Outsourced Software Development: Why It's Set to Grow in the Future

INNOVATION | 03 Dec 2019

The software development sector is growing fast. Every day new opportunities, languages and projects are developing as commercial requirements diversify and multiply across new industries and sectors. As a result, companies are now looking to the likes of outsourced software development teams as a way of meeting their increased demand - and this is only set to become more common in the future. 

With the demand for developers higher than ever, companies will increasingly look at outsourced software development as a way of delivering quality technical projects at an accelerated pace. 

In this blog, we take a look at the reasons why outsourced software development is set to grow and the opportunities this will create in the sector. 

Why Outsourced Software Development Is on the Rise


The rise of outsourced software development over the past 5 years has been monumental. With a combination of factors creating a perfect storm of demand, the sector has geographically expanded, technically diversified and embraced the change in mindset around remote working.

New Countries Are Offering Outsourced Software Development Resources


Traditionally, outsourced software development teams have come from Central/Eastern/Southern Europe, the Balkans and the Baltics, but increasingly, high quality resources are being sourced from alternative regions. Both Latin American and Africa are showing positive signs of growth in this area with a strong community of talented engineering talent. 

While new regions are offering added competition for outsourced software development projects, others are restructuring to enhance the technical value and capabilities they can offer. Serbia is a great example of such a country, reworking its infrastructure at the political and technical level to maximize its technical capabilities and the number of technical experts it produces. 

The Technical Development Field Is Diversifying


There are now more technologies, languages and technical niches than ever before. The rapid emergence of Blockchain and the Internet of Things shows how quickly new opportunities are developing. Taking these two sectors as an example, both require hard to find skill sets, and as a result, companies are looking further afield to find the technical knowledge and capabilities they need. This issue of representative of most new technologies. Outsourced software development teams are seeing these gaps and specialising in order to offer the highly specific skills and knowledge companies need to deliver. 

Technology Is Enabling the Remote Working Model 


Over the years, effective remote communication and working has become significantly easier. With video calling now nothing but a simple formality, the logistical challenges of the past are no longer barriers to preventing a fruitful long distance development relationship. Regular remote communication is now simple, easy and effective. This has allowed for stronger relationships to develop, enhancing the productivity and quality of remote working partnerships. 

The Challenges of Growth in Outsourced Software Development


As the outsourced software development sector develops, growing pains are likely to occur that may hinder the success of technical projects. 

Identifying Good Developers From the Bad Will Become More Difficult


While growth in outsourced software development teams is undoubtedly a good thing for the sector, it’s likely challenges will arise that potentially undermine the opportunities. As more teams enter the market, identifying quality is likely to get much harder. They say the cream always rises to the top, but you don’t want to be engaged with a partner who underdelivers for 12 months before you find it. With this challenge in mind, it’s more important than ever to properly audit potential development partners and conduct proper due diligence before committing to a project. 

Finding the Necessary Skill Sets Will Get Harder 


As the market becomes increasingly fragmented, finding high quality development skills will naturally be much more challenging. The supply of active developers covering more wide ranging technologies is already below the level of demand and if these generalists start to specialise in highly specific areas, then finding good quality developers focused on more common technologies will become even harder.  

The Costs of Specialists Will Increase 


With demand in specialist skill sets likely to increase as adoption of new technologies grows, teams that do possess the necessary skills are likely to charge more. This is typical of the labour market, whenever a supply and demand imbalance exists in favor of demand, costs rise. This will be a challenge for companies looking for highly specific skills in the future.

Opportunities of Outsourced Software Development Growth 


While there’s no doubt the growth of outsourced software development will bring challenges, it will also present major opportunities for hiring organisations and development teams alike. 

Growth Will Improve the Reputation of Outsourced Software Development


With the growth of outsourced software development, the current negative stigma attached to the sector is likely to disappear as it becomes a normalised way of delivering technical projects. As the successes outweigh the failures, outsourced software development will quickly prove itself as the very best way to source high quality, niche talent fast. This change in perception is likely to drive demand as an increasing number of businesses look to external talent as a genuine business opportunity.  

Mindset Will Change Around Using External Development Resources 


Many companies use external development resources and treat them as an add-on to the business. They make little effort to integrate external development teams and in many cases, just hand over grunt work the internal teams don’t want to do. However, this status quo is set to change, as the market grows and more opportunities arise, high quality outsourced development partners will have their pick of who they want to work for. This will force hiring companies to treat their partners like part of the wider organization and use them for value-added projects, not just extra capacity. 

Distributed Teams, Remote Work and the Blended Workforce Will All Become More Common


Outsourced software development initiatives can take many forms and over the years, the nature of the working relationship has changed. Now these external partners work in different ways:

Distributed Teams 


In this model, each individual of a technical team works from their own location. The team still works collaboratively, but does not occupy the same physical space. 

Remote Work


This is the traditional outsourced model, a team works in the same physical location, but away from the hiring party. They are not an in-house resource and do not relocate when hired. 

Blended Workforce 


A blended workforce is a team of individuals, each of which work to a different set of parameters. Some may be freelancers, other part-time workers, some will be contractors and the rest full-time staff. By developing a blended workforce, companies can build the teams they need as and when required. There is much more flexibility and evolve with this model.

These new approaches are only set to become more common in the future as outsourced software development grows and diversifies. 

Collaboration Will Become Easier and More Efficient, Optimizing Delivery and Success 


As companies acclimatise to working with outsourced software development partners, they will improve the way they operate in order to best accommodate for their external partner’s needs. This will be further assisted by the continuing evolution of technology that will help drive strong working ties and more efficient relationships. These changes will help optimise communication and maximize the quality of the technical output produced. 

The growth of outsourced software development shows no sign of slowing. With the likes of Apple, Google, IBM and Microsoft all opening development centres in Easter Europe and other tech unicorns embracing hubs in Estonia and Poland, it’s clear the sector is expanding rapidly. 
This is only set to continue as new countries develop a greater number of technical experts and the demand for technical skill sets rises. 

Over time, as companies adapt to working with outsourced software development partners, they will quickly see the benefits on offer and further embrace the significant opportunities they can unlock.

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