Advantages and Disadvantages of Outsourcing Software Development

Linh Nguyen

Linh Nguyen | 02/05/2024

Advantages and Disadvantages of Outsourcing Software Development

In this era of automation and artificial intelligence, the need for software development technologies is at an all-time high. This all-time high was tremendously accelerated over the last year due to the coronavirus pandemic, which made the need for a digital transformation more necessary than ever. While large companies have been tackling this head-on due to huge budgets, small and medium businesses are now coming on board and realizing that these technologies offer amazing benefits.

In these instances, it may be significantly more beneficial to outsource software development instead of wasting resources to achieve in-house software development.

Outsourcing has numerous advantages as well as disadvantages. The key to deciding whether you should outsource or not varies from situation to situation. This article seeks to assist those who are thinking about software outsourcing by outlining a few of the advantages and disadvantages of outsourcing software development.

Key Takeaways

  • Software development outsourcing is the practice of hiring third-party vendors to manage part or the entire development process on behalf of a company.
  • The biggest advantage of outsourcing software development is the access to specialized skills without the need to hire and train in-house staff.
  • Implementing robust strategies and clear communication can minimize risks and maximize profits through outsourcing IT development.

Advantages of Outsourcing Software Development

Advantages of Outsourcing Software Development

Access to a Wide Pool of Experts

The first pro of outsourcing software development is the opportunity to access a wider pool of world-class experts. Outsourcing your software development project gives you access to some of the top software development countries on the planet and their vast pool of experts. These software developers are all well-trained and have been in the business for years. They can substantially improve your business’s performance and skyrocket sales by implementing the necessary expertise using their particular set of skills to deliver outstanding results.

These days, outsourcing work is no longer only a good idea to save some extra money. It’s about finding the right talent at a reasonable price. For example, the price of hiring a US developer is pretty high. Furthermore, paying a higher price doesn’t always equal quality. Therefore, it’s not that companies can’t find devs in the US but rather because they want to find talented developers at a more reasonable price and leverage all the advantages of outsourcing software development.

Faster Turn-around Time

Relying on an in-house software engineering team, especially if they are still learning, can be a long and slow process. If you are in a competitive market, time is essential, and if you’re slacking, competitors can overtake that market. To maintain that competitive edge, outsourcing your software development project can always keep you one step ahead of the competition. In this instance, your employees can focus on their respective tasks, and the expert third-party vendor can work on the time-consuming tasks.

Due to time zone differences when partnering with outsourcing companies from offshore regions, businesses get the advantage of 24/7 support and operations. Even after working hours, the outsourcing team in a different time zone can actively work, ensuring continuous availability and coverage for their clients without interruptions.

Focus on Business Goals

One of the other advantages of outsourced software development is that it gives you free hands to prioritize primary business goals. With your software development project in the hands of experts, there is more time to focus on other core competencies of your business. You can strive to work on the business’s long-term goals and start implementing ways to achieve them. Benefits include strengthening and improving the core processes that help your company improve, which is a guaranteed step to continued success.

Reduce Risk

As with any project, the most critical factors are risk assessment and analysis. Many times, you will find that the software engineering outsourcing company may offer software testing services as well. This way, you can ensure that the software you introduce to the public or your employees is free from defects and works as it should.

As professionals in dealing with cybersecurity risks, the outsourcing partner has the ability to detect and eliminate vulnerabilities through data encryption and secure coding practices before they have a chance to happen. The expert’s ability to plan and mitigate potential risks will ensure your project goes as smoothly as possible.

In terms of protecting sensitive data, by implementing confidentiality agreements and non-disclosure agreements (NDAs), businesses can rest assured while ensuring all intellectual property and proprietary data shared with the outsourcing vendor is safe, adding an extra layer to data protection.

Cost Savings

Above all, the advantages of outsourcing software development include the lower cost when outsourcing any software development project, which is possibly the best one of all. An in-house software development team is excellent, but hiring local software developers can come at an unbeatable price. Upfront costs related to setting up IT infrastructure for full-time employees, like office space and software licenses or required benefits and training sections, all lead to financial considerations for business owners.

Outsourcing your software development projects has shown to be significantly lower than any in-house software development project. Clients just have to pay once for their contracts, and outsourcing partners can provide software development services at their fingertips due to specialization. This cost-effective solution can save your company a great deal of capital, which can be used to further enhance your business.

Simplify Project Management

Managing an offshore software engineering team can seem intimidating, but clarifying a few steps from the get-go can make managing the project easier. Most companies will schedule meetings and assign a team leader to report on the progression of the project as it goes through the various phases. This keeps you involved in the process so that in the event of a bump in the road, you’ll be kept in the loop.

Using outsourcing services also means that you have the advantage of leveraging third-party vendors’ communication channels and project management technologies. While effective communication channels help businesses facilitate regular updates and simplify project oversight, advanced project management tools and technologies optimize such processes for clients. This combination plays a vital role in simplifying the project management task as a whole.

Better Work Relationships

It is undeniable that close relationships among in-house developers are the foundation for great collaboration. However, such a high level of cohesion can occasionally lead to complacency or a lack of vigorous competition, potentially resulting in a dip in work quality if internal standards are not rigorously maintained. In contrast, outsourced software developers are out to make their stand and to prove to the world that they should be taken seriously. The benefits of this type of thinking involve the need to churn out the highest quality of work possible and create the best working relationships.

