More and more companies are looking to undertake digital transformation. The adoption of new technologies, however, is often accompanied by rising costs. Thus, many businesses need cost-optimization, as well as scalability, flexibility, and agility more than ever before. 

All these needs can be addressed by software outsourcing. But how to choose a trusted provider, avoid pitfalls, and benefit from outsourcing software development

The article covers:

Why outsource software development?

1. Cost-optimization

One of the most significant benefits of outsourcing is cost-optimization. Companies can save up to 30% of their budgets by going for software development outsourcing. The primary reason for it is the difference between the cost of living in different countries and, as a result, rates.

The billing rates of tech professionals from Eastern Europe and other popular outsourcing destinations are much lower than in the USA and the UK. That is why you can get the same services by paying less for them. 

What’s more, your engineering outsourcing partner is responsible for all HR, administration, and infrastructure processes, which also helps you to reduce costs.

2. Access to a vast talent pool

The shortage of talent in the USA and Europe is a pressing problem, so many businesses choose to look for talent overseas. 

Talent from major outsourcing destinations can help you fill in the gaps in the teams without sacrificing quality by settling for professionals with less experience or expertise.

What’s more, software outsourcing allows hiring engineers with specific skill sets on an hourly basis if you do not need these professionals full-time.

3. Flexibility and scalability

We live in a fast-changing world where businesses have to be flexible to be competitive. Thus, companies must be able to adjust their services to market needs. 

Software outsourcing allows scaling your team according to your needs and requirements, changing the scope of your project when it is necessary, and having as much control over the project as you want to. 

You can achieve such flexibility by choosing a suitable cooperation model with your outsourcing company. 

There are three key engagement models for building a team: an extended team, a managed team, and an outsourced team. Every model has its peculiarities and suit for different aims, which should be taken into consideration. 

Learn more about the engagement models

Choosing the right cooperation model is the key to a successful partnership with your tech partner.

4. Faster time-to-market

The speed of software development can be used as a competitive advantage. The unpredictable delays in production are something that businesses try to avoid by all means. 

Outsourcing of software engineering is a way to achieve faster time-to-market and avoid postponements. When you partner with a trusted vendor, you entrust the recruitment processes to them and do not depend on the in-house resources for the product launch. You create the schedule your developers need to adhere to.

What’s more, your outsourced engineers can help you automate your business processes that will also reduce the time-to-market.

5. Easier technology adoption

Implementation of new technologies gets easier if you partner with a software development outsourcing company, as trusted outsourcing software providers have broad expertise and an internal pool of skilled specialists. 

Despite the benefits of outsourcing software development, however, some businesses still hesitate to opt for it. To dispel any doubts, we have compiled a list of the most common risks businesses face and ways to mitigate them.

Risks of software and IT outsourcing and how to avoid them

1. Communication barriers

Access to global talent, as a primary benefit of software outsourcing, also creates an obstacle-communication barrier. We mean a few aspects here: different time zones, languages, and cultures.

But how to overcome these barriers?  When it comes to communicating with outsourced software developers, comprehension of the project requirements is the most essential factor. You and your team have to be on the same page to achieve the desired results. 

The use of collaboration tools, like Jira, Asana, etc., as well as regular stand-up meetings via video or audio, are the best ways to avoid miscommunications and overcome the communication barrier with your remote team.

Software outsourcing: collaboration tools

To know more on how to manage your remote development team

2. Code quality

Code quality is about attributes that need to be communicated with the team. Well-documented and well-tested code that follows the formatting best practices, as well as coding conventions, is of utmost importance for long-term success and bug-free execution.

Maintaining code quality while cooperating with outsourced engineers requires communication of expectations and laying down the quality benchmarks in advance. 

Partnering with a software outsourcing vendor is a way to ensure quality software development by signing a contract with your vendor. That is why avoiding contract loopholes is so essential.

3. Contract loopholes

Confidentiality, liability, data protection, regulation compliance, and intellectual property rights are the aspects you need to pay special attention to in the contract no matter what engagement model you choose. 

However, each cooperation model has its legal terms, so to avoid any legal issues, make sure to learn more about the subject.

Read our article to know more about software development outsourcing: how to avoid contract loopholes

4. Security issues

While still on the subject of legal issues, let's talk about regulatory compliance. Many IT outsourcing problems come from the company's failure to deal with the requirements, thus having issues with business processes and access to data and, as a result, the inability to deliver certain services. 

To know more about the secure software development

ISO, PCI DSS, and GDPR are the most critical compliances your vendor needs to have, as they ensure secure software development. 

Security regulations in software outsourcing

There were the key risks of software and IT outsourcing and ways to mitigate them. Knowing the risks will help you achieve better results in outsourcing.

However, much of your success lies in the right choice of a software outsourcing company. But where to find a reliable partner?

What are the best locations for outsourcing software development?

