businesses are catching on, 37% of them are now using outsourcing to help them compete better.

Yet, many companies wait too long to consider outsourcing, often in times of trouble. By spotting five clear signs that your business is ready to take advantage of outsourcing early, you can grow your business steadily, keep high quality, and remain strong in a fast-moving market.

Your in-house team is overwhelmed

Stress at work is a significant issue for many employees. In the UK, work is the third-biggest cause of stress, right after sleep problems and money issues. A hefty workload can easily lead to stress, and LinkedIn noted that 60% of employees feel this pressure at their jobs.

In the US, the American Psychological Association found that 77% of Americans felt work-related stress in the past month. More than half, about 57%, said they faced stress-caused burnout. The financial cost of workplace stress is staggering, hitting around $300 billion each year in the US alone.

Almost half of American workers report feeling tense during their workday, with that number rising to 61% among those who feel less secure in their jobs. Furthermore, over 67% say they experienced at least one sign of burnout recently, like lack of energy, feelings of loneliness, or reduced effort at work. This burnout is pushing many employees to leave – 43% of Millennials and 44% of Gen Z workers have quit a job due to burnout.

Persistent work-related stress can lead to various psychological problems, including anxiety disorders, depression, and chronic fatigue syndrome. Employees may experience feelings of hopelessness, irritability, or difficulty concentrating. In severe cases, prolonged stress can result in mental health issues like post-traumatic stress disorder (PTSD) or major depressive episodes.

As stress levels rise, productivity often falls. This is where outsourcing comes in. By assigning repetitive tasks to outside experts, businesses can relieve some of the pressure on their internal teams. This change allows employees to focus on more important and engaging work, which can potentially lead to a 7% drop in employee turnover, according to Gartner.

Moreover, outsourcing can help companies free up valuable resources, allowing them to put about 12% more into innovation and research and development. This shift encourages a workplace culture that values creative problem-solving, helping businesses stay competitive.

If your team is overwhelmed—missing deadlines, feeling burnt out, and producing lower quality work—it might be time to consider outsourcing. Offloading tasks to external specialists can ease the burden on your employees, boosting morale and productivity in the long run.

You’re struggling to find the right talent

Many employers are having a tough time finding skilled workers. A recent study showed that nearly 4 in 5 employers around the world are facing this issue. It’s not because robots are taking all the jobs – on the contrary, there aren’t enough people available to fill them. By 2030, experts predict that there will be a shortage of over 85 million skilled workers worldwide. This could lead to about $8.5 trillion in lost income each year if the situation doesn't improve.

Finding the right talent can take a long time. In a recent survey by TotalJobs, the average time to hire a suitable candidate was about 4.9 weeks. Larger companies often take even longer, with businesses that have over 1,000 employees taking an average of 5.5 weeks to find the right person. No wonder, more than half of recruiters—52%—say they feel pressured to fill open positions quickly.

The problems recruiters face keep coming back to a few main points:

• High competition for talent: Many companies are competing for the same skilled workers. This competition makes it harder to attract and secure the right candidates.
• Skill shortages: Many positions require specialized skills, particularly in fields like software development. There are simply not enough candidates with these skills to meet the growing demand. About 61% of companies struggle to find candidates who fit well with the job.
• Changing candidate expectations: Today's job seekers often have higher expectations regarding work-life balance, benefits, and company culture. Many businesses struggle to meet these demands, which can deter potential candidates.
• Salary expectations: Many companies find it difficult to offer salaries that meet the expectations of skilled candidates. With the rising cost of living, many skilled workers are looking for higher pay, which can put pressure on employers’ budgets.
• Inconsistent job requirements: Sometimes, job descriptions are overly complicated or unrealistic. When the requirements for a position are too stringent, it can scare off potential talent.
• Limited recruitment resources: Smaller companies may lack the resources or time to effectively market their job openings or to go through a thorough recruitment process.
• Geographical limitations: If a company is only looking for talent in its local area, it may be missing out on skilled candidates from other regions or countries.

This situation is particularly challenging when it comes to hiring skilled software developers. The tech industry is highly competitive, and good developers are in high demand. Many businesses are competing to attract the same small pool of talent, making it harder than ever to find the right person for the job.

One effective solution to these challenges is outsourcing. When you outsource, you instantly gain access to a global pool of skilled professionals without having to go through the lengthy recruitment process. This means you can quickly find talented software developers who can work on your projects without the hassles of hiring them yourself. Outsourcing allows you to focus on your core business activities, while still getting the expertise you need to succeed in a competitive market.

