Entrepreneur’s Guide to Outsourcing Work - Do it Your Yourself or Someone Else's?

Today, companies are increasingly developing their own IT products, both for customers (websites, mobile applications, web services) and for employees (business automation systems).

Their creation implies a long development process, further support and maintenance. And here the question arises: to hire developers on the staff or to outsource the development?

A team of specialists from a nearshore programming company empowers entrepreneurs around the world to use cost-effective solutions to design and develop software for projects of any complexity.

As a result, it helps organisations achieve business goals in the shortest possible time and with the lowest possible budget. 

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In the pursuit of solutions, not every approach fits every entrepreneur's needs. 

However, an increasingly popular remedy being embraced by business owners is outsourcing.

Outsourcing involves delegating tasks to individuals or external firms outside of the primary business structure. This can be achieved through freelancers, hiring specialized firms such as call centers, or even by relocating certain business processes like manufacturing overseas.

For most small business owners, outsourcing simply means entrusting work to individuals external to their own organization. Yet, a crucial question arises: How can one ensure the maintenance of high-quality standards?

It is often assumed that external individuals or firms lack the same understanding of cultural values and the drive to deliver top-notch work as internal team members. However, let's not jump to conclusions just yet.

Understanding Why You Want to Outsource and Its Benefits

Outsourcing has become a prevalent business strategy across various industries, offering numerous advantages for companies of all sizes.

However, before embarking on the outsourcing journey, it is crucial to understand why you want to outsource and how it can benefit your business. This understanding will guide you in making informed decisions and reaping the maximum advantages that outsourcing has to offer.

One of the primary motivations behind outsourcing is the need to focus on core competencies. As a business, your core competencies are the unique skills and expertise that set you apart from competitors. 

By outsourcing non-core activities to external specialists, you can divert valuable time, resources, and energy towards enhancing your core strengths. This allows you to streamline operations, increase productivity, and deliver higher-quality products or services to your customers.  Hire offshore development team to access specialized expertise without extensive training or investing in expensive equipment or software, which can significantly lower operational costs and enhance your overall financial performance."

Cost reduction is another compelling reason to consider outsourcing. Outsourcing certain tasks or processes can often be more cost-effective than hiring and maintaining in-house staff. 

By outsourcing, you can eliminate expenses associated with recruitment, training, salaries, benefits, and infrastructure. Moreover, outsourcing allows you to access specialized expertise without the need for extensive training or investing in expensive equipment or software. This can significantly lower operational costs and enhance your overall financial performance.

Flexibility and scalability are additional benefits of outsourcing. 

As your business grows or experiences fluctuations in demand, outsourcing enables you to adapt quickly and efficiently. Instead of being constrained by internal resources, you can leverage the flexibility of outsourcing to expand or downsize operations as needed. 

This scalability allows you to respond promptly to market dynamics, seize opportunities, and maintain a competitive edge.

Outsourcing also provides access to a global talent pool. With advancements in technology, geographical barriers are no longer a limitation. You can tap into a vast network of skilled professionals and specialized firms from around the world. 

This access to diverse talent and expertise opens up new possibilities for innovation, creativity, and problem-solving, fostering a dynamic and forward-thinking business environment.

By focusing on core competencies, reducing costs, gaining flexibility, and accessing global talent, outsourcing can empower your business to thrive in today's competitive landscape.

Embracing outsourcing as a strategic tool can unlock growth opportunities, enhance operational efficiency, and position your business for long-term success.

The Positive Aspects of Outsourcing Specialists

#1.Better processes 

​Establishing an effective development process requires relevant experience, making it challenging to do so without prior expertise. 

It is not a task that can be accomplished within a month's time. When inquiring about the initial stages of their development journey, most developer companies will admit to experiencing chaos. 

Inconsistencies in terms, calculations, inefficient task management systems, and more are common challenges faced. 

The ability to establish a successful development process comes with experience gained from working on various projects. 

Companies opting to develop IT products internally must consider this factor. 

Significant time, effort, and financial resources will need to be invested in shaping this process.

#2.High competencies

In an IT company, various specialists from diverse fields are employed, each possessing a specific set of technical competencies suitable for developing specific products. However, assembling such a team of specialists independently can be challenging and costly. 

Why is that?

Firstly, it requires a deep understanding of the development process to accurately assess whether a specialist possesses the required skills. 

Lacking this understanding may lead to the need to hire another specialist solely for the purpose of evaluating potential candidates, resulting in additional costs and time wastage.

Secondly, when partnering with an outsourcing company, you gain the advantage of leveraging developers whose skills have already been tested on previous projects. 

This provides reassurance that their capabilities align with your specific requirements.

#3.Teamwork

The development of any product, be it a website, a mobile application, or a CRM system, requires the collaboration of a skilled team of specialists. This team typically comprises a business analyst, designer, quality assurance (QA) professional, one or more developers, and a project manager. 

However, maintaining such a team can be costly due to various expenses, including salaries, workplace setup, and employee taxes.

To streamline operations and optimize costs, many businesses turn to outsourcing specialized development teams. By outsourcing, companies can benefit from a range of advantages while mitigating the financial burden associated with maintaining an in-house team.

Firstly, outsourcing provides access to a pre-established team of specialists. 

These professionals possess the necessary expertise and experience to efficiently handle the development process. By tapping into this ready-made team, businesses can save valuable time and resources that would otherwise be spent on recruitment, training, and team coordination.

