What is Outsourcing Software Development?
Outsourcing Software Development is the method of having a company’s work done, e.g. small projects, day-to-day tasks, etc. by another company mainly for conservation of resources. This is a well-known concept that is accepted and implemented by companies all around the world. Executives are starting to show more and more interest in having their work outsourced due to the benefits that accompany it. Tech giants like IBM, Intel, Amazon, etc. have openly portrayed their inclination toward having their short-term projects outsourced.
Outsourcing Software is mainly of two types:
This is a type of outsourcing where companies look to hire either freelance professionals or companies from overseas. This is the more commonly preferred type of outsourcing for the UK and USA as wages there are much higher than in other less-developed countries like India and Vietnam. Software developers get paid almost ten times less in these countries than in the UK and USA.
This is the second type of outsourcing where companies look to hire other companies or freelancers from within their home country. This type also has its charms, in that it enables a more active collaboration between the two parties and eliminates language barriers.
All in all, outsourcing is viewed as a cost-saving alternative. It allows businesses to focus on their core competencies by offloading their non-core functions to outsourcing providers in low-cost countries such as India.
What is Insourcing?
Insourcing is a business practice where work that a company would normally contract out is performed in-house. Essentially, insourcing entails bringing in experts to fulfil momentary requirements or training the existing employees to perform tasks that would otherwise have
been outsourced. Insourcing is a newfound concept that stands in direct competition with outsourcing. It will inevitably lead to better management control and job creation at the local level. Insourcing is also an effective solution to the hidden costs that are typically associated with outsourcing. Predominantly with manufacturing companies that usually hire labour and other services from external administrations, insourcing is a more approachable technique solely for effectively cutting down on costs and reducing tax burdens.
Outsourcing Vs Insourcing
Here is a direct comparison between outsourcing and insourcing.
When you opt for outsourcing work, you end up with an already managed team. However, regarding insourcing, you will have to recruit, hire, train, and manage the team all by yourself. It is only with outsourcing that you will be able to prioritize your company’s core competencies.
Cost The wages of software developers in India are nothing compared to how much they are in the US. You might be surprised when you become aware of the fact that outsourcing can cut down your IT costs by over 30%. Outsourcing is the way to go for you if you are looking to cut down on your overall expenditure.
By outsourcing services such as customer care to a company located in a different country, you can offer 24/7 customer support at very cheap rates. Compared to this, one would have to spend a lot on insourcing 24/7 customer care support. Infrastructure Costs: You need to free up space for an office if you decide to do insourcing. Also, you would have to invest in office equipment. Moreover, insourcing adds an extra burden of state and federal taxes. Outsourcing has no such issues.
Between the two, outsourcing undoubtedly offers your business significant tax and cost benefits. Moreover, if you opt for a company from a varying time zone, you can have your business 24/7 online.