Why Do You Need IT Outsourcing? 7 Top Benefits [Based on Our FinTech App]

Through the last 3 years, IT outsourcing's global value remains at the level of over $60 billion per year. Those numbers say that delegation of software development to the external IT resources is a stable tendency. IT outsourcing allows hiring high-quality developers to build any kind of software. That means anyone can become an app owner without knowing how to code.

Table of Contents:

1. When outsourcing of IT service is a good idea?

2. Let's take a look at the Alibaba example.

3. What are the top IT outsourcing benefits?

4. How do we handle the outsourcing challenges at Railwaymen?

5. Conclusion.

When outsourcing of IT service is a good idea?

IT outsourcing is a perfect solution for any company that does not have an IT background or can not afford to hire the development team in-house. Using an external IT company is a good idea when the project has defined time and scope. In that case, building an internal IT team is not profitable. It will raise a problem - what to do with hired coders after closing the IT project.

Does it mean those robust companies, that can afford to hire programmers in a long-time perspective, skip the outsourcing? No, they don't. Great companies like Google, Alibaba, WhatsApp, Skype, or Slack also delegate some of their work. Why? They want to grow faster. This approach is more productive.

Let's take a look at the Alibaba example

They started as a small e-commerce company. The business environment established to be demanding. In that time, China faced a lack of dev talents. Jack Ma quickly realized that he needs to hire programmers from the USA. Thanks to outsourcing, the Founder of Alibaba was able to build sustainable e-commerce infrastructure and become a market leader.

Now, imagine that your digital business can develop in any direction you will want and need. Imagine that every (even the most advanced) feature can be implemented and you don’t have to worry about founding employees. Sounds great, isn't it? You can hire the most talented developers right away and make this vision come true.

What are the top IT outsourcing benefits?

Let's take a look at the top business advantages of software development outsourcing. I will explain the benefits of IT outsourcing on our FinTech web app CostTracker example. It will help you understand why so many companies decide to cooperate with external software firms.

#1 Cheaper than in-house programming team

I know that at first glance, you may think that external IT service is an expensive deal. Hiring a full-time software developer in-house may seem to be a cheaper option, but is it true?

First of all, you have to take into consideration the costs of recruitment and hiring. Nowadays, programmers are one of the most wanted groups of employees. Your salary proposition has to be competitive otherwise, it won't be interesting. I also advise you to prepare for a rather long-time recruitment process because the job market still suffers from a deficiency of developers.

Secondly, you have to acknowledge the risk of hiring not a proper person. Software development undoubtedly requires technical knowledge. Here comes my question, are you able to well-test whether potential developers have the skills on the right level? At software houses, during the recruitment process, we pay strong attention to checking whether the coder can write a clean & reliable code. That's why experienced Senior Developers, CTO and CEO are also involved in recruitment. Building a team of talented people is our priority.

To build CostTracker (comprehensive cost management software), we ensured a complete team: Project Manager, Front-end Developer, two RoR Developers, UX/UI Designer, QA Specialist. It is not hard to guess that employing such a multitasking team in-house would be a time-consuming challenge.

#2 Better control of the costs

The software house will charge you for the number of work hours that team has to spend on your project. Before starting the project, you will receive an approximate hour cost. That knowledge will help you to run a project budget sensibly and effectively. Before starting the cooperation or next phase, you can consult the cost of a particular feature with a dedicated Project Manager that will estimate the price for you.

Furthermore, a good method, practiced by trustworthy IT companies, is to develop a Minimum Viable Product (also known as an MVP). This approach focused on releasing the most basic version of a product that still manages to deliver customer value. MVP has a significant impact on cost optimization because the IT team does not produce any unnecessary software components.

Let's take a closer look at other important costs. Building and launching a software product is only one of your business steps. Your application will require lifetime support, maintenance, and development. It's very likely that those tasks won't need a full-time job. A software company will work for you only if you need it. Cooperation with an IT company gives you flexibility.

CostTracker client knows the work hour valuation of each team member. It's easy to calculate the final costs. The client receives a detailed work report every week. Everything is transparent, no hidden or surprising charges.

