Outsourcing Software Development: Advantages and Disadvantages

Outsourcing software development has been a strategic trend in business growth for years. Some companies even outsource their entire company to others, and that trend is continuing to dominate. But do you understand what outsourcing software development is and how to practice it?

What is Outsourcing Software Development? 

Outsourcing software development is hiring a third-party service provider to handle software development projects. These projects can vary from developing custom software for internal use or developing commercial software for other customers. By entrusting software development services to other outsourcing partners, the internal IT teams can focus on core competencies such as growth and innovation.

It has been many years since outsourcing software development became the strategic move of businesses. Some of the IT outsourcing trends are: 

  • Quality comes first
  • Focus more on communication
  • Moving to Cloud
  • Outsourcing software development is for every business, from small to big
  • Business core preservation 
  • Cutting-edge technologies application

Outsourcing Software Development pros and cons

Outsourcing Software Development Pros and Cons

Sometimes, there are many benefits to outsourcing software development that support businesses. However, it can also come up with many disadvantages that we need to know. Read on to know all about outsourcing software development advantages disadvantages.

The Advantages of Outsourcing Software Development

Cost Savings

One of the most significant benefits of outsourcing software development is cost saving. You can cut down the many costs, including those spent on hiring, training, and facilities. For example, employees’ prices in the US or UK are always higher than other outsourcing companies.

External experts’ assessment

Practicing outsourcing software development gives business owners many chances to meet and work with many IT talents. Not only can you have all your requirements completed, but also you exchange knowledge with the outsourcing company and learn from one another. 

Focus on what you do best

Outsourcing software development saves your companies from an overwhelming workload. Instead, you can divide it into parts and entrust it to the outsourcing parties, then focus on what your companies are good at.


Outsourcing software development gives you a way to get rid of hiring employees when handling new projects. The math would be easier to solve with the employees coming from other outsourcing companies, and you don’t have to pay them more when the tasks finish. 

Latest technology access

Inefficient technology is also the reason for outsourcing software development. If you found an outsourcing firm with advanced technology, it’s a plus for your business’s growth.

New & fresh perspective

When working with outsourcing firms, the differences in the business core, culture, and working style can help you variate your products and services. During the cooperations, the outsourcing firm can suggest many ideas to get the products done most beautifully.

Disadvantages of outsourcing software development

Most businesses have agreed that all the disadvantages of outsourcing software development often come from trust.

Lack of control

A lack of control over the process in an outsourcing company is a critical issue in maintaining trust. Moreover, an external organization typically has distinct principles, purpose, business goals, and management structure, impacting the project control issues.

The presents of many hidden costs 

To provide the services that were not included in the contract, cooperation with the external team could produce additional costs. You have to budget for unforeseen expenses and related negotiations when you decide on outsourcing.

Confidential data leak

Every relationship, as already described, is based on trust. Details about your customers may be difficult to entrust to an external partner. Therefore, it is necessary to devise a contract that will protect your business and customers’ data.

There would be some disagreement about norms, management systems, and efficiency. However, when you concentrate on the area where you perform the best and outsource the rest, the solution will undoubtedly benefit your business.

>>>> Read more: Outsourcing Benefits In Vietnam: Reaping The Reward Of Your Business

Insourcing Vs Outsourcing Software Development: What do they mean?

Businesses can process the software development process in two ways: insourcing or outsourcing. Insourcing software development happens when the company recruits in-house employees to complete all the parts of the projects. On the other hand, outsourcing software developments refers to hiring freelancers, agencies, or contracting other companies to perform a specific function of one product or service.

There are always pros and cons of in-house vs outsourcing software development. Depending on the size and kind of businesses, the owners can choose one or combine these two strategies. Insourcing is more comfortable when the job relates to core business functions, and you need to keep it in-house for one or more purposes (reducing risk, compliance, company culture, etc.). However, offshore software development is better if the product or service is non-core. Therefore, you can benefit from decreased costs, increased creativity, or intense competition for talent (software developers).

