New project undertakings and prompt delivery of solutions play a crucial role in the business growth and success. However, some organizations struggle to meet their tech-project deadlines. From talent shortages to lack of expertise – the causes could be wide-ranging.
Outsourcing your software and IT projects is an effective way to help the business support steady growth and productivity. But just choosing any IT sourcing company might do more harm than good. You must make an informed and strategic decision.
And that’s what this blog post is all about: we will discuss how IT outsourcing services help organizations grow more rapidly and improve business outcomes.
But before jumping into the topic, let’s first understand how IT outsourcing works and what are its models and types. Let’s dig in!
How IT Outsourcing Fits Into Your Tech Requirements
As most of you already know, IT outsourcing involves using external service providers to deliver software-related products and services. It also covers business processes, infrastructure solutions, and similar offerings. One of the top enablers of the global tech boom, outsourcing also includes software-as-a-service (SaaS), utility services, and cloud-based solutions.
Outsourcing helps organizations build an effective sourcing strategy and vision, hire the best IT service providers, and formulate proper contacts. It also helps regulate deals for sustainable relationships with external vendors.
IT outsourcing services from a software outsourcing company help businesses reduce costs, ensure quick time to market, and leverage expertise, assets, and tools.
Key Drivers of IT Outsourcing
Here are the main reasons why you should consider outsourcing software development:
Significant cost reduction
Outsourcing helps you save money. It reduces labor costs, provides an affordable infrastructure, and/or offers a beneficial tax system in the chosen outsourcing location.
Locally unavailable tech expertise
When you outsource, you get access to skilled resources from all over the world.
Better Use of In-house Resources
Outsourcing software development helps you allow your internal resources to focus more on business-critical tasks by delegating some of your business operations to a third party.
Streamline and Boost Business Processes
IT outsourcing sets your in-house employees free from mundane and time-consuming processes. Thus, you can engage them in core business processes while improving their efficiency and productivity.
Outsourcing to a third-party service provider allows you to delegate a part of a non-focus operation. It helps you transfer the responsibility and associated risks to them.
[Also Read: How Does Staff Augmentation Work For Companies?]
Types of IT Outsourcing at a Glance
IT outsourcing meeting your requirements could be one of the following types.
Also known as homeshoring, this type of outsourcing involves the delegation of numerous business processes to a different location within the country’s boundaries. Usually, the selected location has lower labor and operational costs.
While one of the main advantages of onshoring is cost savings, scarcity of skill and expertise can also compel businesses to hunt for specialized talents in other locations.
Sometimes, the term “homeshoring” also refers to a scenario when employees work from home.
Nearshoring involves outsourcing software development or other IT operations to a location that is near your home, usually in the same time zone or one within a few hours of reach.
Nearshore outsourcing helps seamless and effective communications compared to offshoring. In addition to this, neighboring countries often share cultural crossovers that make communication simple and easy.
Offshore outsourcing means delegating IT services to a software outsourcing company located in a distant location. The benefits include reduced labor costs, more promising economic conditions, and access to a vast talent pool. In this scenario, the time difference is usually 5 to 6 hours.
Extreme time differences can be beneficial for companies that provide uninterrupted technical and customer support services, and for those who perform ongoing update and maintenance activities.
This type of IT outsourcing involves outsourcing business operations to multiple service providers, thereby diversifying the risk in service provider operations.
Different IT Outsourcing Models to Consider
Specific scenarios determine the engagement model you choose. However, some unreliable IT outsourcing service providers could convince you to pick the model of their choice, which could drain your pockets and fill up theirs.
Therefore, it’s wise to plan out your outsourcing strategy based on insights, like a managed IT services vs. staff augmentation comparison before you hire a software outsourcing company.
At OrangeMantra, we offer a range of IT outsourcing services or models to meet your business goals and requirements. Our team of consultants and experts helps you select the most suitable IT outsourcing model that matches your budget, resource requirement, project scope, time zone, etc.
Below are the different IT outsourcing models that you may choose from for your organization:
End-to-End Process IT Outsourcing
An IT outsourcing service provider assumes full responsibility for the complete development process, including team management, quality of performance, and related risks.
We, at OrangeMantra, handle all implementation stages, right from business analysis to solution delivery and support. We also understand how this IT outsourcing model performs if you lack any development experience, need specific software built, or in case you’re flooded with too many projects.
We ensure complete transparency with regular reporting and active communication.
Staff Augmentation/Team Extension
Under the IT staff augmentation model, you hire remote professionals from a software outsourcing company whom you can manage yourself. This model is suitable if you have a well-established, but slow-paced development process or lack distinctive or specialized expertise. You can hire professionals even when you only need 1-3 external resources instead of a complete team.
Since the team management is on your side, it’s good to choose a provider who also monitors and assesses your employees’ performance and helps them in resolving issues encountered. Ensuring this will significantly enhance the quality of services you receive.
Dedicated Team/Managed Team
A software outsourcing company allocates a dedicated team that works on the outsourced part of the project with the internal team. Hence, this facilitates sharing of costs and responsibility to achieve quality. The service provider takes care of the team management and their PM updates you or your PM on the progress of the development regularly.
Organizations that select this IT outsourcing model usually have a well-established team and business processes. However, they do not have enough capital and domain expertise, and knowledge.
