Software Development

How IT Outsourcing Saves Costs for Your Company

February 15, 2023
How IT Outsourcing Saves Costs for Your Company

In-house or outsourcing? There is data that using an IT outsourcing company allows one to save up to 30%. It could be true, and you could save even more, if you work with, for example, Ukrainian offshore software development companies that have lower rates in the Eastern European region and good quality of work corresponding to world standards. 


However, there are prejudices against using the services of IT outsourcing companies: that it is hard to control such teams, or that is profitable to have an in-house development.

A previous negative experience of working with external IT staff could also restrain you from solving your next IT task with offshore developers. 


In this article, we show an example of a successful collaboration with an IT outsourcing company and speak about why it is efficient to hire an IT outsourcing company. 

In-house PROS and CONS

The proponents of in-house development have several arguments:

  • The in-house team is fully involved in the tasks of your business;
  • You could communicate directly with the technical specialists and discuss the project in a daily format;
  • You could control the professionalism of the employees you hire, as well as monitor and control their work;
  • All the information about the project stays inside and the instalment of new features is easy.


However, it is costly to have your own staff, especially if we talk about developers. Developers are in high demand today and to retain them you will need to provide perks - medical insurance, mobile phone expenses covered, a good laptop, a monitor, software, a working space with a stable internet connection and technical support and other things. As an employer, you will have to train your current employees and integrate the new ones. 


It is always hard to optimize your expenses for the compensation of in-house IT specialists. When you launch your own project you need 8 people minimum: 3 backend developers, 2 front-end developers, a designer, a project manager, a QA engineer and a DevOps engineer. During the process of work on an IT project specialists have different amounts of work: so one could be 100% busy and another one has no work at all at the moment. When a project will be realised you will need only a few specialists working part-time for finalizing the project. It is ok when you pay for hours a specialist works, as you do in the case of IT outsourcing, and it is not rational when you have your in-house IT specialists working on payroll.

What About Freelance?

Freelance specialists are known to be cheaper than IT outsourcing specialists and you pay them for the work done.


However, freelance does not always mean low cost, as one freelance specialist could have a payment rate the same as a team with middle-level work payment. 


When you hire freelancers for your project you have to organize their collective work and provide smooth communication between them for not to play the blame game in case of a problem. 


The IT outsourcing companies have coherent teams of developers, QA engineers, designers and other specialists who are in constant and stable communication and working on a project - your project. The first time after a project will be finished an IT outsourcing company provides you with a guarantee and assistance in fixing possible bags. 

Advantages of the IT Outsourcing

We have looked through in-house development and freelance, so here we will discuss the benefits of outsourced IT services.

1. Augmented experience and professional knowledge

When you hire an external IT services provider you get access to an increased volume of technical knowledge, as it is normal for outsourced teams to share their experience and ideas inside their group. When you hire an employee to work in-house, you get the knowledge of one person. 

It is the reason why the outsourced employees could spend less time on research and more time searching for solutions and increasing the value of your business. It is all about efficiency which means a high ROI.

2. Well-organized working process

When you collaborate with your IT partner, there is just an uninterrupted process of working on your project. You are not distracted by sick leaves, vacations or dismissal of employees. The outsourcing team could be increased if it needs to speed up. 

3. High qualifications due to the constant competition

 The sphere of IT outsourcing services is a domain of high competition between companies for getting proposals from clients and inside companies between colleagues too. Unlike the in-house teams, offshore outsourcing development teams have to improve themselves constantly not to lose to competitors. 


Read also: How to Choose an IT Outsourcing Company

IT Outsourcing Cost: How the Price is Formed

We have discussed the advantages of IT outsourcing but what is the price for such services? How it is formed? 


Let’s look at our company. We have no pre-made price list, as every project is unique and will be customized for the business tasks of a client. 


When we start to work with a client we communicate and produce together a technical task that has an estimation of the working hours of every specialist involved in the project. It means a budget of a project depends on the number of specialists engaged and the total amount of work. The complexity and desired timeframes are counted too. We analyze all the factors and pick up the best option (how many specialists a project needs, of what qualification and for what period of time). This approach allows considering the interests of both sides and presenting a suitable proposal. 

How to Find a Reliable IT Partner 

What are the indicators of the modern and progressive IT companies in Ukraine? Let’s see. 


Ability to listen and concentrate on the client’s task


The important trait of contemporary and reliable development outsourcing companies is the ability to listen and delve into the client’s task. It allows finding an appropriate solution for a specific case. IT partner is not only trying to scrutinize the client’s technical task but to immerse in the client’s business. Such an approach takes into account a client’s interests. Fraudulent IT outsourcing partners usually replace a specific solution for a client with a ready and typical sample that is not relevant to the client's needs. 


For a client’s technical task an IT partner compiles a list of questions related to the project and organizes a call with the client where not only the project managers participate but the whole team. Technical specialists from reliable IT outsourcing companies start communication long before the beginning of work. They consult a client, discuss any corrections in the technical task and clarify the moments. 


Attention to the client’s task and good communication are the priorities of a reliable IT partner. 


Openness and commitment to dialogue


IT partner provides a comfortable format of cooperation to a client and direct communication with technical specialists. 


Flexibility


It is normal when during the development of a project new demands and ideas are coming. That’s why IT partners should be flexible, adaptive and fast to propose new solutions (as a client is at a distance from a Zoom call)


Transparency


IT outsourcing partner understands the need of a client to supervise a project openly. That is why an IT outsourcing partner provides its client with comfortable access to all stages of the working progress for tracking changes and tasks. 


Technical documentation safety


At first glance in-house development provides you with a guarantee that all the technical information will stay inside a company. However, there are cases when all the key information was in the hands of one developer. When he or she left a company, technical expertise about a project went away with him. Additionally, there are cases when in-house developers have no technical documentation for a project, so a new specialist has to spend a lot of time understanding the code or has to rewrite some pieces of code. It could take time and resources. 


A reliable IT outsourcing company always organizes technical documentation for its client, like a medical record in a hospital. It allows to change a contractor or to instruct a new specialist easily. 

Takeaways

Let’s sum it up. The IT outsourcing team is when you have your own IT department of well-trained professionals with coherent team communication, resources and instruments needed to develop and support any project. 


The main IT outsourcing benefits are the optimization of costs for specialists' services, and removing operational activities related to a workforce from business management tasks. Outsourced IT services provide you with the same and better results you could get with an in-house team and costs saved.

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