#3 Easier project management

When it comes to running a software development project, the main challenge is to build a strong team and effectively control the tasks. Thanks to outsourcing, you don't have to continually keep your eyes on the whole IT team and talk with developers using the tech language. While running a project with an IT company, you will communicate to one person - a dedicated Project Manager (or in some cases - technical Team Lead).

Fragment of Railwaymen's review on Clutch.co posted by Tim Jones, Founder & CEO, LaunchMatic.

Outsourcing gives you flexibility. How? Usually, software companies use Agile Software Development (one of the most effective methods of project management for app development). With the Agile method, the application is built in a series of interactions (sprints) that divide complex projects into smaller pieces. Sprints make IT projects more manageable, give teams flexibility, help developers to adapt and implement changes.

We are flexible, our clients can choose whether they prefer contact with technical Team Lead or Project Manager. In technical cases, CostTracker client contact the RoR Team Lead. To talk about organizational things, client contact with the Project Manager. Task management goes through Jira (an Agile Project Management online tool), where the client has an ongoing overview of the project and sprints. Team Lead manages the tasks and assigns them to developers. The client gives feedback to every finished task. He can approve or reject it. For daily communication, we use Slack.

#4 Access to IT know-how

Outsourcing gives you access to expert knowledge and experience. That is the point. You don't have to figure out which technology will be the best for your project or how to design a layout that matches the latest app trends. The software partner will do research and offer the best solutions for you.

As I mentioned above, our HR Department strongly focuses on building a harmonious and talented team. Our Ruby on Rails developer even built a dedicated HR tool for us called Evally. The employees' rotation at Railwaymen is almost zero ;) During the +10 years of our experience, we launched over 100 applications, fixed thousands of bugs, and designed hundreds of prototypes. We know how to develop apps from scratch. This knowledge is available to our clients.

We encourage preparing well for the software development process. That's why our Business Efficiency Specialists willingly organize free Workshops for our potential clients. During those Workshops, we share our know-how and help to build Software Strategy. The goal is to understand everyone's perspective and outline the next steps.

To successfully start the CostTracker project, we organized introducing workshops with the whole development team to discuss all product details and goals. At some stages of the app development process, we implement the UX/UI design and Quality Assurance service because this project needs it. As a software house with systematized departments, we can guarantee a wide range of services.

#5 Higher quality of the product

According to Startup Grind, low-quality development, QA issues, and user unfriendliness are the reasons why a massive number of mobile apps fail. Well, quality is essential, no doubt about that. I want you to understand one thing. Your application has to be well planned and well-coded if you wish to succeed.

App development is a costly process. I am aware that outsourcing to India is tempting because of the low price. But believe me, from time to time, we do receive queries, like "Will you fix my app made in India?". Our answer is: it depends. First of all, we have to check whether it is possible. Yeahh, sometimes the application has so low code quality that it is more profitable to build it from scratch again.

How to avoid quality app disaster?

 Before you start a project, you can check the experience of a team that will work for you. It's a common practice. At Railwaymen, we often send an employee overview to our future clients. It includes a description of skills and experience and a list of the finished project. My other advice is to choose the company that runs projects with the Agile method because it is more bug detection oriented.

Fragment of Railwaymen's proposal to the client.

During the CostTracker app development process, our Quality Assurance Specialist (using the best tools for QA software testing) verified whether each aspect of the application is working correctly and the experience of using the application. Any detected abnormalities were immediately reported to the Developers.

#6 Higher level of product security

Cybersecurity is a must-have for every digital product. Unfortunately, some app owners don't pay enough attention to it. The Veracode's State of Software Security Report 2019 says that 83% of 85,000 tested applications of apps have one security flaw on the initial scan.

App security should be a part of the project from the very beginning. I need to mention the Agile method again because it's an ally of security. It allows checking whether the app needs improvement on any stage of the project. We have some well-tested security practices. Our Developers efficiently cooperates with QA Specialists through Kanban boards. We have one rule: the quicker we'll find and fix security issues, the safer product will be.

