After the Great Depression in the 1930s and the Great Recession in 2008, the year 2021 was characterized by the Great Resignation - a phenomenon that marked the business world through the second year of the pandemic.
According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021. The Great Resignation is usually considered in terms of the American workforce, although it is a global phenomenon. Employees are voluntarily quitting from their positions, which is assumed to be due to a variety of issues, including discontent with existing working circumstances and personal career and lifestyle reassessments.
Harvard Business Review's in-depth analysis shows that resignation rates are highest in the healthcare and tech industry. The study concludes that "resignation rates were higher among employees who worked in fields that had experienced extreme increases in demand due to the pandemic, likely leading to increased workloads and burnout."
While some industries like finance and manufacturing did not significantly feel the effects of the Great Resignation, the tech industry faced resignations increased by 4.5%.
Given the global situation that has prevailed for two years, resignations among healthcare workers who are on the front lines of the pandemic did not come as a surprise. But where do software developers fit in?
Healthcare workers are on the front lines of the pandemic. But software developers are on the front lines of the company's digital transformation. With the pandemic's beginning, an accelerated process of digitalization of business began, enabling companies to introduce remote work for their employees. Industries for which we could not even imagine remote work before March 2020 had a simple choice - go digital or go bust.
Digitalization is a part of everyday life in IT companies, and remote working has long been a standard way of working for freelancers. However, many traditional companies that, if they were thinking about digitalization, intended to do so gradually and over a more extended period. The pandemic changed those plans, and software developers were at the forefront.
According to 85% of surveyed developers who participated in the study conducted better to understand the impact of COVID-19 on software engineers; urgent digitization led to burnout.
The Great Resignation has brought many challenges for people who manage software engineers and oversee development teams. Professional software developers have always been challenging to find, hire, and expensive to retain. The year 2021 has made this task even more difficult because many individuals refuse to accept employment that does not meet all their requirements.
The Simple Solution - Outsourcing
Outsourcing has proven to be a successful strategy for businesses to reduce expenses while increasing productivity. It helps companies to increase productivity and focus on their core competencies.
Whether it is nearshoring or offshoring, one of the primary drivers for outsourcing is gaining access to skill sets that do not exist within the company or are not enough. This claim is confirmed by Info-Tech’s study, which states that many companies outsource to gain access to specialized expertise, a larger number of experts, and develop software faster. Besides specific expertise, companies opt for outsourcing to respond quickly to a market opportunity.
Another essential feature of this business model is that companies increasingly look at outsourcing providers as innovation centers. According to Deloitte’s Global Outsourcing Survey, 35% of respondents are focused on evaluating the value of innovation in their outsourcing relationships.
Outsourcing software development is used by many companies all over the world. There are several reasons for them to seek out reliable partners to help them develop a product, launch a new service, or improve their current performance. The fundamental motive for outsourcing is the financial component.
Other benefits of outsourcing are becoming more evident for companies as the global market progresses and becomes more competitive.
More focus on core benefits is a benefit that is highlighted in the Global Outsourcing Survey as the most significant benefit of outsourcing. As many as 65% of the surveyed companies pointed out this benefit as an essential item of this business model.
Outsourcing today provides many different models and ways of working, making it sometimes difficult to choose the model that will best suit your business needs.
In general, models can be divided into two criteria - location (how far is the potential outsourcing partner from your company) and relationship (how you will collaborate on the project).
With location-based types, there are three basic categories of outsourcing:
1. Onshoring - outsourcing to the partner who is based in the same country as you
2. Nearshoring - outsourcing to the partner who is based in one of the neighboring countries
3. Offshoring - outsourcing to the partner based overseas.
Besides location, there is a choice based on cooperation, where we also have several categories.
Dedicated team – this model allows you to hire a whole team of IT experts for a specific project. In this case, the outsourcing team does not work with your in-house developers but reports the project to you. If you want to stay involved in decision-making related to the project, but you do not have enough experts in-house, this model is a good choice for you.
Project-based model – if you want to fully delegate the project to an external team from planning to release, this model may be a good choice. With the project-based model, you communicate directly with the project manager, who regularly informs you about the project's progress, shows demos, and the like. This model has proven to be good in cases where you have limited in-house resources, or those same resources are already in charge of a particular core product. Also, this model is the simplest solution in cases where you have a clear vision of how the final product should look and work.
