Key Questions Answered in This Article
- What is Outsourcing in the IT Industry?
- Why Do IT Companies Use Outsourcing?
- What Are the Benefits and Drawbacks of Outsourcing?
- How to Choose the Right Outsourcing Provider?
What is outsourcing?
Have you ever thought about what it would be like if someone could do the lion's share of the work for you and make the day-to-day operations of your business more enjoyable and less stressful?
Outsourcing in the IT industry refers to employing an external company, an entire team, or a single individual to provide services related to information technology. Outsourcing providers may be located domestically or internationally, and the services provided may include software development, web design, network management, technical support, data analysis, and other IT-related tasks.
Outsourcing, offshoring, and nearshoring are all terms used in the IT industry to refer to hiring external companies or teams to perform certain IT-related functions. While they all involve outsourcing IT work to external parties, these terms have some key differences.
- Outsourcing refers to hiring an external company or team to perform a particular function that would otherwise be done in-house. This can be done for various reasons, such as reducing costs, accessing specialized expertise, or increasing efficiency. Outsourcing can be either domestic or international.
Take a look at the article about Outsourcing to Poland - Why and How?
- Offshoring is a form of outsourcing where the work is outsourced to an external company or team situated in a country that is geographically more distant than the typical nearshore destinations, emphasizing the focus on remote locations for conducting business operations. The main reason for offshoring is to take advantage of lower labor costs in the offshore location. In the IT industry, common offshore destinations include India, China, and the Philippines.
If you want to know more about offshore software development read our article.
- Nearshoring is a type of outsourcing where the work is performed by an external company or team located in a nearby country, typically within the same time zone or a similar cultural and linguistic environment. The main reason for nearshoring is to take advantage of lower labor costs while maintaining proximity to the client. In the IT industry, common nearshore destinations for companies based in North America include Mexico and Central America, while for companies based in Europe, Eastern Europe is a popular choice.
Check out our article What is Nearshore Software Development?
Companies widely use outsourcing services to reduce costs, gain access to specialist skills and knowledge and improve efficiency. Outsourcing allows companies to focus on their core competencies and leave IT tasks to technical specialists, which can result in higher quality work and faster delivery times.
However, outsourcing also has its challenges and potential disadvantages. Communication issues, cultural differences, time zone differences, and security risks are some of the most common concerns about outsourcing. Therefore, careful planning and management are necessary to ensure the success of IT outsourcing projects.
Why is outsourcing used within IT companies?
For many different reasons!
For example, reducing the costs associated with hiring an in-house developer and his onboarding process - this procedure also takes the pressure off the shoulders of the in-house team. In such situations, the developer has to familiarize himself with the tools and environment and undergo appropriate training. A more efficient solution for companies is to choose someone with a lot of experience and who does not require a complex onboarding process. Typically, an assigned specialist is billed for the time he has already spent on a project - this limits the time and money to familiarize himself with a given environment and its possible education.
An important aspect of outsourcing is access to a vast pool of available developers on the global market. Most companies in the IT industry are now opening up to remote work, so the pool of specialists is constantly increasing. This is one of several reasons foreign companies use specialists from companies around the world.
The Central and Eastern parts of Europe are famous for outstanding specialists in the IT industry. In Poland, more and more people graduate from IT studies, resulting in more developers on the market.
Poland ranks among the top developers in Python/Django technology. In the United States, developers from Poland are seen as "inventors, not innovators". Many companies are concerned about management and quality assurance – despite all these beliefs, we are still at the forefront of providing Python and Django specialists, according to Clutch.co.
What are the benefits of outsourcing?
There’s plenty, from cost savings, through scalability, to the possibility of using the best specialists in the world in a given technology and field. This is a massive advantage for the company, but not only. Who else is using it? The whole team of people working on a project. Very often, when companies use outsourcing services, development teams are mixed - then it is called a mixed-team approach, where one team on the client's side cooperates with a team on the contractor's side (software house), and they work on the same project.
A typical case, even in the eCommerce industry, is that teams on the client side need to migrate a given platform to a completely different technology - the reason they do it is technical debt or the management board's decision to change the platform. Then the team on the client's side needs to have the appropriate qualifications and sufficient knowledge to undertake such actions themselves. Above all, they only have time to deal with an issue with the help of an external agency. Training specialists would be costly and time-consuming, and let's face it - everything in the IT industry must have been done yesterday!