You need to accelerate your development timeline

The term "time to market" is often mentioned in discussions about business strategies, and for good reason. It refers to the time it takes from the initial idea for a product or service until it is available for customers. This timeline can greatly affect your company's success, as the quicker you can deliver, the better your chances to lead in the marketplace.

Delays in launching products can have serious financial consequences. A McKinsey study highlights that products released six months later than planned can earn a staggering 33% less profit over five years compared to those launched on time. The reasons for this drop in profits can vary, but they often stem from increased competition, missed market opportunities, and shifting consumer preferences. On the other hand, products that are launched on time but exceed their budget by 50% only see a minor profit reduction of about 3.5%. This indicates that it’s not just about being fast; it's also about managing resources effectively.

An effective strategy to accelerate your development timeline is to consider outsourcing. By delegating non-critical tasks or functions, your business can streamline its processes and focus more on core competencies. Research from Bain & Company shows that outsourcing can enhance efficiency by up to 25%, allowing businesses to prioritize what truly drives success while relying on external partners to manage essential yet less critical tasks.

Additionally, outsourcing non-critical functions can lead to faster product or service launches. The 2023 Outsourcing ROI Report by Aberdeen Group indicates that outsourcing can result in a 25% reduction in time-to-market, according to various studies.

Speed to market is crucial not only for improving internal efficiencies but also for meeting customer expectations. Today’s consumers have high demands regarding response times and product availability; falling short of these expectations can result in dissatisfied customers and missed business opportunities. Accelerating your development timeline is crucial in a competitive landscape where every moment counts. The financial implications of being late to market can be severe, and rising customer expectations make it even more vital to respond quickly.

Outsourcing provides a pathway to streamline your processes, access specialized skills, and allocate your resources more effectively. By embracing outsourcing, your business can not only improve its efficiency but also enhance its ability to meet customer needs promptly, ultimately leading to greater success in today’s market.

You want to optimize costs without compromising quality

Finding ways to save money while still keeping high quality is very important for businesses today. This trend is growing, and it is expected that money made from outsourcing will increase by about 7.54% each year until 2027.

Many businesses find that by doing this, they can reduce their development costs by around 15% to 30%. This is a big help, especially for companies that want to stay competitive.

Ukraine and Poland offer rates that are 20-25% lower than counterparts in the US and Western Europe. This shift shows that companies are looking for the best quality work at lower prices.

A survey found that nearly half of HR leaders believe saving money is the main reason to outsource. This is a clear sign that cost savings are a big reason businesses are choosing to go this route. The global outsourcing market is largely driven by the potential for lower costs, with companies reporting an average savings of 19% in their day-to-day expenses.

Keeping a large in-house team can be costly. You have to pay salaries, benefits, and training, which can all add up. Outsourcing can help businesses lower many of these costs. When companies choose to work with outside teams, they can focus on what they do best without worrying about the high costs of staff.

A common worry about outsourcing is whether it will affect the quality of the work. However, outsourcing can actually lead to better quality in many cases. When companies use staff augmentation services, they can work with teams who are experts in their specific fields. This means that the job can be done by skilled people who have a lot of experience.

For example, if a company needs to create software, outsourcing can connect them with a team that focuses only on that type of work. These specialists can bring in fresh ideas, new skills, and advanced technology, which can improve the final outcome. So, outsourcing can enhance the quality of work and give companies an edge over their competition.

Saving money while maintaining high quality is a key goal for businesses today. Outsourcing is a strong option to help achieve this goal. It allows companies to cut costs without losing quality. By working with skilled outside teams, businesses can use their resources more wisely and concentrate on what they do best. The rise of outsourcing to new markets shows a change in how companies think about cost and resources. Overall, outsourcing is a great way for businesses to run more smoothly while still providing excellent value to their customers.

You require more flexibility to scale up or down

Companies need to be ready to change quickly. Market demands can shift overnight, and businesses must adapt to stay competitive. One great way to achieve this flexibility is through outsourcing. In fact, a study found that 42% of CTOs see outsourcing as a key solution for quickly scaling their operations. This allows companies to respond to changes in the market more effectively.

Markets can change for many reasons, contributing to the dynamic nature of business environments:

1. The introduction of new technologies can disrupt existing markets and create new ones.

2. Consumer preferences are constantly evolving, influenced by trends, cultural movements, and social values.

3. Economic conditions, such as recessions, inflation, or shifts in consumer spending power, can dramatically affect markets.

