Outsourcing Software Development: Pros, Cons & Essential Features

According to data from Medium, 82% of businesses worldwide outsource development tasks to reduce costs and gain easier access to top talent. They also receive a reliable digital product without the time and expense of hiring an in-house team of professionals. This is particularly relevant for small and medium-sized projects, as well as IT solutions with tight release deadlines.

Hiring an outsourcing company is a complex issue, so experts from Lampa Software have identified key points to share with you. From the article, you will learn what outsourcing software development is, along with the pros and cons of such collaboration. We will also discuss the best geographical regions for hiring an external IT team.

Understanding the Concept of "Outsourcing" and Its Popularity Reasons

Outsourcing is a collaboration model between a client company and a contractor company in which the client receives one or more specialists to work on their project.

For example, suppose you need to create two mobile applications – one for the iOS platform and the other for Android – but there are no mobile app developers with the necessary expertise on your team. In that case, you can turn to an outsourcing agency. They will provide you with the required iOS and Android developers for the entire duration of the project.

The contractor company takes on the responsibility of selecting specialists and providing them with workspaces and the necessary equipment. This is one of the most significant benefits of outsourcing software development since it allows you to save significantly on hiring developers in-house. Additionally, outsourcing is the best option for companies that do not have a technical team but require developing a digital product.

Before delving into the pros and cons of outsourcing software development, it is important to understand the current situation in the IT service provider hiring market in 2023. Based on Statista's forecasts, the annual growth rate of this industry from 2023 to 2028 will be 8.61%, and by 2028, the global IT outsourcing market is expected to reach $240 billion. Experts also believe that by the end of 2023, the average expenses for one remote worker will be $45.58.

Despite the mass layoffs of technical personnel from corporations such as Meta, Netflix, and others last year, the demand for remote developers remains high. In terms of macroeconomics, outsourcing services continue to be in demand. Despite some downsides of outsourcing, this working format is still more economically beneficial for businesses.

Advantages of Outsourcing Software Development

Companies in need of software choose to hire remote developers for various reasons. Therefore, let's examine the essential advantages of outsourcing software development, which many business owners opt for this collaboration model:

  • Cost Reduction: Outsourcing helps reduce expenses on salaries, office space, and infrastructure. This model provides access to specialized experts without hiring them as full-time employees.

  • Access to Top Talent: IT contractors typically employ highly qualified and licensed specialists in various product development areas, offering expertise to fulfill your project requirements.

  • Fast and Reliable Development: Specialized teams can respond quickly to project changes, ensuring high efficiency, reliability, and prompt task completion.

  • Focus on Other Business Needs: By outsourcing development responsibilities, you free up time for other aspects of work. For instance, you can concentrate on marketing your future product, finding new advertising platforms, and more.

  • Scalability and Time Savings: Outsourcing companies can easily adjust team sizes as per project needs, providing flexibility and saving time compared to recruiting additional specialists independently.

  • High Development Quality: Professional IT companies adhere to strict quality standards and established project control processes, ensuring you receive a high-quality software product.

  • Risk Mitigation: External developer teams usually have extensive experience in solving various issues related to digital product development, minimizing project-related risks, and avoiding downtime due to unexpected problems.

  • Post-Release Support and Maintenance: Most outsourcing agencies offer post-sales technical support and maintenance services. They also assist in releasing updates, a crucial part of long-term software operations.

All these advantages of software outsourcing guarantee the creation of a reliable, high-performance product. Additionally, you save not only time and money but also the effort needed to address other critical business tasks.

Disadvantages of Outsourcing Software Development

Like any collaboration model, outsourcing IT has its pros and cons. To fully understand this topic, we suggest familiarizing yourself with the main drawbacks of partnering with external developers:

  • Development Control Complexity: When working with a remote team, you cannot physically oversee every process or personally monitor task execution. This can lead to discrepancies between the implemented product and your expectations.

  • Data Leakage Risk: Collaborating with foreign IT companies can be risky due to the potential leakage of confidential information or its transfer to third parties. However, you can mitigate this issue by selecting a trusted company through a careful review of testimonials, portfolios, and ratings on independent freelancer platforms.

  • Communication Challenges: Differences in time zones and language barriers can result in misunderstandings. This disadvantage of outsourcing is associated with disruptions in effective communication between your team and the IT team, potentially causing organizational difficulties.

  • Possible Work Delays: Misunderstandings or communication problems can lead to extended development times. This is especially problematic when urgent changes are required in the product.

  • Cultural Mismatch: Variations in cultural values, traditions, and working methods can affect your collaboration with the IT company. Thus, differing perceptions of work processes can impact results.

Which of the following is an important disadvantage of outsourcing? Here, the decision is yours, as every project has its own requirements. To compensate for drawbacks like cultural mismatch or time zone differences, consider selecting an in-house team of developers in your region. You can mitigate other weaknesses by discussing all terms at the outset and clearly specifying them in the contract, as well as by signing an NDA to ensure data security.

Outsourcing Software Development: Service Costs by Country

After examining the pros and cons of outsourcing IT services, let's move on to a more practical question—their costs. You have access to talents from all over the world. However, depending on the economic situation, tax burdens, and similar factors, the price for the same specialist's work can vary significantly.

Consider the table of approximate hourly rates for outsourcing developers based on their region of residence:

Region

Average Cost

North America (USA and Canada)

From $50 to $250

Western Europe (United Kingdom, Germany, France, and others)

From $50 to $150

Eastern Europe (Ukraine, Poland, Romania, and others)

From $20 to $60

Latin America (Argentina, Brazil, and others)

From $20 to $50


Asia (India, China, and others)

From $10 to $60


By weighing all the pros and cons of outsourcing and analyzing the prices, you can make a more informed decision about whether this collaboration model suits your needs.

Why Should You Choose a Ukrainian IT Company?

When you hire Ukrainian professionals, you gain several advantages of outsourcing:

  • Cost-Effectiveness: Despite being highly skilled experts, Ukrainian specialists offer their services at a moderate price. The hourly rate for a programmer here typically ranges from $25 to $35, which is much more cost-effective than their American or Western European counterparts.

  • Deep Technical Expertise: The knowledge and experience level of Ukrainian developers is on par with their peers in other countries. They are proficient in all major programming languages, including the most common ones like JavaScript, C++, and Python, as well as more specialized languages like Kotlin and Objective-C.

  • Language Proficiency: Since Ukrainian IT companies focus on collaborating with international partners, their English proficiency is quite high. For European clients, this significantly minimizes certain negatives of outsourcing.

  • Cultural Similarity and Schedule: Ukraine shares a close cultural affinity with European countries, facilitating communication and understanding of your project's requirements. Additionally, there is a slight time zone difference with Western Europe, ensuring convenient cooperation and communication. In the case of collaboration with companies from North America, specialists are readily adaptable to the conditions.

We Work for the Benefit of Ukraine

The Russian invasion in February 2022 shook our country but couldn't break us. Approximately 85-90% of Ukrainian IT company employees resumed their work as soon as they reached safety. This includes our software development company, Lampa Software, which has become even more united and active in the professional arena.

Like other Ukrainian enterprises, we are diligently working to support Ukraine's economy. By partnering with us, you are helping our country grow stronger and continue the fight for a free and peaceful life.

Contact our manager to learn more about our services.

Need professional assistance gathering all the required artifacts to build a mobile app? Order product ideation services from Lampa!

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