IT outsourcing is a fast-growing part of the industry and a valuable solution for different companies. Both big companies and young startups leverage the benefits of outsourcing to their businesses. This approach helps you cut costs or lead to a greater competitive advantage.
In addition, a Deloitte survey says that COVID-19 has banished the idea that physical co-location of resources is necessary to develop a trusting relationship in the workplace.
All these suggest that the needle will be tilting more towards IT outsourcing.
As a Biz Dev Manager, my main responsibility is to bridge the gap between innovative startups and the talented team at Uptech. From team formation to project management, I get it all covered in the IT project outsourcing process.
So, here’s your detailed guide to IT outsourcing. I’ll explain what is IT outsourcing, and how it benefits your business (spoiler: cost saving isn’t the only advantage). All in all, in this guide, you’ll get to know everything about IT outsourcing and see if you actually need to outsource IT and why.
What is IT Outsourcing?
The first question we should start with is – what is IT outsourcing?
IT outsourcing means that a company moves a part of the software development outside of the in-house structure to save costs and control all the processes. You basically hand over task implementation to the partner and keep an eye on things.
IT outsourcing can be implemented both ways: outsides or within the country. There are 3 main types of outsourcing that refer to where the service is provided:
3 Types of IT Outsourcing
- Onshore
- Nearshore
- Offshore
- Onshore. It is a process of hiring professionals that are located in your city or nearby. It's a good option to keep everything under control at a reasonable cost.
- Nearshore. It is outsourcing to neighboring countries with the same time zone. By choosing this option, it's easier for you to communicate with developers yet, this option isn’t always profitable.
- Offshore. It is outsourcing to another country. This type allows you to save up the most.
According to Clutch, 83% of small businesses will maintain or increase their spending on outsourced business services in 2023. They also highlight that the main purposes for IT outsourcing are:
- Cut costs;
- Bring industry experience onto the in-house team;
For entrepreneurs, especially startup founders, IT outsourcing can be the key to propelling their business forward faster and saving more money than they could with a small in-house team. Big companies like Google, Apple, Facebook also outsource some part of their work as it accesses them to professionals with different expertise.
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Best IT Outsourcing Regions
As we already found, cost reduction drives companies to use the IT outsourcing business model the most. The main reason for that is that outsourced IT services may cost less in different countries. Let's check how hourly rates vary in different regions.
That price isn't the only factor you should consider while choosing the place for outsourcing information technology. We advise you to find the balance between the proficiency level, time zone, communication level, and prices.
3 Common IT Outsourcing Models
Before you sign a contract with an information technology outsourcing company, you should choose a cooperation model. While types of IT outsourcing appeal to the geographical location only, the outsourcing business model defines the way you collaborate and the final goals of such a collaboration. Here are 3 most common IT outsourcing models and their pros&cons.
Project-Based Model
How it works: The client hires a team to implement the part of the work that is already planned and defined. The project manager from the outsourced team carries full responsibility for the quality and performance of the project.
When to use: The project-based IT outsourcing model is suitable for not complicated projects that have predictable and well-studied functionality.
Dedicated Team Model
How it works: The client hires a team that will create a project for them, and they will work only on that project. Unlike the project-based model,a dedicated IT outsourcing team is more engaged in your project. In this model, an outsourced team becomes your technical and product advisor. So it can offer ideas and suggest alternative solutions.
When to use: Dedicated team IT outsourcing model suits best for early-stage startups that are expected to grow, complex long-term projects, which have the potential to expand, and projects with many vague requirements. If you want to validate your idea, find a product-market fit, or build an MVP to test the market, the dedicated team is the way to go.
We at Uptech focus on a dedicated team model. Our recent case for real estate app Yaza is a great example of how a full-cycle product development studio works. The client came with an idea to create a utility tool for navigating experiences found in the real world. Instead of a simple implementation of the concept, we went further.
Our product management team validated the initial idea, found product-market fit, and increased the audience. The design team used an iterative approach which improved the usability of the solution. All in all, we succeeded in releasing the up-to-day product with the best UI solutions.
Outstaff Model
How it works: It's a type of outsourcing IT when you don't need a full-fledged development team and hire separate specialists. Sometimes the project requires finding a couple of additional professionals, and you're free to hire outstaff workers to cover that scope of work.
