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November 26, 2014

Situations When You Should & Should NOT Outsource [Video]

Situations_When_you_Should__Should_NOT_OutsourceThere are plenty of circumstances where you should and shouldn’t outsource, and it’s important to know what they are before you decide what’s best for your software company.

Here is the information you need to make an informed decision.

When You Should Outsource

MVP or Startup

If you’re a startup building your first software product, outsourcing is an option that has worked for many companies. Often, startups are pursuing a Minimum Viable Product (MVP) to decrease ramp-up time and manage costs.

Accelerance has a number of certified partners that specialize in this type of software design. Often, even if you don’t have complete specifications for your MVP project, you’ll still have a vision for where the software can go. With outsourced developers using agile development you can observe the progress of your application’s creation, and then get a much better idea in the end of what you want your final product to do.  

Augment Your Existing Team

If you want to expand or augment your team to continue working on the same software applications, outsourcing is an excellent option. Local programmers might be too expensive, but by going offshore you can find many options for the right budget. 

You can also benefit from using an outsourcing team that utilizes the agile methodology development process, which can lead to quicker software production with the same amount of quality. Your team can then learn these methodologies from outsourced engineers and developers, and implement these new techniques for their own method of working.

Maintain Old App

Outsourcing is also a good idea for maintaining an old app while your internal software team transitions to develop a new application. At the same time, software developers, even at outsourcing companies, always want to work on the latest and greatest technology, and it may be difficult to find a team that is willing to work on an old technology for an older app.

For example, your app may utilize ColdFusion, but finding a programmer who wants to work with this older technology might be difficult. The same goes for other old languages and frameworks, but it’s important to still explore outsourcing for this option, it is possible it will help free up your staff and save on costs.

Cut Burn Rate

Burn rate is a difficult problem for many companies, and effectively cutting it sometimes is necessary to simply survive. It’s not always a pleasant situation, but during difficult financial situations, companies sometimes need to let internal staff go and resort to outsourced employees who can do the work for a fraction of the cost. This may only help you save your company, but also the jobs of the internal team members that still work for you.

When You Should NOT Outsource

Complex R&D

Doing research for creating software applications involving complex algorithms or highly specialized applications requiring deep market knowledge is sometimes not the right fit for outsourcing.

Outsourced developers have a deep knowledge of programming languages and specialties, but there are some areas which are simply not practical. Ultimately, if you require complex programming in a highly specialized area, it might be difficult to expect the results you want from hiring an outsourced provider.

No Budget

If you have no budget, then you can’t really approach outsourcing successfully. In some rare cases companies will take some amount of stock for software development work, but software outsourcing is more of a “paid for” service. You need to be prepared to spend money, usually in the range of $3,000 to $7,000 a month per programmer.

With most sophisticated web applications, you need a budget near $50,000 to $100,000 range at least, while some mobile applications can be less. Ultimately, you need to be realistic about the costs of developing software and have a budget in mind. As the CEO of one our partners says, “Unfortunately budget limitations do not automatically reduce the complexity of what you want developed.”

Security Constraints

If you have very sensitive data or clients that are concerned about who has access to sensitive information, then outsourcing might not be the best idea. In those situations, you might need to raise a substantial amount of money for an internal development team in your own country.

Ultimately, it’s important to analyze your own software development needs and decide what the best approach is for you.


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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