1. Eastern Europe

Ukraine, Poland, and Romania are the countries that house the most significant number of software engineers in Eastern Europe. 

The region boasts excellent STEM and computer science education. For example, Ukraine has one of the most significant shares of STEM and computer science graduates in Europe. The number exceeds 9% out of all graduates in the country. 

Times Higher Education World University ranking of top educational institutions worldwide recognizes more universities of Eastern Europe compared to Asia and Latin America.  

According to the Times Higher Education World University ranking, Eastern Europe houses a more considerable number of excellent universities (compared to Asia and Latin America). 

Excellent tech education is a primary reason why the billing rates in the region are slightly higher as compared to Asia. Other causes are enormous expertise in custom software development and outsourcing, as well as a decent command of English. 

rates of software outsourcing professionals in Eastern Europe

2. Asia

The region is home to an extensive talent pool that reached almost 4M in 2018. India, China, and the Philippines are the leading software outsourcing destinations in Asia. There are 2.75M tech professionals in India, 590K in China, and 190K in the Philippines. 

The IT outsourcing branch in India is a thriving industry with over 30-year history, so many companies choose this country over others in the region for outsourcing software engineering. However, the  Nasscom software association states that India lags in terms of digital adoption as compared to US and European countries. 

The Chinese software and IT outsourcing market might not be as distinguished as Indian, but a lot of vendors from this country are listed in The Global Outsourcing 100 by IAOP.

The main benefit of outsourcing to Asia is the rates of the local professionals. The chart below shows the rates of tech specialists in Asia.

rates of software outsourcing professionals in Asia

3. Latin America

Brazil, Argentina, and Mexico are the most popular destinations for software outsourcing in Latin America. These countries are home to 431K, 103K, 180K developers respectively

The developers in Latin America have similar rates as their colleagues from Eastern Europe: they get $38.00/hour on average. Here is the chart that shows the average rates of software engineers in Latin America.

rates of software outsourcing professionals in Latin America

That was it with the options where to look for software engineers. But how to choose a reliable partner for engineering outsourcing?

How to choose a partner for software outsourcing?

Here are the key aspects you should consider when choosing a software outsourcing partner:

1. Established security policy

Infrastructure vulnerabilities, phishing attacks, data losses, and high loads on IT systems - we face these perils every day. These cybersecurity risks are critical, as they may obstruct the security of your data during the software development.  

So, to mitigate these risks, you need to find a software outsourcing company with an established security policy. Make sure that the vendor you choose to hire a team from complies with international security standards such as ISO, PCI, HIPAA.  

2. Streamlined agile processes

Agile management is often referred to as one of the best work methodologies, especially in the time of remote work. Agile ceremonies, such as sprint planning, daily stand-ups, demo sessions, retrospectives, backlog grooming, make work more manageable and efficient.

Agile management also brings benefits that are critical for businesses. Here are some of them:

  • Accelerated product delivery;
  • Enhanced ability to manage changing priorities;
  • Improved quality;
  • Reduced costs;
  • Better cost and time predictability.

To know more about the Agile software development

Thus, choosing a software outsourcing company with streamlined Agile processes ensures high work productivity that results in reducing working hours and cost reduction, respectively.

3. Powerful employer brand

The known and trusted company can find experts for the project promptly and scaleup teams efficiently way easier than smaller ones. The poor employer brand is one of the key reasons why employees jump ship. 

Thus, before partnering with a vendor, check if it provides employees with comfortable working conditions, professional growth, training opportunities, fair compensation, etc. 

4. Clients’ reviews and testimonials

Research vendors’ websites, LinkedIn accounts, and profiles to gather clients’ feedback and testimonials. That will provide you with valuable insights on how successful the collaboration with this provider was for other companies, what difficulties other clients were facing, etc. 

Client reviews in software outsourcing

5. Advanced communication skills, enthusiasm, and transparency

Evaluate the efficiency of the communication of your potential partner. Choose the vendor that is eager to understand your business needs and requirements, sets up extra calls with you, and sends you follow-ups. These aspects mean that the vendor is interested in clarifying all the details and nuances with you, thus preventing misunderstandings. 

To know more about how to choose the best software development company

Seven companies that benefit from IT and software outsourcing

1. Lebara

Lebara is one of the fastest-growing telecoms in Europe, with operations in eight countries. The company has partnered with N-iX back in 2014 and made us responsible for the full-cycle development of new products and their maintenance. 

The small team, initially working on the project, evolved into a development centre of 100 people working for Lebara. 

Firstly, Lebara needed to migrate its Hybris B2C platform from 4.3 to 4.8 version to meet its requirements for client base growth. 

Then, N-iX professionals developed the website for Lebara, available in the UK, France, Germany, the Netherlands, Spain, and Denmark.

Our client has also benefited from our BI expertise: we have been responsible for performance optimization, support, and development of the existing enterprise BI solution previously supported by IBM.