So yes, outsourcing eliminates the need for extensive workplace setup and infrastructure investment. 

As the external team operates from their own premises, businesses are relieved of the costs and logistics associated with equipping workspaces, including hardware, software, and office amenities. This significantly reduces the initial and ongoing expenses of maintaining a development team.

It also offers the flexibility to scale resources based on project requirements. 

Whether you need to expand the team temporarily or downsize it after project completion, outsourcing allows for seamless adjustments without the complexities and costs of hiring or terminating employees. 

This adaptability enables businesses to respond promptly to workload fluctuations and optimize resource allocation.

Additionally, outsourcing development teams can provide access to specialized skill sets that may be challenging to find locally. 

By engaging professionals from diverse locations, businesses can tap into a global talent pool and leverage specialized expertise in niche areas. This access to a broader range of skills enhances the quality of the development process and fosters innovation.

#4.Cost

One undeniable benefit of outsourced development is the ability to pay solely for the hours worked, with the exact number known in advance. 

In full-time development, specialists receive a fixed salary, making it difficult to accurately determine how much of their time is dedicated to actual development tasks. Consequently, the final product may end up being considerably more expensive compared to outsourcing.

When opting for outsourced development, businesses have better control over costs as they pay exclusively for the productive hours invested in the project. 

This allows for greater transparency and cost predictability, ensuring that companies are charged only for the actual work performed by the development team. 

By eliminating the need to pay for non-productive time, such as breaks or unrelated activities, outsourcing minimizes the risk of unnecessary expenses.

In contrast, in full-time development, there is inherent uncertainty regarding the proportion of working hours devoted to development tasks. 

Specialists may be involved in various non-development-related activities or face productivity fluctuations, making it challenging to accurately calculate the true cost of the final product. 

Consequently, businesses opting for full-time development may face higher expenses due to paying for non-productive time.

By embracing outsourced development, businesses can effectively optimize their budget and ensure cost-efficiency. 

Paying for the known number of hours worked allows for accurate project estimations and cost projections, preventing any surprises or budget overruns. 

This transparent cost structure further solidifies the position of outsourced development as a compelling option for businesses seeking to maximize their return on investment. 

#5.Time

This idea flows naturally from the previous one. What is the purpose of rushing to complete a task perfectly on the first attempt when you receive a monthly salary? 

While it is possible and advisable to hold such an employee accountable, how can you do so if you lack understanding of the technical aspects and cannot evaluate whether certain tasks genuinely require a significant amount of time?

There exists a third option, which involves a combination of full-time employees and outsourcing. 

This approach is reasonable when there are aspects of the development process that regular employees are unable to handle due to a lack of necessary skills or experience, or when there are occasional spikes in workload within a small timeframe. 

When is outsourcing more profitable? 

The volume of tasks is not fixed. 

IT tasks can be unpredictable. For instance, if adding a new section to the website only occurs every six months, outsourcing becomes a more cost-effective option. 

It is simpler to pay less for this specific task rather than supporting a programmer for a much higher cost without knowing what other tasks to assign to them.

The tasks are too challenging. 

If the tasks require significant skill leaps, it is advantageous to engage third-party specialists. Maintaining a highly skilled developer on a daily basis can be very expensive.

Developing a product from scratch. To create a high-quality IT product, a complete team of specialists is necessary. Even the most experienced programmer cannot tackle such a task alone. 

Cons of outsourcing

One disadvantage of outsourcing is the potential loss of control and oversight over critical business functions. 

When a company outsources certain tasks or processes to an external vendor or service provider, it relinquishes direct control and supervision over those activities. This lack of control can lead to a variety of challenges and drawbacks.

Firstly, outsourcing can result in a loss of quality control. 

When tasks are handed over to a third-party, the hiring company may not have the same level of influence or authority in ensuring that the work is completed to their desired standards. 

This can lead to inconsistencies, errors, or subpar outcomes that may negatively impact the company's reputation and customer satisfaction.

Additionally, outsourcing can create communication and coordination difficulties. When work is conducted by an external party, there may be challenges in effectively communicating requirements, expectations, and feedback. Time zone differences, language barriers, and cultural nuances can all contribute to misunderstandings and delays in delivering the desired results. 

This lack of direct communication and coordination can impede collaboration and hinder problem-solving processes.

Outsourcing can also pose risks to data security and confidentiality. When sensitive information, such as customer data or proprietary business information, is shared with external vendors, there is an inherent risk of data breaches or leaks. 

Companies must carefully assess the security measures and protocols of their outsourcing partners to ensure the protection of sensitive information. Failure to do so can have severe consequences, including legal liabilities and damage to the company's reputation.

Moreover, outsourcing may lead to a loss of internal knowledge and expertise. When certain tasks or functions are outsourced, employees within the company may not have the opportunity to develop the skills and knowledge associated with those activities. 

Over time, this can result in a diminished internal capability to handle those tasks, making the company more reliant on external providers and potentially limiting its ability to adapt and innovate. 

Wrapping up

In conclusion, while outsourcing offers several benefits such as cost savings and access to specialized expertise, it also comes with drawbacks. 

Loss of control, quality issues, communication challenges, data security risks, and potential loss of internal expertise are all factors that companies need to carefully consider when deciding whether or not to outsource. 

It is essential to weigh the pros and cons and conduct thorough due diligence before engaging in outsourcing arrangements to mitigate these potential downsides.