This is the right time to start cooperation with an external agency - just on a mixed-team basis, where one team works with another towards the same purpose. What happens during such collaboration, and what do I refer to? Mostly exchanging experience and competencies.
At Sunscrapers, in working with our clients, we notice a desire to assimilate with our developers, making them feel like part of their team. This behavior significantly impacts the entire team's morale and work efficiency.
And the disadvantages?
As they say, “There’s no real beauty without some slight imperfections”! Many outsourcing agencies do not use this solution due to company policy. Nowadays, not only the specialist’s qualifications and skills count - what also matters is finding a common bond with a person and team. Thanks to that, the team constantly develops and does not require much reshuffling. When hiring a developer, many companies see more of a future with him and want him to be a team member. Thanks to developers, companies from the IT industry with their products are constantly growing and earning money as businesses.
Frequent changes within staff contribute to many unpleasant issues that greatly impact the company's overall future. Lack of communication can also be one of the problems and reasons why so many companies do not use this solution. Therefore, the process of verifying our candidates at Sunscrapers is very precise. We selectively and sleekly choose specialists to visit our client for a project. We consider not only technical skills but also those soft skills that play a crucial role in contact with the client and daily communication.
In addition, in cooperation with our clients, we practice time overlap with the client's time zone. We make every effort to ensure developers are responsive on Slack platforms, during email communication, and frequent daily or weekly meetings with the client-side team. Combining teams of two separate companies working on one project can be the best possible solution, but it can also be a great obstacle in finalizing a common goal. Choosing the right specialists is a significant factor. Work on a given project can take many months, and management meetings in the presence of developers, PMs, or even clients for whom a given order is carried out can occur every day.
What do I mean by developer compatibility? Solid, seamless communication. The common language in IT has always been English, but it is only sometimes inadequate for the communication offered by a given developer or an outsourced team. With cooperation, communicating and presenting one's duties or goals is crucial.
How do I choose the best outsourcing provider for my business?
Nowadays, many IT companies specialize in outsourcing by offering the best specialists in all technologies. As this is a top-rated service, unfortunately, there is no shortage of companies that do not cope with this model of cooperation best, so it is worth paying attention to the adequate early verification of the company, its experience in working with clients, and specialization.
Suppose you are unsure whether an outsourcing provider is reliable and have doubts about using its services. In that case, the Clutch.co platform comes to your aid, where you can verify a company straightforwardly and intuitively.
On Clutch.co, you will be able to check the specialization of a given company and the number of employed people, and you will be able to get acquainted with the case studies of projects in which a company cooperated.
- Read more about How to Find the Leading Software Outsourcing Company?
Outsourcing is when companies hire external teams or individuals to perform IT-related tasks such as software development, web design, network management, technical support, and data analysis. Outsourcing can be either domestic or international. Offshoring is a type of outsourcing where the work is performed by an external team located in a different country. At the same time, nearshoring involves hiring an external group in a nearby country.
Companies use outsourcing to reduce costs, gain access to specialized skills, and improve efficiency. This approach lets companies focus on their core competencies and leave IT tasks to technical specialists. Challenges include communication issues, cultural differences, time zone differences, and security risks. Careful planning and management are necessary to ensure success.
The benefits of outsourcing include cost savings, scalability, and the ability to use the best specialists in the world in a given technology or field. Outsourcing can also facilitate the exchange of experience and competencies between teams.
However, outsourcing also has its disadvantages. Some companies prefer to hire developers as team members rather than outsourcing to build a more robust team culture and avoid issues related to frequent changes within the staff.
At Sunscrapers, we specialize in finding the best talent for your needs. With our network of professionals, we can provide you with top-notch talent from around the world. Our recruitment process ensures that only the most qualified candidates are presented to you for consideration.
Partnering with Sunscrapers means that you can focus on what you do best - running your business - while we take care of the rest. Our dedicated team will handle all aspects of the hiring process, including recruitment, onboarding, and ongoing management.
Contact us, and let us take your business to the next level! With our expertise and commitment to excellence, you can trust that you’ll work with the best.