The demand for this IT outsourcing cooperation model has grown steadily, with global revenue from IT services projected to hit $1,570 billion by 2027. In 2023, web development leads the chart for top in-demand IT skills, with DevOps and database software professionals as runners-ups.
When to use: Outstaff IT outsourcing model best suits short-term projects or businesses that lack specific knowledge and need extra hands to scale their business fast.
Uptech is an outsourcing and outstaffing company, we provide such services as product outsourcing and staff augmentation. Here are 2 cases when you can get the maximum benefit from working with us:
- When you lack in-house resources and need extra hands to develop a product – choose IT outstaffing.
- When you lack product expertise and need a product development team (product managers, designers, developers, QAs) to build your product – choose IT outsourcing.
Over the years, we’ve helped 150+ companies in various fields turn their ideas into marketable products. Among them are GOAT, DSC, Aspiration, Cardless, and more. Our team consists of multidisciplinary experts, and we practice the Agile development approach to remain flexible and efficient when designing, testing, and improving apps.
So you can be sure that your product is in reliable hands.
Want to learn more about IT Staffing? Check our article.
Why You Should Use IT Outsourcing
Now that you know what IT outsourcing is, its models, and types, it's time to clarify why you need to outsource and whether you really need it. Let's go over a few situations that suggest when to opt for IT outsourcing.
You are a domain expert with idea
If you're an industry expert with the idea that solves a real problem, IT outsourcing is your choice. In this case, your main goal is to enter the market and test the solution fast. An outsourced team will help you validate the idea, build an MVP to check the hypothesis, and implement changes in your product according to market needs. It saves you money, time and lets you reach the goal.
You have an early-stage startup
It's a common case that young startups spend money faster than they get a solid team and a ready-to-market product. The Failory found that financial problems are the 3rd reason why startup fails. So it makes more sense to reduce costs by hiring an outsourced team of professionals while your business lives on investor's money. You may employ a full-cycle product development studio covering all the blind spots and bringing your product to life.
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You need a technical support
Even if you already have a ready solution, but it demands some technical improvements – frameworks for backend components, new language, integrations with enterprise app, UX&UI design – it makes more sense to find an experienced partner. There are many functions that IT outsourcing can cover, and again it saves you the time you'd otherwise spend on looking for qualified staff.
Why Outsourcing IT to Uptech Is the Best Option
Uptech is a top IT outsourcing and outstaff company. We have been empowering startups and established businesses with the best app developers for 7 years. We developed apps for eCommerce companies like Dollar Shave Club and GOAT. We have been working with clients from the fintech industry, like Aspiration, for 6 years, and we treat their product as our own. We recently finished another fintech project for the US neobank – Cardless. After working with two big real-estate projects, Yaza and Nomad, we're experts in building apps in this niche.
We develop web and mobile apps of different complexities for both platforms (iOS, Android). Our company is powered by a team of highly skilled multi-discipline IT experts. As far as programming tech is concerned, we're well-versed in popular languages and frameworks, including Kotlin, React, and Node.js.
We help startups develop the MVP to raise the next funding round and support the existing business with our tech expertise to scale their products quickly. At Uptech, we don't blindly develop your project, we treat it as our own. We propose new ideas and solutions to meet your business goals.
How Much Does IT Outsourcing Cost?
When it comes to IT outsourcing prices, the range can vary depending on a couple of key factors: the hourly rates of developers and the size of the team involved.
It's important to note that IT outsourcing and IT outstaffing are not the same. IT outsourcing involves entrusting the entire project to an external company, while outstaffing allows you to hire remote developers as part of your own team.
For IT outsourcing, the cost can range from $50,000 to $250,000. However, in the case of IT outstaffing, where you hire individual developers, the prices can vary significantly. On average, for a single developer, the price can range from $25 to $100 per hour, depending on their experience and location.
Uptech rates range from $25 to $49 per hour, which is approximately half the cost of most European countries and nearly four times lower than that of the USA or Canada. We believe in providing exceptional value while maintaining top-notch quality for our clients.
Summary
In this article, we have attempted to dispel the myth that information technology outsourcing is low-profile deliverables and last-resort decisions. We figured out that even big tech companies outsource with ample benefits. Also, IT outsourcing is a great option for early-stage startups to save time&money.
Uptech is a product development studio that focuses on the Dedicated team IT outsourcing model. We provide our clients with a full-cycle product development team. It’s a team of professionals who will be 100% engaged in your product from the idea validation stage to the product launch.