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People have been arguing about the Pros and Cons of Information Technology outsourcing services for many years and still, it’s quite difficult to give a definite answer if a company should start outsourcing software development to some other party or not.

First of all, let’s figure out the difference between “outsourcing”, “offshoring” and “nearshoring” because it’s also quite important to understand that these are 3 different notions, not synonyms.

Outsourcing — this notion implies that some operations and work are conducted by another company instead of your employees.

Offshoring — it means that you make a contract with a third-party company located in some other country so that they would fulfil different kinds of operations/services.

Nearshoring — it implies outsourcing of business processes (mostly IT processes) to companies in a nearby country, which are also likely to share a border with the source country. So roughly speaking, nearshoring is a special kind of offshoring. For Germany, for example, the nearshoring countries are Belarus, Poland, Ukraine, etc. For the USA that’ll be Mexico, Brazil, Argentine, etc.

So now when we are clear about the difference between the terms, we can move on to the advantages and disadvantages of software development outsourcing.

Pros of Information Technology Outsourcing

Reduced costs

In fact, the companies whose management decides to make a decision in favour of information technology outsourcing are doing so because it actually can spare quite a sum. The costs of software development are quite high nowadays, especially if you need somebody who has high expertise. And if you don’t need such a specialist on an ongoing basis, you’ll have to pay only for what you use when you need it.

A wide choice of qualified resources

Every time you employ someone, you get only the set of skills this person possesses and although the person is really skilled, sometimes he/she might lack the expertise needed for a specific project. So, by going outsourcing (and offshoring) you offer yourself a wider choice of talents all over the world.

You don’t have to employ more people

Outsourcing is a great alternative to hiring additional staff in-house, especially if you feel that there’s not so much need for that. You just pay a contractor and consequently, you have extra money for other company expenses.

You’ll give more freedom to your in-house team

When you outsource some work, it automatically implies that you’ll free up your own team and while the work is being done by a remote team, your developers won’t have to stay long hours and they can really focus on their own tasks, so the company can become a top-notch in delivering its core product.

Cons of Information Technology Outsourcing

The culture within the company is affected adversely

When you’re running a business it’s very important to take into consideration not only the Pros of outsourcing software development but also pay great attention the Cons. They often say that involving a remote team can adversely affect the company culture.

As long as the work culture in the company is positive, the workers will continue doing their job productively, so it’s of paramount importance to maintain such kind of atmosphere, so don’t be afraid to talk to the employees who can be affected.

Losing control

When it comes to outsourcing, even in cases when you give some kind of guidance concerning what you expect to see, you have to hand over some part of the control. As the contractor is working remotely, maintenance of the level of control you expect can be hard to reach.

Problems with communication

That is quite natural that when you have a remote team working for you, it’ll be more difficult to arrange frequent communication rather than with a team working on-site. This also hinges on the person who will be handling the communication on the outsourcing side, on their competence and reliability in terms of communication.

Provided that the communication manner is alike and the time intervals in the communication work fine — well, there’s no need to worry then and there will be no problem in establishing a friendly and productive relationship. In other cases, the process of communication with each other might cause troubles and disappointment.

Still, you can discuss all these matters (frequency and channel of communication, etc.) before you sign up a contract. And this problem becomes quite an obstacle when your remote team is located in some other time zone and the time difference is 8-10 hours.

Quality Issues

Although IT outsourcing has a lot of advantages, it’s worth it only when you the work done is of high quality which you hoped for. If the results don’t live up to your expectations, then the result will be total frustration.

Of course, this doesn’t mean that the off-site team won’t manage to fulfil some certain tasks, however, the advice is to talk over the quality awaited in advance.

Conclusion about Pros and Cons of IT Offshore Outsourcing

As you see, there are lots of Pros and Cons of outsourcing software development. The key to success is as follows: study and mull over all the advantages and disadvantages before diving into something you can not only regret in the end. This shouldn’t come as a very easy decision. And remember to think about not only the profit your business is likely to have if you outsource, but keep in mind your staff, as offshoring really affects your on-site team too. If you are ready to outsource — don’t hesitate to reach out.

by Sergei Orlov

CTO

One of our C-level Managers who drives our company towards achievement of new goals in development. He focuses on the quality of the work done, makes sure that work with customers is proactive and he motivates the team.

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