What is IT outsourcing and how can it help you?
Alexandra Vaszily|27.01.2023
IT outsourcing is a long growing part of the IT industry and a valuable solution for various companies. Large corporations as well as young start-ups are taking advantage of outsourcing for their business. This approach helps reduce costs or leads to a greater competitive advantage.
In addition, the Deloitte survey confirmed that COVID-19 disproved the idea that physical co-location of resources is necessary to create a trusting relationship in the workplace. So all indications are that, over time, everyone will be leaning towards IT outsourcing. We therefore bring you a detailed guide to IT outsourcing to help you understand what it is and why you need it.
What is IT outsourcing?
IT outsourcing, or also Bodyshopping / Bodyleasing, means carrying out certain activities with the help of external resources. It is the subcontracting of IT activities to another company.
Outsourcing IT means that a company moves part of the software development outside its internal structure in order to save costs and control all processes. Although you hand over the execution of tasks to a company IT, you still have the option to supervise everything yourself. You can assign individual IT specialists or entire development teams. A big advantage is the direct communication with the commissioned developers and the complete control over your IT project.
3 types of outsourcing according to the place of service provision
- Onshore
- Nearshore
- Offshore
Onshore
This is the process of hiring professionals who are located in or near your city. It is a good option to keep everything under control within reasonable costs.
Nearshore
This is outsourcing in neighbouring countries with the same time zone. The main advantage of this option is easier communication with developers. Nevertheless, this option is not always advantageous.
Offshore
It is outsourcing to another country. This type allows you to save the most cost.
Main purposes of IT outsourcing
Above all, outsourcing helps you achieve:
- cost reduction,
- development of the company,
- cooperation with multifunctional experts
For entrepreneurs, especially startup founders, IT outsourcing can be the key to moving their business forward faster and saving more money than with a small in-house team. Even big companies like Google, Apple and Facebook outsource some of their work because it gives them access to experts with a wide range of specialised skills.
3 common IT outsourcing models
Before signing a contract with an IT outsourcing company, you should choose the model of cooperation. While IT outsourcing types refer only to geographical location, the outsourcing model defines the way of cooperation and the final objectives of this cooperation.
Project-based model
The client hires a team to execute a project or part of the work that is already planned and defined. The project manager from the outsourced team takes full responsibility for the quality and performance of the project.
When to use it: The IT outsourcing project model is suitable for not too complex projects that have predictable and well-studied functionality.
Specialist team model
The client hires a development team to create a project for him and work only on that project. Unlike the project-based model, a specialist development team is more involved in the project. In this model, the external team becomes your technical and product advisor. Thus, it can offer ideas and suggest alternative solutions.
When to use it: This IT outsourcing model is best suited for startups that are expected to grow, complex long-term projects that have the potential to expand, and projects with many unclear requirements. If you want to validate your idea, find product-market fit, or create an MVP to test the market, a specialist team model is the way to go.
Outstaff model
It's a type of IT outsourcing where you don't need a full-fledged development team and you hire separate IT specialists. Sometimes a project requires finding a few more experts, and you can hire outsourced workers to cover that scope of work.
When to use: The outstaff model of IT outsourcing is best suited for short-term projects because there is a risk that your outsourced workers will be replaced over a long period of time.
Why should you use IT outsourcing?
Now that you know what IT outsourcing is, you understand its models and types, it's time to clarify why you need it and do you actually need it. Let's go through a few situations that suggest when to consider IT outsourcing.
You are a domain expert with an idea
If you're an expert in your field with an idea that solves a real problem, IT outsourcing is your choice. In this case, your main goal is to enter the market quickly and test the solution. The outsourced team will help you validate the idea, create an MVP to test the hypothesis, and implement changes to the product according to market needs. It will save you money, time and enable you to achieve your goal.
You have an early stage startup
It often happens that young startups spend money faster than they can get a solid team and product ready for launch. Failory found that financial problems are the 3rd most common reason for startup failure. That's why it's smarter to cut costs by hiring an external team of experts while your company lives off investors' money. You can employ a full-cycle product development studio to cover all the blind spots and bring your product to life.
You need technical support
If you already have a solution in place but it still requires some technical improvements - frameworks for backend components, new language, integrations with the enterprise application, UX & UI design - it makes more sense to find an experienced partner. There are many functions that IT outsourcing can cover, and again, it will save you time that you would otherwise spend searching for skilled employees.
How is it here at CODERAMA?
CODERAMA has been a stable partner in IT outsourcing for 16 years. Providing innovative and creative solutions is our passion, so any obstacles in our way are just another exciting challenge to overcome. We thoroughly test developers interested in joining CODERAME and never hire anyone without passing our algorithmic tests/assignments.
Our hiring process is efficient and fast, but very rigorous. We only take the best. Most of the projects we work on are large in scope with huge amounts of data, so optimization is something we do every day.
The main advantages of IT outsourcing in our company are:
Availability and flexibility
We fully guarantee our clients the continuous availability of quality human resources throughout the duration of the project and beyond.
Quality and fast implementation
We continuously monitor new technologies and trends to keep a steady lead over our competitors.
Cost optimization
We eliminate hidden costs, making efficient use of your resources and reducing the overall project cost.
We share risks
We take on governance and management responsibilities, reducing your project risk.
We reduce the cost of IT professionals to our clients
We reduce the costs associated with finding and hiring IT professionals, such as management, training, staffing bureaucracy, etc.
Hiring process
Our recruitment process is divided into 3 rounds. In the first round, the potential candidate first goes through a general interview with our HR specialist, where we also focus on the level of foreign language. In the second round, the candidate is given a technical IT test, where we check the candidate's proficiency in the given specialization. In the third and final round, the candidate undergoes a technical interview with our IT specialist on the technology in question. Up to 80% of our people are fluent in English.
Account
Our account managers carefully select suitable IT specialists from among the candidates to deliver profiles of people who really match your requirements.
The Summary
In this article, we have tried to bust the myth that IT outsourcing is associated with low-quality delivery and final decisions that are made without the possibility of further appeal or review. We found that even large technology companies are using outsourcing with significant benefits. IT outsourcing is a great opportunity for startups to save time and money.