IT Outsourcing: 8 Pros and Cons [2024]

Introduction

Have you been considering product development outsourcing or just outsourcing some tasks or projects? This approach can have both advantages (starting from benefits of product development, through efficiency, talented staff, and savings) and disadvantages (risk, challenges with intellectual property or final lack of expertise in-house).

As the market in 2018 showed, there is great growth in outsourcing and it is not projected to stop in the nearest future. Now is the best time to learn more about this practice. We think that to choose right is to know the pros and cons of something and its effect on business, companies’ growth and global economy.

The truth is that you can spot many advantages of outsourcing and at the same time there are some prerequisites to keeping it seamless. So let’s start the comparison!

Advantages of outsourcing an IT team

Keeping developers in-house is not your concern

When outsourcing a team of developers, you do not have to hire anybody – just sign a contract. It means that you can save on employment, training, and employee benefits. The employed developers that work in your team on their own on products and solutions for you, are not on your payroll, and you have just partial responsibility for them.

Large talent pool

When you start looking for a developer to hire, you have got limited access to the right potential employees. If you need a specialist, like someone proficient in React, then you need to expand your search. Fewer options often end up in a compromise – and you do not want that. Thanks to IT outsourcing, you can access talents worldwide and find the skills that you need in your team or project.

Better choice, lower costs

Statistically, 300,000 jobs are outsourced each year in the United States. No wonder so many companies have reasons to look for support, especially in development with high quality and lower rates. You don’t have to trade price over quality anymore, outsourcing allows you to level them out.

Managing risk better

Outsourcing in the IT sector allows you to reduce risks connected with employment and employees who quit unexpectedly, which can be tiresome and time-consuming for your business. Instead of an employment contract, you sign a B2B contract. Such a B2B relation limits the potential organizational liability. Even though you cooperate with individuals at the end instead of businesses, the specific rules provide security against litigation, better terms, and conditions as it comes to responsibility and deployment on time.

Faster delivery cycle

Thanks to IT outsourcing, you can have more developers working on your project for lower costs – it improves the speed of delivering the product and achieving goals on time. For sure, the quality will not suffer upon such a fast cycle of product delivery, everything lies in the proper relationship within a team and focusing on the final deployment.

What’s more, the optimization of resources and workforce allows you to spend more time on management, coaching, and planning. While outsourcing part of the tasks, you stay focused on the core activity in your company.

Disadvantages of IT outsourcing a team of developers

What about the security of my company’s data?

When it comes to sharing data – it is always risky. Remember that when you choose an outsourcing partner, choose wisely. Ask about storing, processing and protecting data before you sign the contract. Later on, control what you share during a current phase of a project and ask who has got the access to particular information, it is the best thing to do in such cooperation to stay effective and safe.

It is already happening that IT outsourcing companies are becoming data or systems integrators and long-term partners to many customers. So focusing on quality, safety to deliver competitive value should be brought into the foreground even more now.

Intellectual Property (IP) – who possesses it?

The thing with outsourcing is that another company is in the possession of the IP. Despite the fact that some protections of the intellectual property are put down in the contract, you cannot be 100% sure that outsourcing or offshoring will protect it. This is why it is essential to be diligent when it comes to the research and the final choice of an IT outsourcing company.

Expertise is built outside your company

Experience gained and expertise learned while working on a project and finding solutions are the most precious. When you outsource, the expertise stays outside when the contract ends. You gain just the solution while outsourcing, the expertise gained stays where it was built, that is with your partner.

The risk is you won’t have the expertise for future projects within the company or any further implementations in the outsourced project, and you’ll always have to rely on your partner.

So you should challenge the situation where there is the risk that nobody in your team will know the technical details of the product. But do not lose hope. Again, choose your outsourcing partner wisely. Professional IT outsourcing companies allow their clients instant and constant access to their teams, tools, repositories and show the status of the project. Also, there are companies that support their clients in building their own local teams when it is needed.

Conclusion

IT outsourcing can give you great competitive advantages – just remember to choose reasonably and remember about a few things to reach satisfactory effects. One of the most important steps to take is building a long-term partnership.

Some executives do not take outsourcing seriously, thinking that extracting a high-value solution can be built cheaply and quickly. Theoretically, it is possible, but you have to have a long-term plan in your mind. Both parties of the outsourcing contract should be satisfied with the cooperation, clear communication, and mutual trust.

Remote, outsourced work varies from working with an in-house development team in an office, it has many faces. The decision of cooperating with outsourced developers should be based on your team’s needs and your leadership skills and personality – it should make your work easier, not harder.