When Should CTOs Outsource Software Development to Another Company?

The role of CTOs in an organisation is crucial as they have to take critical decisions. One of the key decisions they have to take relates to whether software development ought to be done within the organisation or should this task be outsourced to an external software development company.

During the course of my two decades of experience in the technology field, I have sat on both sides of the table. This is why I can better understand the needs of the CTO, an understanding that has helped us service over 500 clients so far. Based on my experience, let me share with all of you the best practices on when to outsource the software development task, and I hope my advice will help you in your decision-making process.

Overcoming technical challenges

Software development is a fast-changing medium. There are niche development techniques that constantly keep cropping up. You need experts in these niche areas who keep skilling themselves in order to execute the projects. In such cases, you are better off roping in an external team with proven expertise in that field rather than trying to do this in-house. A good example is one of India’s largest e-commerce jewellery brands, which prides itself on having a very strong technical team. The company worked with us on a complex solution and we executed it successfully. This saved the firm a lot of time, while it was also able to get its solution working efficiently.

Reducing expenditure

CTOs constantly want to innovate while reducing software development costs. Contrary to common belief, it actually is more cost-efficient to outsource development than to get it done internally. Globally, this is one of the biggest reasons why companies seek external development partners. Outsourcing helps you avoid costly upfront investments in infrastructure, development tools and licences. This means you can channel all your resources to areas that are more core to your success.

Quick scaling

When tasked with a stiff goal and a looming deadline, CTOs often make the mistake of playing the HR manager’s role. This is because they know that hiring the right people is crucial to the project’s success. Sadly, this can be an enormously time-consuming activity. Even when you do get new people, they will need some warmup time to get trained and to acclimatise themselves to the organisation’s culture. By outsourcing, you take advantage of a dedicated team of developers who have already been working together for a long time. You save time and bandwidth by getting a team that has proven expertise, which enables you to achieve the quick growth you seek. It also helps you to focus on your core areas that generate the highest value. Once the project is successfully completed, the company need not worry about reducing its headcount, which can be an emotional burden. With an external partner, it’s quite easy to scale down.

Faster to market

Without deep planning, software development can turn into an expensive white elephant, taking forever to complete. Time management is crucial since releasing the software at the right time is important to take advantage of the market’s demands. There is a vicious tussle between the sales and marketing teams (that need the product at the earliest) and the development team (that needs the time to produce high quality products). This vicious cycle doesn’t stop unless an external force is applied. That’s where external development partners, who are conscious of the rapidly-changing demands of the market, can prove useful.

Finding the right development partner is tricky and hence it is truly worth your time to evaluate extensively before partnering. Outsourcing software development is a good way to overcome insufficient domain expertise, limited manpower bandwidth, the need to beat a stiff deadline, pressing market demands or simply to be costefficient. The trends are clear as we see more and more companies opting to outsource their development for higher efficiency and quicker results. It’s no wonder that technology outsourcing is expected to reach a massive turnover of US$ 481.37 billion by 2022, growing at a compound annual growth rate of over 6 per cent.