Thinking about outsourcing software development? You need to know this

This article is part of our Opinions section.

The IT world is hunting for qualified in-house experts: Forbes’ latest IT Skills Gap report shows 93% of UK businesses are experiencing an IT skills gap. If the outlook is that bleak, where do organisations go to find that talent for software development?

If you ask 63% of UK organisations, they plan to outsource their IT at the same rate or more in the next two years. Should your company do the same? Possibly, but it depends on quite a few things. Outsourcing isn’t as straightforward, either, as one might think. Let’s dive in. 

When is it appropriate to outsource software development?

If you’re in a time crunch, outsourcing software development could be your best friend. If your core developers are working at full capacity towards a looming deadline, bringing in an external team takes a lot of pressure off their shoulders and reduces the risk of employee burnout. The project also benefits from a broader mix of skills, and the resulting time savings make all the difference when it comes to meeting set deadlines.

Another reason to outsource software development? You’re struggling to hire in-house developers. Old news as the IT skills gap is, its consequences are still felt across the industry. Whether there’s simply a lack of qualified engineers in your area, or the rates of local developers are too high, an external team provides an easy alternative to the hassle of hiring developers internally. 

Leading on from this, an external team may be a good idea if your core team lacks expertise for a specific project.  Imagine that you’re working on an important project, like migrating a monolithic legacy system to a cloud-based architecture, and your in-house team simply doesn’t have the skills to get the job done. The solution here is clear: bring in external developers with the right expertise. That way, you can ensure a fair and appropriate allocation of work across team members, and you might even find that your in-house team learns a thing or two in the process. 

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Next steps: finding the right contract 

So, assuming you’ve now decided to outsource your software development, the next question is, ‘now what?’ 

Before reaching out to potential providers, you first need to establish what type of contract you’re looking for. The two most popular are called ‘time and materials’ and ‘fixed price’, and naturally there are pros and cons to both.

Fixed price

Fixed-price contracts, unsurprisingly, have a set price, agreed in advance for the entire project. Any additional work beyond the original contract has an extra charge. These contracts are popular for various reasons: they’re predictable, work well with tight deadlines, don’t require much client involvement in daily management, and are especially well suited to short-term, simple, small-scale projects. 

On the flip side, the rigidity of the contract may become frustrating if requirements and deliverables eventually change in the future – making adjustments to the fixed price can be tedious and costly. If you also want to be quite invested in the development process, this may not be the pricing model for you. 

Time and materials

Time-and-materials contracts, on the other hand, are the antithesis of their fixed-price counterparts. Instead of having a predetermined cost, you are charged for the hours worked by the external team, plus the cost of other materials (such as hardware or software licences) used in the process. You, the client, are able to decide how many software engineers you need and for how long you’d like to use them. A product roadmap is often helpful here for estimating the final cost. 

The key advantage to time-and-material contracts is the flexibility across the project, in terms of goals, deliverables, timeframe and budget. This makes it a sensible option for long-term, complex, large-scale projects. Of course, if you have financial limitations or prefer a more planned schedule, these types of contracts may not be for you.

Ultimately, the final decision depends on the end goal of your project, and what you consider to be a priority. The question is, do you want predictability or flexibility? Answer that, and you now know which contract will be the most effective way to meet your software development requirements.

Which vendor should I pick?

With so many different vendors promoting their services, it can be difficult to determine which one is the best fit for your company. Verifiable case studies, certifications, industry awards and online reviews are telling, but you have to be more inquisitive than that. You have to ask the right questions directly. 

Things to consider when outsourcing software development

• Is the outsourcing company able to meet your business and development needs, and what is their previous experience with this? If not, can they adapt their services (outsourcing model, collaboration model, team size, etc.) to your requirements? If they can’t be flexible, that should ring alarm bells. 

• Do their software developers have the knowledge and expertise your project requires, and are they experienced with the tech stack you are using? A good tip is to Google specific areas you need help with (modernising legacy software, for example) to find companies that specialise in that area. 

• How do they handle disasters? Building great software is a challenge. The other side we don’t see is having system checks and a plan B to keep building that great software without delays or interruptions. Do they have that? Have they considered how to handle a worst-case scenario? 

• What’s their employee retention rate like? If their team has a high turnover every few months, you should be asking how this will affect the efficiency of your collaboration. A good provider will have the right processes in place to keep engineers happy and maintain employee satisfaction and well-being. If they’re not happy, you won’t be happy either. 

Ultimately, outsourcing software development can bring a whole array of benefits to your company and core developer team, ranging from time savings to supporting employee productivity and well-being. Although there’s a lot to consider when choosing the right contract and vendor (it’s definitely not a ‘one size fits all’ solution), when equipped with the right tools and knowledge you can look to outsource your software development with confidence.

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