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19 Jul 2023

Optimize Cost Savings from Outsourcing

The case for outsourcing is quite the strong one no matter the industry, with companies across all niches gravitating towards cost-saving and remote-friendly hiring options ever since the COVID-19 pandemic. In fact, according to the International Organization for Standardization, outsourcing can help companies reduce an average of 15 percent of their costs. This is perhaps the strongest and most popular argument in favor of this practice, as the massive financial advantage is among the greatest outsourcing benefits no matter the specific line of business of your company. In this blog post, we’ll go over the way outsourcing cost savings work and the biggest ways to save money outsourcing your software development solutions. Keep reading to learn about software outsourcing! 

What Is Software Outsourcing? 

Software outsourcing is the practice of hiring third-party development team members to perform regular tasks and bring in new solutions instead of these being performed in-house by the company's own employees and staff. This can take various forms including offshoring, nearshoring, or simply working with freelancers and independent contractors. 

Companies choose to outsource their software development solutions for a myriad of reasons, from gaining access to specialized skills and services, accessing a larger talent pool, and improving business focus, to reducing operational costs and overheads. It's this last point - cost savings - we're particularly interested in expanding today as it can guarantee you the most return on investment when nearshoring

How Does Outsourcing Result In Cost Savings?

The primary way software development outsourcing results in major cost savings is through the labor cost differences between North America and nearshore or offshore countries. By taking advantage of wage differences between markets and outsourcing tasks to countries where development rates are significantly lower than their home market, you can save a substantial amount of money. 

Another way your company can save money through outsourcing is by eliminating the overhead costs associated with maintaining an in-house team - especially if you swap a department for a fully remote team. This includes office space, utilities, equipment, and training expenses. Furthermore, by outsourcing non-core tasks, you and your in-house team can focus their resources on their core competencies thereby increasing efficiency and productivity. 

Now, there are different strategies to really capitalize on the monetary advantages of software outsourcing. This next section will elaborate on these pathways toward maximum cost efficiency!  

Strategies to Maximize Outsourcing Cost Savings

1. Prepare a budget in advance. 

Before embarking on nearshore outsourcing, it's crucial to prepare a budget in advance. You should estimate the costs of outsourcing these tasks. This should include the service fees charged by the outsourcing provider, but also any other relevant expenses such as setup costs, training costs, or the cost of any necessary equipment or software. Remember to factor in the cost of managing the outsourcing relationship. This can include the time and resources needed to oversee the outsourced tasks, handle communications, and resolve any issues that arise.

2. Choose the right nearshore development partner.

The success of your outsourcing strategy will largely depend on the competency of your outsourcing provider. It's essential to conduct a thorough assessment to ensure that your potential outsourcing partner has the necessary skills, experience, and resources to meet your business needs. This can include examining their track record, seeking references from other clients, and assessing their financial stability. Also, it’s important to consider cultural compatibility, communication skills, and their ability to understand your business needs to maximize savings when outsourcing.

3. Set clear objectives in advance. 

Before you begin saving money through outsourcing, it's crucial to have a clear understanding of what you aim to achieve. This could range from cost savings, improved efficiency, access to specialized skills, or even freeing up your in-house team to focus on core business activities. Having well-defined objectives will not only help guide your decision-making process but also enable you to measure the success of your outsourcing venture. 

4. Monitor your outsourced development team’s performance. 

Once you've found a nearshore development team and outsourced your tasks, it's important to regularly review the performance of your outsourcing provider to ensure they're meeting your expectations. This can involve setting key performance indicators, conducting regular reviews, and providing feedback. Remember, outsourcing is a partnership, and open and honest communication is key to its success. 

5. Mitigate all potential risks to ensure outsourcing cost savings.

Outsourcing, like any business venture, comes with potential risks. These risks can range from communication barriers, and quality control issues, to data security breaches. It's crucial to identify these risks early and develop strategies to manage them. This could involve establishing clear communication channels, implementing strict quality control measures, and ensuring robust data security protocols.

6. Define your nearshore outsourcing needs. 

Lastly, it’s best to reiterate that the first step is to clearly define what tasks or processes you want to outsource. This includes understanding the complexity, frequency, and duration of these tasks. The more detailed and specific you are, the easier it will be to estimate the associated price and estimated outsourcing cost savings. Think ahead about the potential savings from outsourcing and consider setting aside a contingency fund to cover any unexpected costs or challenges that may arise.

Ready To Hire Nearshore Developers And Start Taking Advantage Of Outsourcing Cost Savings With Blue Coding’s Nearshoring Service?

With Blue Coding, you can access top-notch nearshore developers and maximize the advantages of outsourcing while significantly reducing your costs. Our team has years of experience facilitating nearshore solutions to help North American companies thrive and maximize outsourcing costs. We can help you hire nearshore software developers from Latin America for a lower cost than the price of hiring in-house staff from your local area. No matter the tech stack or development project you need assistance with, we can find the right IT professionals to join your team. Contact us today to schedule a free discovery session with us and learn more about our nearshoring services! 

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