Software Outsourcing Part 2: Myths and Truths


7 min read

To read Part 1 click here: Software Outsourcing Part 1: Types, Pros and Cons.

Many C-level managers tasked with finding cost optimizations within their organization have a fear of outsourcing companies because of their lack of knowledge about outsourcing and hearing many "horror" stories about various companies.

In this article, I will shed light on some of the myths and truths about software outsourcing. Let's start with the myths first as these are the most compelling ones and the biggest blockers for any prospective client to jump on board.

Myth: The software product will be of lower quality

Software outsourcing companies ARE software development companies and the quality of code they produce can vary greatly. A US-based development team, which is usually not outsourcing, can produce code just as badly as a team from Bangladesh.

There's absolutely no basis for this claim, which is more likely an unfounded fear from managers looking into outsourcing.

Myth: You can't get to market quickly by outsourcing the product

It's true that managing a remote team of any kind is more complex than an on-site dedicated one, but getting to market is not dependent on the outsourcing nature or the location of the team.

A well-built team comprised of expert developers can just as easily get a product to market as any other team, the key is to manage expectations correctly.

The perception that outsourcing cannot deliver a fast go-to-market process is a myth that stems from inadequate planning and communication, rather than the intrinsic nature of the outsourcing model.

Through the use of offshore development centers, outsourcing can provide round-the-clock development support, thereby shortening the development cycle, improving product quality, and accelerating time to market.

Myth: Developers will steal your code and idea

The right to the codebase, just as any other asset of a company is dictated by the terms of NDA contracts and intellectual property rights.

Most outsourcing companies, just like any other company, have robust legal frameworks in place, and they respect the intellectual property rights of their clients.

Due diligence needs to be carried out though, background checks of the company, what kind of legal framework the country has for outsourcing where the company is registered.

BUT to build trust and establish a long-term partnership, a professional and well-reputed outsourcing provider relies heavily on its reputation, which means it will keep its clients' code and ideas completely confidential.

Myth: Language barrier of outsourcing teams

It is a common myth that outsourcing software development to a team in another country will result in a significant language barrier.

Many outsourcing companies, including my company, employ English as their primary business language and require their employees to be proficient in it.

Teams also often have a dedicated project manager or team leader who acts as a liaison with the client and ensures effective communication cutting down the unnecessary "communication barriers" between many people.

Myth: Outsourcing will cut down costs

A huge misunderstanding most of our clients make is to think that outsourcing development is dirt cheap and soon realize that development is indeed like any other service, you get what you paid for.

Yes, outsourcing usually will cut down costs, but a key difference between a good outsourcing company and a bad one is that outsourcing to the good one won't cut down costs that much.

20 to 30 percent cost reduction is a fair and also optimistic price point every manager should look for and it could be enough for an organization to jump on the boat.

Truth: Cultural differences in outsourcing

Cultural differences are an undeniable reality. Differences in work ethics, communication styles, and business practices can sometimes lead to misunderstandings and conflicts in the collaboration process.

It's no secret that when outsourcing software development to another country, there will likely be some cultural differences to navigate.

For example, a culture that values direct communication may clash with a more indirect communication style that prioritizes avoiding confrontation.

Truth: Timezone differences of various teams

As most people in the industry know, software outsourcing often involves timezone differences between client companies and their outsourcing partners, as well as other teams involved.

These differences can sometimes make communication and coordination more complicated, as team members may be working during different hours of the day.

Despite these differences, many outsourcing companies are able to accommodate clients by adjusting work hours or scheduling meetings at mutually convenient times.

Also, asynchronous communication tools and project management software can facilitate easy sharing of updates and progress.

Planning is harder, this is true, but there are a boatload of tools to help overcome the differences and successful collaboration can be achieved.

Truth: The talent pool is much larger

One of the most significant advantages of software outsourcing is that it allows clients to tap into a talent pool much more extensive than what they could find locally.

This fact came to light with the early 2023 tech. layoffs. Most companies who laid off tech people did so to optimize their talent pool and most of them re-hired part of them in other locations.

Moreover, outsourcing companies often have highly specialized developers, whose skill sets might be hard to find locally. This opens up opportunities for clients to work with top-tier developers who can deliver high-quality work.

Also, this provides a competitive advantage as it allows businesses to scale their operations quickly and efficiently with access to a sizable pool of talent.

Truth: Skills and costs are more optimized

Deploying an external software development team can be an excellent way to optimize costs and resource management. These expert teams have the capacity to identify opportunities for cost reduction specific to their field and offer tailored solutions to meet the client's needs.

Outsourcing brings a wealth of experience with them when tackling diverse projects. This experience provides adaptability to unique project types and unexpected situations, something an in-house team might not be equipped to handle.

Team scalability is another advantage offered by outsourcing partners that businesses can use to their advantage. Quick resource scaling or reduction depending on project demands makes project management more agile and flexible.

Besides providing technical expertise, external teams commonly offer a vast range of other services that companies can benefit from, including project management, quality assurance, and efficient documentation processes. These can frequently contribute to reduced project times and increased quality, allowing businesses to maximize their returns.

For less money.

Turnkey solutions without micromanaging

Turnkey solutions are excellent options for businesses that prefer to deploy an external team to manage their technology needs without micromanaging. With turnkey solutions, businesses receive an all-encompassing solution, encompassing different technological areas that offer the convenience of having all technological matters centralized and managed by a single partner. With the caveat that businesses need to actively look for this because the sad reality is that most outsourcing companies are "coding sweatshops".

In the context of software outsourcing, businesses need to communicate the broader project goals and ensure that developers are aware of the strategic direction as well as the product needs and limitations. By involving developers in problem-solving discussions, businesses can benefit from the developer's skills while raising their understanding of the strategic needs of a project, which a "turnkey" solution could offer to the client.

Freelances vs Outsourcing Companies

In software outsourcing, businesses have the option to outsource to freelancers or development agencies. While freelancers may lead to reduced costs, the main disadvantage is that clients may be directly responsible for managing the project and its various stages. In contrast, outsourcing to a development agency means that the client has a team to manage the project holistically and the agency is responsible for ensuring quality outcomes.

Outsourcing companies that offer a full package from design to development, production deployment and maintenance are advantageous as they offer a seamless system from beginning to end, ensuring that each stage of the process works together harmoniously.

Working with multiple outsourcing companies, however, can lead to communication challenges as each company may have different practices and methods. This can lead to defects, delays and a lower quality of work.

Breaking up the project by teams working in isolation can cause communication challenges between teams, which ultimately leads to delays and lower project quality. It's crucial for businesses to consider these issues when outsourcing.

In comparison, working with a company that can offer a full range of services from design to deployment and maintenance simplifies the process. By working with a single company, clients can reduce the challenges of fragmented communication and disjointed methods. A one-stop-shop solution provides accountability throughout the project's lifecycle, leading to timely completion, higher-quality outcome, and more predictable costs.

Additionally, post-deployment maintenance and support are more robust as the company has intellectual property rights and proprietary knowledge of the project, meaning any issues that arise after deployment can be handled efficiently.