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June 13, 2014

How Risky is Outsourcing App Development?

According to a study by Deloitte, more than half of outsourced work fails to meet financial goals. That fact can leave you wondering; have all the problems, risks, and dangers really been eliminated? Is it safe for you to outsource your app development?

How_Risky_is_Outsourcing_App_DevelopmentGiven the pressure to outsource whether it’s from top-down or bottom-up, how can you decide whether outsourcing is even the right decision for your company?

Benefits of outsourcing your app development include the ability to cut costs and improve the quality of your development process. Although the savings vary from situation to situation, more businesses are outsourcing for other reasons than just the cost savings. And, depending on company goals outsourcing might not be the best strategy and can make outsourcing a risky decision.

Here are three criteria to take into consideration when identifying whether to outsource your next app development project.


I used to think that budget was an overwhelming driver for outsourcing, trumping most other considerations. However, although budget is usually the main reason people have for wanting to outsource, it is just one factor to consider. You may have other factors that weigh more heavily on your decision. Those other factors might include the current technical expertise of your development team as well as the need to keep your development project in-house.

For example, a well-funded financial service software company in San Francisco was hiring java programmers to develop their app. Because they have a big budget, outsourcing was not being considered. They wanted to build a team in San Francisco and did not see outsourcing as a desirable option. For them,the cost savings of outsourcing were not as important as other factors they might be considering.

When determining whether budget is a major factor in your decision to outsource, ask yourself these questions:

  1. Do you have a large enough budget to develop your software and app in the U.S with your own employees?
  2. Do you want to outsource just to bring in needed technical expertise, and budget is not a concern?
  3. Are you looking to take advantage of a high quality outsourced team and to cut costs at the same time, if you can?
  4. Are you in an emergency situation in which costs must be cut immediately?
  5. Do you have a limited budget and need to launch an app?

Project Length

Projects lasting less than one year are excellent candidates for outsourcing your app development project on a contract basis. The quick ramp up and relatively low cost of contract outsourcing also make it attractive for many projects lasting longer than a year.

If you do plan to outsource for more than one year, you may want to consider creating a subsidiary to increase your savings. However, taking this route involves more startup expenses, a longer ramp up time and doesn’t make sense unless you need more than 50 programmers. Contract outsourcing with a dedicated team is still a good choice for longer term engagements.

When determining whether the length of a project is a major factor in your decision to outsource, ask yourself these questions:

  • Are you planning to continue development with outsourcing over the long term?
  • Are you outsourcing just filling in to make a deadline?

Technical Expertise

Technical expertise may seem like an obvious requirement for an outsourced firm. What I mean here is acquiring expertise your internal team does not possess.

Is it important to quickly bring in particular technical expertise for your company? For example, Do you have the time to train your existing development team or to hire employees to bring in this new expertise?

To ensure that your app is completed by your deadline and that it meets your goals; outsourcing to a development team that specializes in that specific field can outweigh the disadvantages of keeping it in-house.

Still not sure if outsourcing makes the most sense? Check out our outsourcing strategy decision matrix to help you decide which app development strategy fits the needs and goals of your company.

Photo Credit

Andy Hilliard

As CEO, Andy leads and advocates for the globalization and collaboration of great software teams with companies in search of talent, innovation and a globally-distributed extension of their engineering function and culture. Andy founded the ground-breaking nearshore software development services company, Isthmus Costa...

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