Outsourcing Software Development Pros and Cons

time to read: 10 mins

One of the first things business owners and managers should be able to identify when planning their next software development project is whether or not they would prefer the company to handle the product or instead consider outsourced software development. Outsourcing software development can be a great way to save money and time, but some potential drawbacks should be considered.

Outsourcing software development is an attractive prospect for businesses that need more expertise or budget to develop software internally. Companies who choose outsourcing companies for their software engineering project gain access to vital technology, increased capacity and agility, and cost savings that help them stay competitive in today’s digital landscape.

Before deciding whether to outsource your IT needs, it's essential to consider the pros and cons of doing so. Below we explore both sides so you can make an informed decision about outsourcing your software development projects.


Exploring Outsourced Software Development

Outsourcing software development can be an excellent option for businesses that want to access specialized skills and technologies, increase their capacity, and save money. It can also provide access to a larger talent pool, allowing companies to find the best people for the job.

What Is Outsourced Software Development?

Outsourcing software development involves enlisting a third-party provider to develop and manage a software product or application. This can be done in-house, remotely, or through an offshore partner. The main benefit of outsourcing software development is that it allows companies to access specialized skills and technology without investing in additional staff or resources.

Advantages of Outsourcing Software Development

Companies may consider outsourcing development to cut costs and gain access to specialized software and knowledge.

Moreover, relying on an external workforce is advantageous for businesses as it allows them to tap into a global talent pool and helps them remain competitive in the modern digital ecosystem.

Cut Costs and Save Money

Finding ways to expand a specific budget in more ways is always a good thing. Whenever a manager/boss persona hears the words 'cutting costs,' they will likely smirk a little less by the end of the day. It is no different from software development outsourcing; it can be a great way for businesses to save money.

It is essential to remember that even with outsourcing, hiring costs depend on the type of engagement models and other vital factors.

Local software development companies usually cost more simply because, most of the time, it includes salaries, benefits, taxes, and other elements of hiring a team of people.

There are some scenarios where it is easier to work with a local or nearshore team, as it implies you will use the same language and work in the same time zone. Still, other than that, the cost of outsourcing software development can be much lower due to different economic circumstances and paying only for the services ordered, saving up to 50% of local costs (or even more, depending on the country where the software development company Is from).

Access to Expertise

By outsourcing the development of a product, companies can access experienced professionals from around the world willing to work for lower rates. 

Additionally, outsourcing allows companies to take advantage of economies of scale, as they can hire multiple professionals to work on the same project simultaneously.

For example, the South America and Asia Pacific regions have excelled in technological advancements, along with software development. This is why many companies are now looking to outsource their software development projects to these regions, as they can access a larger pool of talented professionals who offer more competitive rates.

Increased Flexibility

Instead of having to hire a full-time team and commit to long-term contracts, businesses can outsource their software development needs on an as-needed basis. This allows them to scale up or down depending on their project requirements and budget.

Moreover, outsourcing allows businesses to access resources that may not be available in their local market. For example, companies can access specialized skills and technology without investing in additional staff or resources by outsourcing their software development needs. 

Additionally, they can use the time zone difference between countries to their advantage by utilizing a 24/7 work cycle so that projects can move quickly from one stage of completion to the next.

Remote Teams Disadvantages

Outsourcing software development can be a great way to save money and access specialized skills, but it does come with some risks.

Loss of Control

When outsourcing software development, businesses may lose control over the process. This is because they will no longer have direct oversight of the project and may not be able to monitor its progress as closely as they would like. Additionally, the outsourced team may not have the same level of commitment or understanding of the project as an in-house team. This can lead to delays in completion and a lack of quality assurance.

Therefore, companies need to ensure that they are working with a reputable firm and doing their due diligence to ensure they get the best results. They should also establish clear communication channels between themselves and the outsourced team so that everyone is on the same page throughout the project.

Business Goals Difference

When outsourcing software development, companies should also be aware of the potential differences in business goals between themselves and their outsourced team. For example, while the company may aim to develop a high-quality product within a certain timeline, the outsourced team may have different motivations, such as meeting deadlines or maximizing profits. This can lead to disagreements over how best to approach the project and can affect its overall success. Businesses should take the time to understand their outsourced team’s goals and ensure they are aligned with their own objectives before embarking on any project.

Language Barriers and Cultural Differences

Finally, language and cultural differences can also be an issue when outsourcing software development. It is essential to understand the culture of the country you are outsourcing to to ensure that all parties are on the same page. 

Additionally, businesses should ensure that they have clear communication channels with their outsourced team so that everyone understands what and when needs to be done.

What Strategies Can Companies Use to Reduce Risk When Outsourcing Software Development?

Companies can minimize the risks associated with outsourcing software development by taking the time to research and vet potential vendors thoroughly. It is vital to ensure that the vendor has a good track record and is experienced in working with remote teams. 

Companies should also establish clear communication channels between themselves and their outsourced team to ensure everyone is on the same page throughout the project.

Define Project Requirements

Defining project requirements will help ensure that the outsourced team clearly understands what needs to be accomplished in all aspects of development. Additionally, businesses should establish a timeline for the software development process and set realistic expectations for completion. Finally, companies should also ensure that they have adequate support from their internal teams in order to provide timely feedback, KPI monitoring, and assistance throughout the duration of the project.

Determine SPOC

A single point of contact (SPOC) is also essential when outsourcing software development. The SPOC should be responsible for coordinating communication between the company and its outsourced team and ensuring that all parties are on the same page throughout the project. This will help ensure that potential issues are addressed quickly and efficiently.

Monitor Progress

Businesses should also regularly monitor their outsourced software development project's progress. It will help ensure that the project is on track and that potential issues are addressed quickly. Providing timely feedback and support to the outsourced team to ensure they can help deliver a high-quality product within the agreed timeline.

Developing Software In-House Compared To Outsourcing

Developing software with an in-house team can be a great way to maintain control over the quality of the product and ensure that it meets the company’s specific requirements. However, this approach can also be costly and time-consuming, as businesses must invest in hiring, training, and managing their team of developers. 

On the other hand, software development can provide businesses with amazing outsourcing benefits with access to specialized skills and technologies they may not have in-house. Additionally, outsourcing can help businesses save money by reducing overhead costs associated with hiring and managing an internal team of developers. Finally, outsourcing can provide businesses with increased flexibility regarding project execution and can even utilize the time difference to their advantage by having a team working on the project 24/7.

In-House Software Development


  • Maintain control over the quality of the product and ensure that it meets the company’s specific requirements
  • Same time zone and cultural background
  • Direct access to specialized skills and technologies


  • Time-consuming process as businesses must invest in hiring, training, and managing their team of developers
  • May not have access to specialized skills or the latest technology when developing software in-house
  • Not cost-efficient

Offshore Software Development


  • Access to the global talent pool
  • Reducing overhead costs associated with having an in-house team
  • Increased flexibility when it comes to project execution


  • Loss of control over the quality of the product
  • Potential language barriers or cultural differences between teams
  • Possibility of miscommunication due to lack of face-to-face contact between the teams

Overall, outsourcing software development can be an effective way to access specialized skills and save costs. However, it is important to take the time to research potential vendors and ensure that clear communication channels are established. Additionally, businesses should define project requirements in detail, establish a timeline for completion, and monitor progress regularly in order to minimize risks associated with outsourcing software development.

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