Pros and Cons of Hiring a Software Development Company
To succeed and flourish in today’s highly competitive landscape, IT businesses need to remain efficient and maximize the use of their resources. As a result, many opt to outsource software development to a dedicated company rather than hire an in-house development team.
While highly beneficial, the IT outsourcing market is huge, and it’s growing rapidly. In fact, it’s expected to surpass a trillion USD by 2030. With that in mind, the software development industry is highly competitive, and it’s vital to know what to expect so that you maximize your profits while minimizing risks.
Let’s take a look at some of the top advantages and disadvantages of hiring a software development company so that you can make an informed decision that aligns with your business goals.
First, however, let’s clarify some terms, as they can get confusing.
Ways of Outsourcing Software Development
Outsourcing involves contracting 3rd-party professionals to execute specific tasks or projects. However, there are various options you can choose from:
- Offshoring: This method of outsourcing your IT projects means contacting a 3-rd party in a country that’s far away from yours. For example, if you are a US-based IT company, you may choose software developers in counties such as India, China, or the Philippines. Offshoring is a popular choice among many businesses due to its comparatively low costs. However, it often involves language and communication issues, security concerns, and time zone differences, to name a few.
- Nearshoring: This involves outsourcing to a country that is relatively close. For example, if you are a UK-based business, you would contract a software development company in a nearby country like Serbia, Ukraine, or Turkey. While overall costs may be slightly higher than in the case of offshoring, you usually deal with talent that is more culturally compatible, resulting in smoother communication and fewer differences.
- Onshoring: This option involves outsourcing software development projects to professionals in different locations within your own country. For instance, if your company is based in Texas, you may work with experts in Minnesota. While costs may be higher, they are still lower than hiring an in-house team. Moreover, you can support your local economy, don’t have to deal with foreign taxing policies, and don’t have cultural differences or language barriers to worry about.
Each of these models comes with its own pros and cons, and you must evaluate your business goals and budget to make the most suitable decision.
Advantages of Hiring a Software Development Company
1. Access to a Broader Talent Pool
One of the greatest advantages of hiring an external software development company is that you have a broader choice. Since you are not constrained to a physical location, you can find a software development team that not only has the right qualifications and masters the technology stack you are looking for but also has extensive expertise in the industry that is relevant to you.
This means that you can opt for software developers that are not only highly skilled but are familiar with the latest technology developments and industry trends, maximizing the potential of having a successful project outcome.
2. Technical Expertise
As you have access to a vast talent pool, you can entrust your software project to a development company that has the right skills and expertise. With over 20 million developers worldwide, you can find professionals who have the exact expertise you require.
3. Flexibility
When hiring a dedicated software development company, you are in charge of your project. However, you are not expected to cover fixed salaries and overhead costs. This allows you to scale your project up and down with significantly more ease.
As a result, you can work with fewer or more developers based on your project stage, as well as employ specific professionals at different stages of software development.
4. Faster Turnaround and Market Introduction
If you hire an in-house team, they will most likely require onboarding and training as well as time to learn any new skills your project may require. This can be a long and tedious process. Meanwhile, the IT field does not sleep and can rapidly advance while your in-house developers are still learning the ropes.
Meanwhile, a specialized software development company that you have carefully vetted can jump right into your project without requiring additional learning or training time.
This is also one of the reasons we recommend hiring a dedicated remote development team as opposed to individual talent. A dedicated team will have previously established chemistry and work processes, eliminating costly and time-consuming onboarding procedures.
5. Simplified Project Management
If you want software development to run smoothly and stay within the constraints of the time and budget you’ve set, project management is crucial. And with that, your software development team will need a project manager to plan, assess, and keep things moving in the most efficient way possible.
A project manager will also facilitate communication. So, instead of speaking to each team member to find who can solve a specific issue, you can simply converse with a project manager who will then take the lead on managing the execution of your request.
When you hire an expert software development company, it will come with a dedicated project manager. Besides respecting your budget and deadlines, a project manager will also implement various project management techniques, as well as set up and manage communication and project management channels, billing, and any relevant documents.
Overall, you’ll find your life much easier with a project manager. Thus, if a software development company you are considering does not come with one or suggests that you hire an external one, run.
6. Less Time and Money
Software development can burn a hole in your pocket if you let it. Hiring a dedicated remote software development company can help you save both time and money.
First, it’s significantly faster to hire and onboard an external software development company than to build your own in-house or remote team. This allows you to get started right away. Moreover, a dedicated team will have prior experience working with each other. So, they will know exactly when and with whom they are supposed to work and how.
That being said, well-established project management, project timeline, and communication are vital. Since you aren’t working alongside your developers, some can and will take advantage of that by billing more than needed. This can be either deliberate or simply due to a lack of skill, and many IT companies learn it the hard way by hiring cheap talent and ending up paying more than expected for subpar services.
