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Advantages and Disadvantages of Outsourcing Software Development

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Outsourcing is already a common practice for the largest software companies as many outsourcing large portions of their business. Smaller developers are following the same trend as other companies across the world are also catching on.

It is estimated that the IT outsourcing sector in US is estimated to reach $132.9 billion by 2020 and is expected to grow. What is the reason companies consider outsourcing as a part of their business strategy? More capacity, the ability to achieve larger goals in business in a cost-effective manner, as well as having access to expertise that isn’t readily available at home.

There are a lot of pitfalls and challenges when outsourcing partnerships aren’t properly integrated, resulting in low morale among employees, poor written code, a lack of deadlines, and ultimately an unsatisfactory return on your investment.

Let’s examine the advantages and drawbacks of outsourcing software development and examine why the solutions at are among the top on the market for effectively using an outsourcing partnership.

The advantages of outsourcing Software Development

Cost-related Factors

While cost isn’t the primary reason for companies to think about outsourcing software development, savings in costs are definitely a desired result. The average cost for engineers is much smaller within Latin America, Eastern Europe or Asia than Europe, Eastern Europe or the United States, the UK or Australia.

Finding the best skill set

Due to the shortage of talent due to the shortage of talent in US, Western Europe, and Australia outsourcing allows companies to fill in the gaps within their teams without having to compromise quality by hiring developers who have little experience or knowledge. In addition, outsourcing allows companies to utilize a range of skills that they might not be able to utilize or the need to employ full time.


Conducting interviews and finding candidates as well as negotiating compensation and taking on a new employee can take the time of a lifetime, only for a few to depart after a year or so to find a new position. Partnering with an outsourcing company lets you outsource a large portion of the process of recruiting and enables tech executives to dedicate their time and resources to other high-value projects for the company.

Possibilities of disadvantages to outsourcing

Outsourcing can cause issues when there is a culture divergence with the partner business or the team that is developing has weak English capabilities. Differences in time zones where there is a limited overlap in workdays can lead to an inability to communicate in the event that expectations are not properly established. In-house project managers who have responsibility of an outsourcing team could assist in this and aligned partners are accustomed to dealing with the difficulties of working in different time zones.

The morale of the company

A majority of outsourcing isn’t designed to replace employees in-house however, it is often used in conjunction in order to increase the headcount internal. However, some employees might consider outsourcing an obstacle to their position within the company. This could result in a decline in productivity, and even a refusal to incorporate an outsourcing partner in the team. A clear communication from leaders and management is vital to explain the function outsourcing can play and how it affects each team member.


Concerns regarding the quality of code are not unfounded. Many development companies around the globe employ inexperienced developers who are not able to interact with clients or present the idea to an “A team” before transferring the project in a short time to developers with less experience (a technique referred to “bait and switch”).