What Are the Hidden Costs of Software Development Outsourcing?

A lot of businesses lack the capabilities and in-house infrastructure to develop any required software solution. In the past few years, offshore development became a thing, and people found some relief. And yet, there are some things that are still not very transparent in the IT domain. One of the biggest one being – the hidden cost of development found in the custom software development process.

Honestly, not all companies are like that. Some comes do keep a lot of transparency in the process, and there you would only be required to pay what was quoted to you. But if you don’t have any experience in outsourcing software development that you need to be aware of the hidden cost. This would allow you to look for the signs before signing a contract with a company. So, without any further delay, let’s check out the implied cost of software development outsourcing.

Cost of hiring reliable IT outsourcing company

Every project has its own needs. You would require certain capabilities like infrastructure and human resources to meet the needs of the project. Before you start your endeavor of finding the right IT souring company, keep a cost in mind. For this quest, you need to research and understand the strength of various technology companies.

Full-grown IT companies have resources that have various expertise and experience. Like they would have software development experts, and at the same time, they would have junior developers. Research and understanding the strength of various technology companies will cost you efforts, time, and money. Determining the cost of development would become easy if you send out a “request for proposal.” It is a simple process; a lot of websites of IT companies would have a form where you can add your project file and ask for a quotation.

Once you have the responses, you can evaluate them, see their actual contractual agreement, align your project needs with the engagement model and take a few weeks to months. Also, this would cost you about 1 to 2% of your total budget.

According to a report in 2018, global market spending on outsourcing and shared services was evaluated to approximately 688.4 Billion US dollars. In 2023, the market was expected to spend 971.2 Billion US dollars. Given the pandemic and people inclined towards leveraging SaaS development services and other software solutions, it is believed to outgrow all the expectations.

Personal Time and Involvement in the Development Process

Once you have hired a software development company, you cannot ignore the need for your involvement. You need to invest your time and resources to brainstorm, analyze, implement, test, and manage the project. Especially, the company the department you are trying to resolve the problem of with your software product needs to be deeply involved in the development process. As for you, it is essential for you to ensure that the project needs are getting fulfilled.

During the development process, your software development company needs your regular inputs and suggestions to build a software product exactly as you wanted. Your feedback is very crucial for the company to make the project successful and effective. You and your team need to regularly manage your schedule for regular calls, meetings, discussions, etc.

Maintenance Cost

Once the software is developed, you meet to maintain it too. Any software would start to show some performance issues overtime. Especially when you are in your growth stage, you will start to realize sometimes in the business lifecycle that your software product is lagging behind. It is not a big issue if the company that you are working with agrees to maintain the project. This is the reason why you must always go for a company that believes in long-term relations, be it SaaS or CRM development company or any other.

It would be a lot easier if you have some infrastructural and technical understanding to maintain the execution of the software. To ensure its efficient execution and performance of the software, you would be required to manage the server, domain renewals, security issues arising over time.

One of the biggest concerns of enterprises is security. It is pivotal for a business of any domain that software and digitalization don’t put you at risk of cyber-attacks. A slight problem in security may result in a complete halt to the business. The software solution, be it web or local, should prevent any breach.

For this, you surely need dedicated IT professionals that manage the software once it is deployed. Once it is deployed by the IT company, there would be some expenses you have to bear for increasing your own infrastructural capabilities. In some cases, your existing company would be able to manage the software better. You might have to train your staff to understand the functionality of the software, or you might have to invest in the training programs to teach how the software product works.

Impact on Productivity

Not a lot of people think about this factor, but in many cases, businesses have experienced this. The lag in the procedures and less efficient project development may arise if you don’t cope them on time. Consider that you would have some cultural and communication difference. The actual cost of the development may arise when you have to constantly travel to another country or location to monitor the work. There would be iterations and missed contexts that would require your attention. Make sure to calculate that in your budget.

Upgrade the Software

With time and evolution of technology, changing market scenarios, and uprising new trends in the industry, you would be required to meet your business needs with new software products.

If you need to stay abreast with the world and maintain your position in the market, you are required to scale your software and make it more accessible and dynamic. You have to revamp the software product, including changes in the source code to improve your efficiency.

Since the company that you have worked previously with knows your business need and the software product well, it is likely that you would choose them. Updating and scaling your software would be as exhaustive as creating new project. Whenever you are undergoing development, communicate your long-term and short-term goals about your business so that the company would help you get the best scalable solutions.

Wrapping Up

We hope this blog helps you in uncovering the hidden cost of outsourcing software development. The points mentioned in the blog should be discussed with the software development company so as to make your investment worthwhile. A good software development company would provide you the best solutions and would try to reduce the overhead expenses to great extent. They would focus on your long-term and short-term business goals and help you to make the product as beneficial as it can, be it SaaS development or CRM development services.