How to calculate the cost of outsourcing IT teams
Tags: Software, Nearshore, Outsourcing, Software Development, Startup

Outsourcing software development is an increasing trend that will very likely continue expanding greatly in the coming years. Nevertheless, having to choose between outsourcing to a software house or hiring an in-house development team might be confusing, and making the wrong decision for you can appear risky.

Outsourcing has long been perceived as an easy way of reducing costs. Financial factors are important nowadays, but are they still a priority? Companies tend to focus more on having access to reliable software engineers or the most up to date technologies that allow them to futureproof themselves.

This article will mainly focus on the ‘uncountable’ aspects of outsourcing as we give you access to a handy calculator that will help you to get a better overview of your finances.

Advantages of outsourcing software development

Cost reduction

Finding and hiring talented developers is not easy. The process is expensive, time-consuming and needs maintenance. Outsourcing to a software house such as ours saves time and money as it means that you avoid paying the costs of recruiting and maintaining full-time employees. At LEOCODE, you never pay for the onboarding of new employees if we need to change our technical team and bring new members on board.

Scalability

A good software house of your choice can easily scale outsourced teams up or down depending on your business requirements and the current needs of your project. It is almost impossible to achieve the same level of flexibility with an in-house development team. As we mentioned before, hiring new team members takes a lot of time — the same goes for replacing (or even firing) them.

Fast delivery

Building an internal team takes much more time in comparison to outsourcing. External teams can jump right into building your product. Recruiting a skilled specialist takes 2–3 weeks. Onboarding comes next and it is a very time-consuming process that you should not underestimate to avoid issues in the future.

Talent base

Software development agencies offer their clients easy access to carefully built talent bases. Usually, these IT experts have been trained and tested in various projects so their knowledge and experience are top-notch. Having confidence in the team working on your product is paramount to succeeding as it takes lots of the pressure and stress off your shoulders, spreading the load.

Assuming that you decide to outsource your IT team, the people working on your project will have access to all the know-how of everyone combined in the software house. They can consult on solutions, improvements and create efficient processes which is a massive added value that you don’t even have to pay for!

Proven workflows

Outsourcing providers give companies access to experienced teams who work efficiently and follow well-defined processes and workflows to boost their productivity. The result of this is that they deliver well-polished digital products.

In addition, a well-organized software development agency can provide you with all the roles needed for development such as Scrum Masters or Project Managers. This will give you access to a complete team that works on the product holistically.

Cons of outsourcing software development

Code of poor quality

If an outsourced team fails to produce proper code and documentation, transferring the project to another team might become an issue and involve unforeseen fees. Sometimes, the code needs to be refactored and rewritten from scratch which could result in additional costs.

Shutdown

Software development agencies are just as prone to possible business risks as every other type of company. Your outsourcing partner could go out of business or reduce its services because of their various internal procedures. This could be a risk to the development of your product.

Limited control

Having limited control over an external development team who are responsible for large amounts of financial aspects in your business may appear risky. Experienced agencies such as Leocode value frequent communication and transparency to ensure that the client is comfortable and informed at all times and is never excluded from the process. Be sure to check our Rescue mission service to find out more about transferring your current project to a new team.

Communication issues

Working with a software house or a team located in an entirely different time zone can produce various communication issues. Experienced providers know how to deliver optimal services regardless of their location or language barrier.

When to outsource product development?

You should consider outsourcing your product development if you…