Staff Augmentation model – The company hires external engineers, generally on a Time and Materials contract basis. This model is easily scalable, and its primary benefit is flexibility. It allows you to cover necessary positions temporarily or permanently. This model is a good choice if you already have in-house developers working on a project, but you need additional experts to help develop another part of the product. Unlike project-based outsourcing, where experts manage multiple projects simultaneously, the staff augmentation model allows a greater degree of efficiency since expert developers are focused only on a single project.
The Best Use Cases for Outsourcing
Start-up building an MVP
When creating a Minimum Viable Product, the goal is to get the initial version of your software product on the market as quickly as possible. Hiring experienced developers who can effectively contribute to your goal takes time and money.
On the other hand, collaborating with a company that has already developed numerous applications from the ground up can significantly speed up the creation of your MVP.
The small or mid-sized company that needs to grow their team fast
Scaling up and launching new product features requires hiring different technical roles. Growing companies are often caught up between outgrowing their competition and hiring on time.
Fast growth comes with its own set of challenges, and many companies discover that they require outside assistance at this point. Working with an outsourcing partner can increase your team in a significantly shorter time. After all, for software outsourcing providers, scaling is their core business.
You need new expertise
Suppose your company wants to expand into new markets or implement new technologies. In that case, it's possible that you won't have the necessary skills or understanding, and you'll have to invest a lot of money and time in research and training.
This is where outsourcing can be of great help. If you choose the right outsourcing partner with the necessary expertise, they'll collaborate with your in-house team to create the required product. During this period, your team will also receive valuable training, and they will be able to understand new technology and market without requiring considerable training from your firm.
You want to focus on your core business
Another advantage of outsourcing is that it allows you to concentrate on your company's most essential functions. During fast expansion, a company's back-end activities increase, necessitating a significant investment of resources. You have less money to deliver superior front-end services when you devote more resources to secondary tasks. Outsourcing frees up more of your resources, allowing you to put them to better use.
How to Choose the Right Software Outsourcing Partner
The process of selecting outsourcing partners is almost always the same. But to gain previously mentioned benefits, it is critical that you do not rush into things. Companies must evaluate several things before making a final selection. Something that, if ignored, can lead to failures, lost time, and higher expenditures.
One of the first things that is evaluated right at the beginning is the software developer's CV. CV is important but should not be an essential item. Here is why.
CVs of engineers are either "fine-tuned" towards your individual needs by a sales agent before sending or not well maintained at all, and the skill you're searching for might not be listed there at all, although the engineer might have those skills.
Second: Just because you got the CV, it does not mean that this software developer will be available for your project when you are ready to start. Today when there is a high demand and a short supply of engineering services, not a single successful software services provider can afford to reserve and block some engineers for three or more months.
In other words, look at other characteristics first and do the CV check at a later stage in your buying process.
Here is a list of some not-so-obvious characteristics you should look at:
Leading The Cooperation. Have you done outsourcing of software development before? Can you manage a remote team, or would you like a partner that "drives" that cooperation?
Legacy. Some companies have legacy code. Is your outsourcing partner willing to work on legacy code, or are they specialized in from-scratch developments?
Maintainability.Clean code and documentation are an important thing which is sometimes overlooked.
Engineering Process and Tool Chain. Do you want to add additional complexity by changing your engineering process or switching away from your well-known development tools?
Company Size. If you need an additional five engineers, you want to choose an eye-level partner. A company with ten engineers and 1000 engineers might not be the best fit for you.
Potential to Hire. Can they recruit and grow with your needs, or do they face similar labor market problems?
Industry expertise - does the potential outsourcing partner have experience in your industry? You can get an answer to this question by browsing the case studies of a potential partner by reviewing profiles on sites such as clutch.co, where in addition to information about industries, you can also find reviews of past and current clients.
If you decide to outsource, choosing the right outsourcing partner is the most important step.
You’ll enter a business partnership, and your partner's business practices will have a direct influence on your project. The consequences of making the wrong decision at this early stage can be serious. So before you embark on this journey, make sure you are well informed.
To make it easier, we have prepared a checklist with 6 imperative things to consider when choosing an outsourcing software development partner.