Last but not least, you won’t have to pay overhead costs to house an on-site team. This allows you to reduce your business expenses and only pay for software development and any relevant tools instead.
7. Fewer Risks
No one wants buggy software, and it can ruin your company’s reputation before you’re able to make a name for yourself. In addition to software development, a reputable software development company will also offer software testing services and after-release support.
This way, you can detect and mitigate risks before they cause permanent damage to your company’s reputation. And even if issues arise, you’re more likely to resolve them quickly and effectively with a dedicated software development team.
Disadvantages of Hiring a Software Development Company
1. Possible Hidden Costs
While outsourcing software development tends to be much cheaper, you need to be cautious of possible hidden costs. So, if you are scouting for a software development company and are offered a contract, make sure to read it thoroughly and watch out for any fine print. This can protect you against any unexpected costs.
Moreover, keep in mind that cheaper doesn’t mean better, especially for complex projects like software development. More often than not, you get what you pay for. So, it may seem compelling to hire $10/hour offshore developers. However, you may end up paying more in the long run. Meanwhile, $100/hour developers may seem extortionate at first but can end up completing the project much faster and at a lower total cost.
2. Increased Security and Business Risks
While you face few, if any, risks with a reputable software development company, things can get complicated if you hire the wrong talent.
Since many forms of software collect the personal data of their users, misuse of this data and data leaks can have a detrimental effect. For instance, the social media giant Meta was fined $276 million over a data leak that affected 533 million Facebook users and resulted in their phone numbers, location, and other personal data being exposed. While $276 million may not be such a big deal for Meta, data leaks and software vulnerabilities can cripple IT startups and small and medium businesses with limited budgets.
There is also the possibility of your developers exposing sensitive information or intellectual property specific to your project.
3. More Challenging Quality Control
If you don’t perform proper vetting, you may end up with a software development company that is more motivated by its profits rather than the quality of the services and solutions it offers. Therefore, do your due diligence and go through the reviews and portfolios of the companies you are considering.
4. Failure to Deliver
It’s not excluded that the software development company you hire fails to deliver. They may collect upfront costs and bounce without delivering work, fail to meet your requirements or expectations, deliver a faulty product, or become unresponsive. To avoid that, it’s essential to sign a contract and carefully read it beforehand. Choosing a software development company in a country with a reliable justice system is another approach that can protect you legally if you are taken advantage of.
5. Language Barriers and Cultural Differences
We advise that you hire software developers that are fluent in English and can maintain effortless conversations both orally and in written form. This will prevent miscommunication and misunderstandings that can negatively affect your relationship with them and project outcomes.
If your developers live and work in a different time zone, this can impact the speed at which decisions are made, and issues addressed. Choose nearshore or onshore software developers if you expect that to be an issue.
Additionally, be aware of cultural and political differences that could damage your communication and the software development project. This could be values, differences in opinions, and even holidays.
How to Avoid Risks When Hiring a Software Development Company
Despite the many advantages you can enjoy by hiring a software development company, risks are also real and can be detrimental. Now that you know what challenges you can run into, let’s delve into a few ways you can avoid them:
- Perform thorough vetting: Research the company’s technical abilities and examine their reviews and portfolio. Rely on open platforms such as Clutch or remote work marketplaces like Upwork for honest and transparent reviews.
- Ask for feedback from prior customers: When in doubt, request references of prior work and get prior clients’ opinions of their expertise, skills, collaboration, and project outcome.
- Sign a contract and an NDA: Make sure not to commence any work or transfer funds without signing a contract first. Moreover, an NDA can protect your intellectual property and prevent competitors from learning your trade secrets. If your company has a dedicated lawyer, have them read contacts first to detect any possible risks and loopholes. Or, even better, have a dedicated lawyer draft a contract that legally protects your company against threats. Alternatively, opt for remote work marketplaces which handle contacts, reviews, and taxes. Payment there usually occurs through Escrow which protects you against fraud and allows you to request a refund.
- Conduct virtual interviews: When searching for a software development company, arrange interviews with their leader or project manager as well as the developers. You’ll be able to assess their language skill and determine if you will get along long-term.
- Get to know your developers: Forgetting that your remote workers are just people is one of the top mistakes when hiring remote developers. Don’t hesitate to learn more about them, their culture, values, and interests. This will make working together more pleasant and prevent cultural misunderstandings. At the same time, remain professional. It’s business, after all.
Got a Software Development Idea that Needs Help?
Hiring remote software developers can be a challenge, and as a software development company that has vetted many professionals, we know that very well. So, if you need assistance with software development, we can help. With over seven years of experience, we pride ourselves in professionalism, expertise, and adherence to deadlines and budgets. Schedule a complimentary call to explore your possibilities.
