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Anna Kowal
Agile Project Manager
28.07.2023 | 5 min

5 Reasons Why Companies Outsource Their IT

No matter the size, industry, or type of company, everyone across the entire globe outsources IT. Over the years, it has become a standard for all kinds of software development. The model is widely utilized for everything, from simple proof of concept and MVP projects to massive applications with high budgets and even bigger stakes. The question is why? Why companies are so eager to put their trust in other teams? What makes this model so appealing? And finally, why do so few companies decide to build their own software development departments? These are the questions we’ll answer in this article.

5 Reasons Why Companies Outsource Their IT - 2024 20
Table of Contents
  • Why Do Companies Outsource IT Instead of Forming Their Own Software Teams?
  • How to Choose the Right Outsourcing Partner?
  • Still in Doubt? 

The state of software development in the year 2024 indicates that we’re well past adolescence and into the adulthood of the industry. With the popularization of Scrum and the growing domination of a few most popular technologies, it feels like the sense of establishment is stronger than ever. And one especially well-established thing is that IT outsourcing usually makes much more sense than building an in-house software team. 

At the same time, more and more businesses are being pushed into the software element, including those that previously only needed a social media profile. The demand for digital presence is growing, and the tendency is only going to grow. 

And with all those trends coming together, the demand for IT outsourcing is at its peak. The market is expected to grow from $430 billion to more than $587 billion by 2027, according to Statista. 

But enough of that, let’s move to the topic at hand.

Why Do Companies Outsource IT Instead of Forming Their Own Software Teams?

1. Cost Reduction

This reason alone is enough for a vast majority of companies. The best way to explain the immense cost of starting a development team is to explain the process in detail. 

First, there’s recruitment. The software development job market is infamous for the massive costs and time required to find the right group of people for a project. And we’re not only talking about developers. More often than not, you’ll need additional positions, including scrum master, graphic designer, UX/UI specialist, DevOps, and possibly more. The incredibly high demand for those kinds of specialists makes the job very difficult and time-consuming. Of course, you can hire a headhunting company to do all that for you on time. But you’ll probably end up with little to no budget for everything else.

Now, let’s say you’ve managed to assemble a team. What’s next? 

Well, quite a lot, actually.

We must remember that development teams don’t simply exist and function like a set of perfectly matched gears. They require training, team building, equipment, infrastructure, HR, benefits, and all the other elements that come with hiring full-time employees. 

It’s a massive investment that doesn’t make sense for most projects and businesses. Especially when the outsourcing alternative covers all those aspects and comes with significant advantages, which we’ll talk about next. 

2. Easier Access To Experienced Specialists and Advanced Technologies

The main reason why IT recruitment is so costly is the super high demand for skilled specialists. There’s simply not enough of them available, especially if we’re looking for people with a specific skill set. The most experienced developers and designers usually aren’t looking for a job, so there’s a chance that a perfect match for you is just out of your reach. And we’re not only talking about the programming expertise.

For example, as a software house specializing in energy software, we have a group of highly experienced developers who worked on several similar projects. Whenever we’re approached by new clients from the energy industry, we provide them with much more than software development expertise. We have a great understanding of their unique challenges, and we can offer valuable insights from our extensive experience with similar companies. That makes the entire process much more efficient and gives much better results.

But that’s not all. Besides industry expertise and coding skills, IT outsourcing can help mitigate various risks associated with technology operations. Software houses often have robust security measures, recovery procedures, and backup systems in case anything goes wrong. Taking care of those aspects for a newly created development team would require a massive amount of work that wouldn’t go into the actual product. 

3. Faster Time to Market

Thanks to outsourcing, you can eliminate or at least optimize a lot of difficult and time-consuming initial processes, such as:

  • Recruitment 
  • Onboarding 
  • Training
  • Team building

Outsourcing skips a lot of those processes and allows you to go straight to the discovery phase and MVP development. 

But it’s not even half of it. Perhaps an even more important advantage from the time-to-market standpoint comes in the actual development process.

Companies specializing in IT outsourcing have (or at least should have) a verified, efficient process for all phases and aspects of software development. From the concept phase to smoothly going agile workflow, a good outsourcing company provides you with a clear and efficient process. With all that, you can release your product significantly faster. 

4. Scalability and Flexibility

Outsourcing gives companies a lot of freedom in terms of scaling, both up and down, depending on the situation. Whether you need to increase the team for a rapidly growing project or scale it down in case the app is only in maintenance mode, outsourcing makes the process straightforward and incomparably less costly than an in-house team. 

More importantly, most software houses can provide you with much more competencies than just software development. A vast majority of good software houses can periodically support you with designers, UX/UI specialists, and even a product owner. 

And finally, it’s necessary to point out that outsourcing doesn’t have to be the final solution. Quite often, it’s only the starting option for the most challenging phases of the product’s lifecycle. As soon as the difficult part is over, companies often choose to create their own small development teams just to maintain the product and do all the necessary updates. 

5. Do What You Do Best, and Outsource the Rest

As we’ve pointed out a few times already, it doesn’t only take skilled and experienced programmers to build an efficient software development team. There are all those team-building aspects and development process procedures that are necessary to create good software efficiently. 

By outsourcing IT functions, you can focus on their core competencies and strategic initiatives. It allows you to allocate internal resources and attention to areas that directly contribute to business objectives while leaving IT-related tasks to those who know their stuff.

How to Choose the Right Outsourcing Partner?

There are quite a lot of aspects that you should factor in when choosing the company to develop your project. 

On the technical side, you should make sure that a team has the experience and the necessary skill set to deliver your kind of project. In order to ensure that, you can take a look at who they’ve worked with previously and read their Clutch reviews and case studies

There’s also the often-overlooked aspect of cultural compatibility. Working with a team that shares your views and work ethic makes a world of difference, especially if you have a complex project. 

Still in Doubt? 

That’s perfectly fair. I’m sure you still have some questions about the process, workflow, our approach, etc. 

We’ll gladly answer all questions you might have. If you’re interested in working with us, let's have a call

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