Outsourcing Software Development: The Why, The How, and The Who
In today’s fast-paced digital world, businesses are under constant pressure to innovate while managing budgets and resources. As companies look for ways to bring products to market faster, many are turning to outsourced software development. This approach not only helps bridge the talent gap but also offers cost-saving benefits and access to global expertise.
In this episode of So You Think You Can Dev?, we spoke with Bill Stevens, President of KMS Healthcare, and Kaushal Amin, CTO of KMS Healthcare, to gain insights into the latest trends and best practices for outsourcing software development.
Listen to the episode in the player below or read the highlights in this article for the short and sweet version.
The Growing Need for Outsourcing Software Development
The pressure to generate compelling new features and products has only increased for software companies. Thus, the demand for software development talent has surged in recent years, but the supply hasn’t kept up. This talent shortage is one of the main reasons companies are seeking external partners to fulfill their software development needs.
“There are far more software companies now than 10, 20, or 30 years ago, but the number of engineering graduates hasn’t kept pace. In the U.S. specifically, there’s a significant shortage, pushing companies to look abroad for talent,” said Kaushal.
Outsourcing provides access to skilled developers worldwide, allowing companies to tap into new talent pools without the constraints of local hiring. And there are many constraints.
“There’s a shortage of engineers in the US marketplace. The good ones aren’t changing jobs either. So it’s become really, really hard to recruit,” Bill said. “The last thing they want to do is put too much pressure on internal employees and force them to leave.”
Expertise and Cost Savings: The Dual Benefits of Outsourcing
For many companies, the decision to outsource software development goes beyond just filling talent gaps. There’s also the advantage of cost savings. By outsourcing, businesses can leverage high-quality development teams at a fraction of the cost of in-house teams.
“Besides the talent shortage, many of our customers, especially early-stage and mid-sized startups backed by venture capital, have budget constraints. They have only so much money raised, and they need to use it wisely. Outsourcing helps them prioritize work and deliver within budget,” Kaushal noted.
Moreover, outsourcing partners like KMS Healthcare come with industry-specific expertise, allowing businesses to avoid long training processes.
“Companies don’t want to have to train everything about their business to their partners. They prefer partners who already know a fair amount about their business so that they can get up to speed quickly,” said Bill.
Key Factors to Consider When Outsourcing Software Development
When choosing an outsourcing partner, it’s essential to ensure they have the right experience and capabilities. Companies need to avoid becoming a training ground for developers who are new to the field.
“Make sure the people you’re hiring, whether developers, business analysts, or project managers, are experts. You don’t want to be a testing ground for someone learning a new skill,” Kaushal emphasized.
Here are three critical factors to consider when outsourcing:
1. Expertise: Choose a partner who has experience in your industry, whether they specialize in healthcare, banking, automotive, etc. to ensure that they can offer industry-specific solutions.
2. Team-Based or Fixed-Scope Projects: Identify whether your project requires a dedicated, long-term team or a fixed-scope approach.
“With team-based models, you get a long-term, dedicated team that becomes an extension of your business,” Kaushal explained.
3. Attrition Rates: High turnover can disrupt your projects and lead to knowledge loss.
“Look for a vendor with an attrition rate below 15%, with 10% being a healthy target,” added Kaushal.
Outsourcing Hotspots: Vietnam and Mexico as Prime Locations
While many think of India or Eastern Europe when it comes to outsourcing software development, Vietnam and Mexico are emerging as prime locations for companies looking to diversify their development strategies. These countries offer competitive pricing, high-quality talent, and cultural alignment that makes collaboration seamless.
“Vietnam has a fantastic culture for this kind of work. The people are detail-oriented, committed, and take pride in their work. Our expansion into Mexico has been equally positive, giving us the ability to offer same-time-zone support to our North American clients,” said Bill Stevens.
The cultural alignment and time zone advantages of Mexico also make it easier for U.S. companies to manage their projects efficiently. Combining an offshore and nearshore model can ensure 24/7 support.
Building Trust with Your Outsourcing Partner
Ultimately, successful outsourcing software development depends on trust. When you work with a partner who understands your business and is committed to your success, you can achieve greater efficiency and innovation.
“We build trust by ensuring most of our team members are full-time employees who are committed for the long term. This results in lower attrition and a highly engaged workforce that strives to deliver the best outcomes for our clients,” Bill explained.
Conclusion: The Future of Outsourcing Software Development
The trend of outsourcing software development is not just a temporary solution; it’s a strategic move that helps companies innovate, save costs, and access global expertise. As talent shortages continue to be a challenge, outsourcing remains a viable solution for businesses looking to scale quickly and effectively. By partnering with experienced, trustworthy firms like KMS Healthcare, companies can overcome these challenges and achieve long-term success.
If you’re considering outsourcing software development, remember to focus on expertise, team alignment, and a partner’s ability to scale and adapt to your needs. Vietnam and Mexico offer excellent opportunities for businesses looking to leverage global talent pools, and with the right partner, you can unlock significant advantages.
For more information on outsourcing software development contact us today.