CostTracker is a financial application with sensitive data that allows real-time tracking of budget and costs for companies. We had to ensure a very high-security level by building a strong product core and testing the app during the work sprints. Our team implemented, among others, advanced passwords, session expire time, and two-factor authentication. New safety functions are underway.

#7 Suitable environment for business growth

Outsourcing saves your time, and I'm sure you know that in business, time is money. While the external team is working on your application, you can focus on your core business areas, like polishing your monetization or marketing strategy.

Well, the product development in-house will require more attention from you. You'll have to become a technology specialist and make challenging decisions. Cooperation with a software house will take away a lot of responsibility and engagement from you because you'll receive professional support.

For example, our company assists clients from start to finish. We can organize a research period preceding app development called the Discovery Phase. Here's how it looks like:

Discovery Phase part I:

1. Initial workshops
2. Background Research:
• Statistics
• Target groups definition
• Competition analysis
3. Update Call
4. User Personas and User Journeys:
• Creating User Personas
• Finding user needs
• motivations and frustrations
• Creating user journeys
• High-level app flow

Attendees: UX Designer, Product Person

Discovery Phase part II:

1. Feature workshops
2. Features Brainstorming:
• Initial tech estimate
• Business considerations (eg. monetization)
• Rating feature value (MOSCOW)
3. Update Call
4. User Stories:
• UML
• Use case diagram
• Activity Diagram
• Communication Diagram

Attendees: UX Designer, Product Person Developer

Discovery Phase part III:

1. Initial workshops
2. Lo-Fi Wireframes
3. Technical Research:
• Tech Constraints
• Technologies used
• Proposed architecture
• Integrations
4. Non-technical requirements (HIPAA,GDPR etc.)

Attendees: UX Designer, Developers

After finishing the development process and launching the product, it will need reliable maintenance and programming support. The question is are you ready to handle it for a long-time perspective? We are.

While we're coding, CostTracker concentrates on implementing an effective sales strategy, acquiring new customers or Content Marketing and blog articles.

How do we handle the outsourcing challenges at Railwaymen?

IT outsourcing gives a lot of possibilities and benefits, but there are some challenges. I am sure you are wondering how do we handle time zones and distance; is it possible to overcome the language and cultural barriers, or how do our clients have full control over the projects.

In our portfolio, you can find cases from all over the world that require flexibility from us. Sometimes we have to handle some cultural differences like different non-working days or time zones. Communication is the key to success. We adapt to customers' preferences by asking how they would like to communicate and choose the best solution. We mainly use Google Meet, Skype, Slack, Zoom, and Jira for conversations and task management.

We get a lot of cooperation oriented questions. That's why we have written an article that answers the FAQ. You can read it right here:

Conclusion

Don't be afraid of outsourcing. It can give you more benefits than you think. When it comes to outsourcing for IT, there are plenty of examples when great companies scaled their business thanks to transferring duties to external firms. Actually, many of them are global leaders right now. From our experience we observe that small businesses who don't have IT resources also willingly choose outsourcing. What is the greatest about outsourcing? It allows expanding a business without running the recruitment, hiring employees, buying equipment, and renting an office.

Do you think about IT outsourcing? Consider the following points:

1. Look at your business, how digitalization can improve it?
2. Calculate the cost of creating an IT team in-house.
3. Do the research and ask a few software companies about project cost estimation.
4. Go through this article again and analyze how the benefits of outsourcing can impact your company.
5. Compare the cost-effectiveness, benefits, and risks associated with IT outsourcing.

For us, as a software house, IT outsourcing is about building a win-win relationship. We hire talents that can work for your success. I advise you to think about which services ensured by a software house can improve your business. Relieves of many duties and flexibility are the main benefits of outsourcing. IT outsourcing allows you to find the right technology developers within a specific budget.

I hope that after reading this article, you see outsourcing as a great chance to magnify your business resources. Starting the app development process could be challenging, especially for a non-technical person. This guide will show you the successful way:

Checklist - What You Have To Do To Start The App Development Project?

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