Expand and Grow

With the help of experts, the opportunity to expand and grow is highly possible. These individuals have years of experience and may advise you on different ways to leverage the outsourcing software development pros and grow your business. This also leads to several benefits and puts your business on a path you never thought possible. Not only can they guide you in new directions, but they can also execute those plans flawlessly.

Disadvantages of Outsourcing Software Development

Disadvantages of Outsourcing Software Development

Hidden Costs

There is no doubt that outsourcing your project can be cheaper. However, it is worth noting that you can still encounter an offshore company with hidden costs if partnering with an unreliable one. Some outsourcing companies whose pricing structures are too good to be true can be a clear sign of low-quality service. These third-party vendors may offer attractive service packages with initial quotes that do not fully disclose all expenses involved. This lack of transparency can result in unexpected costs emerging later in the project lifecycle, negatively impacting budget constraints.

Be sure to discuss everything from the beginning while you are still scouting for a software development company to mitigate the disadvantage of hidden costs. If offered a contract, read it thoroughly and pay extra attention to the fine print to save yourself from incurring additional costs.

Security Risks

In today’s world, misuse of personal data has had a crippling effect on many individuals and companies. The security risk is extremely high for your business when outsourcing projects that require the use of personal information. There is potential for that information to get misused and passed on to unauthorized persons who can wreak havoc on your customers and business.

It is recommended for businesses to conduct thorough due diligence when selecting outsourcing partners to eliminate these security risks. Once you have signed the contract, don’t forget to establish clear security standards in service level agreements and invest in ongoing monitoring to ensure a secure software development environment.

Quality Control

The reason you need to choose a well-established and highly recommended software engineering company is that you are going to be guaranteed favorable results. If the time is not taken to research the vendor before settling, you may end up with a company that is motivated by profit more than the quality of work they produce.

No matter how experienced the third party is, your lax quality management can lead to a subjective work attitude and lack of integrity. The diversity in the definition of quality standards and approaches by service users and a specific outsourcing company also leads to inconsistency and miscommunication in the cooperation process. In this situation, defining clear quality metrics in the initial phases and conducting regular reviews and audits are some of the solutions that help maintain high standards of software quality and performance.

Failure to Deliver

It can be dangerous to put your business’s financial well-being into the hands of another company. What happens if they fail to deliver? Have you received a refund for the amount you’ve paid thus far? Again, a good read of the contract if you were offered one should have stipulations for these situations. If not, be sure to ask these questions before you start the process of working together.

Public Backlash

Companies outsourcing work to overseas countries may face a public backlash if word gets out. Some consumers may take a moral stance against outsourcing. However, it is worth noting that no business can operate without the help of data. All businesses, at some point, will face public backlash, whether they outsource or not.

The core of this concern lies in how businesses manage, store, and use these assets to both achieve business purposes and serve user needs. By prioritizing transparency, ethical practices, and compliance with regulations, businesses minimize the likelihood of public backlash and maintain credibility in their outsourcing initiatives.

Time Zone Differences

Being stuck in different time zones is both an advantage and disadvantage of outsourcing. While time zone differences can potentially provide clients with 24/7 support, it can be hard to synchronize schedules to ensure that you’re in the loop all the time. If there is a need for something immediately or a question answered, the third-party vendor may be unreachable.

Companies can adopt strategies such as establishing clear communication protocols and tracking tools, scheduling regular asynchronous updates, leveraging collaboration tools for documentation and task tracking, and planning ahead for overlapping work hours to foster a culture of flexibility among development team members working across different time zones.

Lack of Focus

Outsourcing agencies and vendors may take on more than one client at a time. With multiple clients, your project runs the risk of not receiving the focus it needs to guarantee favorable results. This lack of focus and attention to detail can be detrimental to your business. This is why you need to pick carefully and find a reputable company that has a dedicated team for each client that they sign.

Things Get Lost in Translation

Outsourcing work to overseas companies via telephone or email can lead to things getting lost in translation. This is greatly increased because the native tongue of most software development companies’ employees may not be English.

However, as English gradually becomes the second language in most countries, finding individuals with basic, even fluent, English communication skills is no longer a problem in modern times. If collaborating with European countries where English is popular is too difficult due to their expensive service costs, you can consider more affordable resources in Vietnam, for example.

Moral Dilemma

Much like consumers, you may feel guilty about outsourcing your software development project rather than going with a local developer. This personal moral dilemma can evoke feelings of guilt when you realize you are not contributing to the economic growth of your community or country. However, it’s important to recognize that outsourcing software development is not a meaningless solution but a strategic decision driven by multiple factors such as cost-efficiency, access to specialized skills, and global competitiveness.



In the end, there are numerous benefits and risks involved in outsourcing your software development projects. The advantages and disadvantages of outsourcing software development will vary from project to project. Remember to weigh the pros and cons of outsourcing before deciding to outsource your project. If the pros of outsourcing outweigh the cons, then move ahead with finding an offshore software development company to get started. However, if the cons of outsourcing heavily outweigh the pros, then we’d recommend you stay on the safe side and assign your project to an in-house or local software developer.

However, if you look at the problems related to outsourcing directly, you can easily see that most of them originate from the mistake of choosing the wrong partner. This further highlights the importance of the third-party vendor evaluation process. As a reliable software development outsourcing company, Orient Software has an extensive proven track record spanning almost two decades, proving its capacity and service quality in the technology industry. Visit our website for reference, or contact us now to receive a free quote and discuss how we can help your business grow.

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