We suggest choosing a provider who can seamlessly integrate with your development and communication environment while setting up all the essential resources.
Time and Material
The Time and Material-based outsourcing model allows you to only pay for the number of hours developers spend working on your project. This IT outsourcing model is very popular because it offers organizations flexibility and ease of adjusting requirements without incurring any additional charges. It is the most common type used in IT outsourcing.
Why Should You Choose IT Outsourcing Services?
If you’re considering outsourcing your IT department, you’d like to know why you want to do so and what IT services are worth outsourcing. Also, what benefits you’ll enjoy with IT outsourcing services and support? Here are the main reasons why you should consider outsourcing software development.
IT outsourcing facilitates fast and efficient management of IT operations and project workload spikes. The main advantage of outsourcing is that it saves you from the cost and hassle of hiring and firing an in-house employee. It is a more suitable option for organizations that need a specific skill for a limited duration.
Large Pool of Talents
IT outsourcing services give you access to a large pool of qualified experts and exceptional tools. Finding a candidate with a specific skill set for your in-house team can be a bit of a struggle at times.
Moreover, it is even more difficult to learn those skills. Therefore, approaching a software outsourcing company can provide you with the required services and meet your organization’s skill and technology requirements effectively.
More Focus on Core Business Activities
When you outsource your IT operations, you increase your team’s strength. It is especially crucial for small-medium organizations that lack sufficient IT capital. Instead of overburdening your employees with unaccustomed responsibilities, it’s good to delegate specific IT tasks to external specialists, enabling in-house teams to focus more on business-critical activities.
Another attractive benefit of IT outsourcing services is cost-efficiency. 59% of organizations, according to a Deloitte study, preferred outsourcing software development because it has the potential for cost savings. Why did they adopt this approach?
First, IT outsourcing is cost-effective as it eliminates the need to recruit and train new employees, which is an expensive and time-consuming process. Furthermore, this approach allows organizations to avoid additional and hidden costs. Such costs include purchasing expensive hardware and software, renting an office, paying taxes, and so on.
Outsourcing also reduces labor costs. Because a software outsourcing company offers affordable pricing, especially if it is located in cheaper IT production regions like India, Vietnam, etc.
IT outsourcing helps you improve your team’s performance by dividing the workload into several functional components.
You delegate specific IT tasks to external specialists, who complete them simultaneously with your vital business activities. Furthermore, it ensures uninterrupted workflow due to the time differences. This reduces the overall development time.
Innovation and Industry-specific Knowledge
Your in-house team can’t know everything that exists to know about your business. However, when it comes to the systems that your employees are accustomed to, this experience may often restrict them from deploying new methods.
Moreover, if your organization does not handle information technology, you’re more likely to miss out on the latest industry trends. Therefore, IT outsourcing is innovative as it gives you a fresh perspective on what your business needs when it comes to information technology.
Cutting-edge Tools that You Don’t Need to Purchase
When you outsource software development to a third-party vendor, you save yourself from spending big bucks on expensive tools and software that you will use occasionally in a year.
A software outsourcing company can provide access to top-quality equipment and software for project development, management, and delivery.
Better Risk Management
A full-cycle IT company can share service interruption risks with you and provide disaster recovery and effective data protection services. Therefore, when signing an agreement with the company, make sure to add this clause.
IT Outsourcing Services in Numbers
Here are the top outsourcing statistics that will give you a clear picture of how the outsourcing industry is transforming for 2022 and beyond.
- The top reason for IT outsourcing for 70% of global corporations is cost reduction (Deloitte Global Outsourcing Survey 2020).
- About 24% of small-scale businesses say that they prefer outsourcing software development (according to data from Clutch).
- Nearly 83% of organizations are now considering outsourcing cybersecurity requirements to managed service providers (Syntax, a cloud services provider).
Looking for a Trusted Provider of IT Outsourcing Services?
Technology consulting, end-to-end project development, cybersecurity management, cloud, DevOps, and more! OrangeMantra has been harnessing the power of digital technologies to digitally transform businesses, ranging from startups to large enterprises across various industries.
Our IT outsourcing team can fill the gaps in your in-house development processes and teams to boost your business productivity. We can develop high-quality software products and solutions and offer a wide range of professional services at affordable prices.
Get in touch with us to discuss your IT outsourcing requirements today!
Q.1. What are the best IT outsourcing locations across the globe?
The best IT outsourcing locations by region include:
- Eastern Europe – Ukraine, Hungary, Poland, Romania, Bulgaria
- Asia – India, China, Philippines, Vietnam, Indonesia, Malaysia
- Latin America – Argentina, Brazil, Mexico, Colombia, Chile
- Africa – South Africa, Egypt, Nigeria, Kenya, Morocco
Q.2. Why choose India as your outsourcing country?
India is the primary Asian tech hub that boasts a vast tech talent pool. Software outsourcing companies in India offer lower software development costs and deliver high-quality solutions on time. They also provide 24×7 technical and customer support services. OrangeMantra is a renowned software outsourcing company that offers a wide range of IT outsourcing services and flexible engagement models.
Q.3. Which IT services should a company outsource?
The scope of outsourcing is vast and diverse. The most commonly outsourced areas of business/industries include Infrastructure Cloud hosting, eCommerce development, website development, business process automation, and data analytics, among others.