In each of these scenarios, the ability to understand and respond to changes is crucial. Businesses that are proactive rather than reactive stand a better chance of maintaining their position and capitalizing on new opportunities, ensuring they remain relevant.

For example, if a company suddenly receives a large order, it may need to increase its production capacity quickly to meet customer demand. On the other hand, if the market slows down, the company might need to reduce its workforce to save money.

Outsourcing gives companies the ability to easily scale their resources up or down as needed. When a business needs more support or additional expertise, it can quickly hire an outside team to help. This means that organizations do not have to go through the long process of hiring full-time employees, which can take time and effort. Instead, they can simply add outsourced workers to meet their needs.

For example, if a software company is launching a new app, it may need extra developers for a short time. By outsourcing, the company can quickly bring on skilled developers who can work on the project without committing to hiring them permanently. Once the project is complete, the company can easily reduce its outsourced team without any complicated layoffs.

This flexibility is especially valuable for startups and small businesses that may not have the resources to maintain large teams all the time. Outsourcing allows them to access the talent they need when they need it, leading to more efficient operations and better results.

Best practices for outsourcing

Outsourcing software development can be a strategic move for many companies. By choosing the right provider, you can ensure a successful collaboration that aligns with your business goals.

Choose companies with a fully-managed approach

One of the most important factors to consider is the level of expertise and management that the provider brings to the table. A fully-managed approach ensures that all aspects of the project are handled by a single provider, from conception to delivery.

The benefits of choosing a provider with a fully-managed approach are numerous:

1. Efficient project management: a single point of contact ensures that your project is on track and meets deadlines. By incorporating agile methodologies, project adjustments can be made quickly and efficiently, fostering a more adaptive and responsive development process.

2. Consistency and quality: a managed approach ensures that your software development follows industry best practices and standards.

3. Reduced risk: you're protected from the risks associated with hiring individual freelancers or small teams, such as inconsistent quality or communication issues.

4. Increased productivity: with a fully-managed approach, you can focus on other aspects of your business while the provider handles the technical aspects of your project.

5. Improved communication: A single provider is easier to communicate with, reducing misunderstandings and miscommunication.

6. Cost savings: a fully-managed approach can lead to cost savings, as you're only paying for one provider rather than multiple freelancers or small teams.

When choosing a provider with a fully-managed approach, consider the following criteria:

• Look for teams that have experience in managing complex projects and demonstrate a proven track record of success.
• Evaluate their skills and expertise to ensure they can effectively handle all aspects of your project.
• Prioritize those with excellent communication abilities, as this will help keep you informed about project progress and any developments.
• Choose a partner who is flexible and capable of adapting to changes in your project requirements as they arise.
• Seek transparency regarding their approach, costs, and timelines to ensure a clear understanding of what to expect throughout the project lifecycle.

With a staff augmentation services provider with a fully-managed approach, like Devico, you can ensure that your software development project is handled by experts who are accountable for its success. This approach can lead to increased productivity, cost savings, and improved communication, ultimately leading to a successful project outcome.

Pick a provider that aligns with your company culture

The better the cultural fit between your business and the outsourcing provider, the greater the chances of success of your project. Culture is defined as the sum of values, beliefs, and behaviors that define how a company does business. So, how to find a culturally aligned provider:

• Research vendors that provide open views on their values, mission statements, and company culture on their sites and marketing materials. This will give you insight into which might be a good fit.
• Go to the interviews and ask them about work culture, team building, and conflict resolution or dealing with difficult times. Be conscious of how they respond, contrasting their values against yours.
• Think about their attitudes toward project management: A company's approach to managing projects could reflect its cultural dimensions. Providers that stress teamwork and openness just might indicate cultural fit with clients that believe in teams.
• Check reviews and testimonials: Look for feedback from other clients who have worked with the provider. Reviews can often reveal how they operate and what their culture is like from an outsider's perspective.
• Start small: If possible, begin with a smaller project or a trial period to see how well your teams work together. This can provide valuable insights into the cultural fit without fully committing to a long-term partnership.

A good cultural fit can make all the difference in how effectively teams work together, leading to better results and a more enjoyable project journey for everyone involved.

Default on outsourcing when necessary

Outsourcing is a powerful tool that can help businesses achieve their goals more efficiently. However, knowing when to rely on outsourcing is crucial for making the most strategic decisions for your organization. Below are some scenarios when outsourcing becomes not just a good idea, but the most effective solution.