Later, Lebara decided to migrate its solutions from on-premises to the cloud. 

Also, N-iX supports the iOS Application development for a range of Lebara products: Lebara Talk, Lebara Hub, Lebara Travel, as well as Android Application development for Lebara Money and Lebara Talk.

2. Gogo

Gogo is a global provider of in-flight connectivity with over 20 years of experience and more than 1,000 employees. 

Gogo partnered with N-iX for delivering a complex data governance project that aims to ensure the flawless operation of the equipment and high speed of the in-flight Internet. 

First, we have helped our client with data migration to the Cloud to collect and analyze a considerable amount of data from over 20 sources. Next, we have built a cloud-based unified data platform that collects and aggregates both structured and unstructured data and can process up to 3 TB of streaming data per day.

Together with Gogo, we completely migrated their data solutions to the AWS cloud and shut down its costly on-premises infrastructure. 

3. Currencycloud

Currencycloud has partnered with N-iX to accelerate the development of its white-label Currencycloud Direct application for the Finovate conference.

Since 2013, the N-iX team has become a vital contributor to Currencycloud Direct and Connect API 2.0. 

Currencycloud Direct is an app that allows the platform users to leverage the capabilities of Payment Engine without integrating with the API while providing access to major Currencycloud services. 

Connect API 2.0 is a set of tools that allows the customers to customize their workflows and automate their entire international payment processes.

In 2014, our specialists became engaged in manual testing and working on a new automation testing framework aimed to make the process more efficient and scalable.

Since 2018, N-iX professionals have contributed to transitioning to microservices and migration of all the services to the fully-managed Kubernetes cluster. 

4. Fluke

Fluke Corporation is an American manufacturer and distributor of electronic test tools and software for measuring and condition monitoring. 

The company has partnered with N-iX for the mutual work on enhancing SCHAD’s (part of Fluke Corporation) enterprise asset management solutions. 

Within this cooperation, N-iX professionals have designed the architecture of ESB-like integration platform using well-known industry standards to match integration challenges with various CMMS systems; elaborated test cases design of the existing system; performed R&D of different technologies and solutions to satisfy business needs; provided new highly-customizable mobile user interface based on HTML5, JavaScript and CSS; worked on Asset Health Dashboard.

5. RateSetter

RateSetter is a leading peer-to-peer lending company based in the UK and Australia. This client constantly introduces innovations and modernizes its IT system, so the service is powered by the most innovative technologies. 

RateSetter has partnered with N-iX to modernize its product and develop new functionality. N-iX professionals have widely contributed to migrating from the monolithic architecture to the service-oriented system, which allows scaling the product faster and introducing innovations more easily.

Our professionals were responsible for improving the software testing process as RateSetter needs to update its product regularly to stay in compliance with constantly evolving regulations. Our team designed and developed a framework that allowed the client to achieve enhanced testing coverage, faster debugging, as well as reduced time to market.

6. Travelport Locomote

Travelport Locomote is a travel commerce platform that provides distribution, technology, payment, and more for the travel and tourism industry.

The company has partnered with N-iX to outsource software development, testing, and enhancing the existing corporate travel platform.

Three N-iX teams cooperate with Travelport Locomote on the product. Each team consists of seven specialists: four developers, a Manual QA specialist, a Business Analyst, a Scrum Master/Delivery Lead. 

N-iX has built a team with comprehensive expertise in Ruby, JavaScript, Server side & front end design & development, Cloud app design, development & deployment, and other technologies.

7. TuneIn

TuneIn is a USA-based audio streaming platform with 75 million monthly active users worldwide. 

Back in 2017, this company has partnered with N-iX in order to increase its development capabilities. Our client required highly experienced software engineers to perform complex tasks cooperating tightly with the client’s core team based in San Francisco. 

Our professionals’ main task is to boost the CMS solution of TuneIn to guarantee seamless content and website management. 

Also, the N-iX team cooperates with the client’s onsite developers on moving the solution to the cloud as well as migrating the large monolithic architecture into microservices.

Why partner with N-iX for software outsourcing?

  1. N-iX has almost 20 years of experience in the global IT outsourcing market and offers high-quality solutions to its clients in healthcare, manufacturing, automotive, retail, telecom, and many other industries;
  2. We have offices in Ukraine, Poland, Sweden, Malta, and the USA, which will allow you to tap into an extensive talent pool of professional developers;
  3. N-iX is compliant with the security standards and regulations, including ISO 27001:2013, PCI DSS, ISO 9001:2015, GDPR, and HIPAA that ensure secure software development;
  4. The company is well-positioned in the market and is recognized for its services by GSA UK 2019 Awards as a finalist in three categories, Global Outsourcing 100 by IAOP, and many others;
  5. Industry leaders, including Lebara, Gogo, Currencycloud, RateSetter, and many others, trust us.

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