How to choose the right Outsourcing Software Development companies

When choosing outsourcing software development companies, there are things that you need to take into considerations. The first thing is the cost. Usually, you might need to look for companies with the lowest costs in order to save more. However, those companies need to come from highly developed IT markets or have high-quality educational infrastructures. Also, they have to be able to communicate in your preferred languages. 

It doesn’t stop there; when applying global IT outsourcing software development across borders, the culture or time zone is also a thing that you need to consider. To assure the delivery time, it’s great to have your partners work when you work and rest when you rest. Additionally, they have the same culture as you do to understand what you need deeply. 

More detailed, here are some best countries for outsourcing software development that you should note down right away. 

Vietnam is one of the countries that have high-quality software engineer workforces. Every year, a significant number of students graduate from universities specialized in IT and software development. Also, Vietnam has a tradition of being hard-working and kind. Therefore, along with the cheaper cost of software engineers than India and China, it’s very strategic to outsource software development to Vietnam. The average cost per hour for software developers in Vietnam ranges from $25 to $35.

Outsourcing Software Development Risks

Although outsourcing software can help businesses save their time and money, it can come with many unpredictable risks. You can only prevent or solve the problems with IT outsourcing by getting aware in advance. There are six common risks contained in any outsourcing software development projects. 

Poor Communication

An outsourcing software development project usually consists of many stems. To get things done well and successfully, communication between all parties is the critical element. The cooperation between companies and outsourcing firms, especially in different time zones, can cause many difficulties. Some of them are cultural differences, language barriers, or working styles. Therefore, there can be significant gaps in communications. 

Reality Vs. Expectations

Choosing the right outsourcing software development partner is rough. Sometimes, the portfolio posted on websites doesn’t fit reality. The differences can be various from different aspects. The most significant one could be the over-advertising service. In that case, you can waste your time and money. Also, with qualified outsourcing firms, late delivery can happen very often. The reason is that they have many clients to handle. Generally speaking, there are many significant gaps between reality and expectations, so don’t forget to be careful when signing outsourcing contracts. 

The Cheapest May Not Be the Best

If the price is your most concerning thing, then you might need to change. There are many hidden reasons for the low price. Sometimes, the contracts’ costs might not be the ones you have to pay in total. Therefore, take time to read all the terms and conditions in the contracts as well as discuss with the accounting partners when you’re confused about something. The outsourcing firms also offer you the lowest price as they’re new to the market or not confident about their services. In short, try not to take the price seriously.

Rush Transition 

Entrusting your business parts to outsourcing organizations is a big step that can affect your people, processes, and systems. A rush transition can lead to many regrettable mistakes, such as leaking intellectual property or secret methods. So carefully set up the plan to process everything. 

Loss of Business’s Core Value

When applying outsourcing software development, it’s essential to keep your business’s core value or culture. Outsourcing partners can convince or lead you in some ways that are convenient for them. As a result, you can lose your actual core value and culture. Tell them what you want for your business right at the beginning, and try to keep everything in your way. Send people or take time to supervise the outsourcing process to interrupt whenever needed.

>>>> Read more: Outsourcing Risk | All The Things You Might Have to Know

Magenest’s Outsourcing Software Development Service – When Everything Gets Easier Than Ever!

Magenest is one of the most amazing outsourcing software development partners that you ever have. With more than 5 years of experience in the field, we’re confident that we can provide you a world-class service that can please your expectations. 

To build trust of customers as well as get rid of the hidden cost of outsourcing, we give clients all access to the project management through a platform supported by English-proficient AM. Magenest always respects and catches up with clients’ requirements to timely adjust things as well as eliminate as much as possible the waste of time and money. We have been using Magento Open Source (CE) and Magento Commerce (EE) to successfully handle many projects with big clients such as Heineken and E3D Online.

Contact Magenest TODAY to get your outsourcing software development done fast and effectively! Don’t hesitate because there is always a free consultation.

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