1. When you lack specialized skills

If your project requires expertise that your in-house team does not possess, outsourcing can be a strategic way to access that knowledge. For instance, if you're developing a complex software application that requires advanced coding skills or specific technical capabilities, bringing in specialists from an outsourcing provider can ensure that the work is done right. This approach not only saves time but also enhances the quality of the final product.

2. To reduce costs

Outsourcing can often be more cost-effective than maintaining a full-time in-house team, especially for specific projects or seasonal needs. By outsourcing, you can avoid the costs associated with hiring, training, and retaining employees. This is particularly beneficial for short-term projects or tasks that don’t require permanent staff.

3. To focus on core business activities

Every business has core functions that define its identity and drive growth. If your team is bogged down with tasks that are outside your core competencies, outsourcing can free up resources. This allows your internal team to concentrate on strategic initiatives and the essential activities that drive your business forward, ultimately enhancing overall productivity.

4. When facing resource limitations

Sometimes, your in-house team may simply be overwhelmed with work. During peak periods or when facing tight deadlines, outsourcing can provide the extra support needed to meet project demands without sacrificing quality. This becomes particularly important in fast-paced industries where timely delivery is critical.

5. For scalability

If your business is growing rapidly and you need to scale quickly, outsourcing can provide the necessary flexibility. Instead of hiring new employees and going through long training processes, you can partner with an outsourcing provider that can scale its services up or down based on your immediate needs. This flexibility allows your business to adapt to changing market conditions without the long-term commitments that come with hiring full-time staff.

6. To access technology and tools

Outsourcing can also grant you access to advanced technologies and tools that may be expensive or complex to implement in-house. Many outsourcing providers invest in the latest software and technology to enhance the services they offer. By outsourcing, you don't just get the expertise; you also gain access to the best tools available in the industry.

When considering outsourcing, weigh the strategic advantages against any potential disadvantages. While outsourcing can provide numerous benefits, it’s also essential to pause and assess your company's specific needs, goals, and culture. Ensure that you choose a provider that aligns with your organization to maximize the effectiveness of the outsourcing relationship.

Monitor and optimise throughout the project

In any outsourcing relationship, effective monitoring and optimization throughout the project lifecycle are vital to ensuring success. While selecting a provider with a strong cultural fit and establishing clear expectations at the outset is essential, ongoing communication and performance tracking are equally critical. Here are the crucial elements and how to implement them effectively.

1. When working with teams in different time zones, it's vital to have a clear understanding of the time differences and how they impact communication and collaboration. Creating a shared calendar that reflects the working hours of both teams can help everyone stay aligned.

2. Regular communication fosters a collaborative environment, allowing both teams to stay aligned on project goals and expectations. Establishing designated points of contact on both sides can facilitate smoother interactions and reduce misunderstandings.

3. Schedule regular check-ins or status update meetings to discuss progress, challenges, and any changes in project requirements. This proactive approach can help to identify issues early and adapt strategies as needed.

4. Create an atmosphere where team members feel comfortable sharing their thoughts and concerns. An open feedback loop allows for adjustments to be made swiftly, enhancing the project’s overall effectiveness.

5. Projects rarely go exactly as planned. Ongoing communication allows both parties to adapt to changing circumstances, whether it’s a shifting market landscape, evolving project goals, or unexpected challenges.

With the ongoing communication and performance tracking, you create an environment of collaboration and transparency that enables both teams to deliver high-quality results. This approach not only improves the current project but also strengthens the partnership for future endeavors, fostering long-term success in your outsourcing efforts.

Embracing outsourcing for growth in 2025

Outsourcing is a great way to help your business grow and succeed. It allows you to get expert help when you need it, save money, and focus on what you do best. The good things about outsourcing:

1. You can work with people who are really good at what they do, even if you don't have those skills in your company.

2. Outsourcing can help you save money by reducing costs and letting you use your resources more efficiently.

3. By outsourcing some tasks, you can focus on the things that are most important for your business to grow and succeed.

4. Outsourcing makes it easier to adapt to changes in the market and respond quickly to new opportunities.

5. With the right outsourcing partner, you can complete projects faster and achieve your goals more quickly.

If you're ready to see the benefits of outsourcing for yourself, choose Devico. We're here to help you find the perfect solution for your business needs and achieve outstanding results. Let's work together to make your business shine!