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Why do Companies Outsource Software Projects?

Shardul Bhatt
Why do Companies Outsource Software Projects?

Reports suggest that by 2025, the global IT outsourcing market will reach $397.6 billion. Any business outsources its product development for three major reasons - reducing costs, scaling the existing software, or accessing diverse talents. But these are not all. Today, outsourcing strategies provide an array of growth opportunities.

The biggest challenge companies face today is a lack of resources. Innovative products require skilled professionals. But that requires a budget - and economies of scale are the priority for every company. All of these problems are bound in a loop, which an outsourcing company helps to resolve.

A successful outsourcing program is not just limited to hiring developers and engineers. It also involves the business analysis and QA aspects. It covers operational management and identifies new market opportunities. Companies like BoTree Technologies and Tntra provide an open innovation platform and ecosystem to build, scale, and market the product at a global scale. It is an IT consulting services provider for innovative products.

This article will focus primarily on the reasons companies outsource their product development requirements. Software engineering is tricky without the right resources. So outsourcing operations become the need of the hour. Even the emerging companies are starting to understand that, and that’s why 24% of small businesses outsource their work to achieve efficiency. 

Read more: What Project Managers Should Know To Outsource Software Development

Top Reasons Companies Outsource Software Projects

The dynamic markets require innovative products. But not every company has the skill and expertise to develop such software. They might also lack the physical and virtual infrastructure.

That’s where the outsourcing firms step in. An outsourced software development company provides superior, fast, and marketable products. The outsourcing process is a one-time investment, which delivers the best results. 

Here are the top reasons for outsourcing business & consumer product development to an IT outsourcing company - 

  • Access to experts

    Do you have Ruby on Rails experts for building a product on that technology? If not, there are trusted outsourcing firms that can offer Ruby on Rails developers.

    Often startups and enterprises do not have the right talent for a product. Outsourcing operations to an IT company gives you access to their team and engineering experts. Hiring is always a challenge, but outsourcing reduces that hassle.

    The IT outsourcing partner has employed engineers who will work on your project. Some companies provide dedicated developers and teams that work as your in-house department.

  • Lower operational cost

    Is the pandemic driving your accounts team crazy with all the expenses and the impact on revenue? Maybe it’s time to focus on outsourcing work requirements.

    Outsourcing software developers cost almost 50% less than what an in-house developer in the US would charge. That’s why countries like India, Vietnam, and the Philippines are the first choice for outsourcing.

    Developers are available at a cheaper cost than in other countries. By getting access to IT experts at an affordable price, there’s lower spending and higher revenues. It leads to significant cost savings in software development.

  • Timely product delivery

    Are you unable to meet the product delivery deadlines? The best thing about a successful outsourcing program is that the software is available at the right time. Timely delivery is one of the key characteristics of an outsourcing company.

    While looking at the pros and cons of outsourcing, meeting deadlines is an important factor to consider. Outsourced work is more likely to be delivered on time than an in-house team.

    Many companies follow agile framework development. They provide continuous release and improvements. Since the initial MVP development is quick, subsequent releases are also right on time.

  • Focus on core operations

    Another advantage of the outsourcing process is that you can focus on the core operations. When the internal resources are free, they can take up the organizational system’s management. If the team continuously works on the internal software, they will never explore their potential.

    Core operations include focusing on innovation, building processes that optimize operations, creating internal systems for higher productivity, and more. An outsourced web application development company can reduce the burden of your employees.

    When outsourced work involves support and maintenance, the in-house team focuses on product development. That way, every aspect of the product is taken care of. However, if the outsourcing company has experienced experts for development, it is better to outsource them the entire process.

  • Flexible scaling

    As a business outsources its operations, scaling becomes easier. How? Expansion requires setting up offices, hiring resources, maintaining and managing the operations, etc.

    Outsourcing firms provide services where they act as an offshore office for businesses. They have the physical, virtual, and human resources to work as partners in product development.

    The outsourcing business simplifies scaling by becoming an extension of your company. Several outsourcing companies offer such a program where they partner and collaborate on a product. They offer services like development, maintenance, marketing, support, and more.

Factors to Consider When Outsourcing Projects

Now that you understand the reasons to outsource software projects, here are a few factors to consider before hiring an IT outsourcing company 

  • Project size
    The project size determines the developers you require. It also helps to build a team that isn’t too small or too big for the product.
  • Development process
    Whether you need an agile or waterfall team, it’s a personal choice based on the product idea.

    Communication factor
    Swift communication and transparency are key when it comes to hiring the right partner for outsourcing work.
  • Project budget
    Having a proper idea about the project budget will give a clear understanding of where to outsource and how much to spend.
  • Technicalities involved
    It gives an idea about the physical and virtual resources you will need and help make the decision of hiring a company with such service offerings.

Checkout: IT Staff Augmentation vs. Outsourcing: What’s the Right Choice?


Outsourcing product development is becoming increasingly popular. While support and maintenance were the traditional outsourcing operations, today, companies outsource for a host of reasons. These include strategy development, operations management, monitoring product releases, and much more. 

Today, there’s a need for companies that provide an open innovation platform apart from outsourcing services. It not only reduces cost but provides opportunities for seamless collaboration and innovative products.

Shardul Bhatt
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