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The Difference Between Outsourced Software Development and Outsourced Consulting


9 min read

What is the most effective strategy for running a business? This question is asked by every business owner, and the answer may vary from time to time since business objectives change. When it comes to employing a technical team, we’ve already identified two options: hiring in-house or outstuffing.

An IT department may be more cost-effectively run in-house rather than outsourced. Despite this, software development is handled in-house less often than accounting and payroll. Let’s talk about outsourcing software development and consulting in this post.

What Is an Outsource?

Outsourcing is a business practice in which a company hires another company to do some work instead of hiring new workers or giving those jobs to current employees.

There are several benefits of outsourcing IT services. It’s common for organizations to employ this strategy to save money while still completing vital tasks. It’s possible that businesses use outsourcing on a regular basis, even if it’s rare.

Types of IT Outsourcing Models

There are three different types of IT outsourcing models: onshoring, nearshoring, and offshoring. The variances in these tactics are according to the location of your service provider.

  • The process of outsourcing IT services to a website development team situated in the same country as your firm is referred to as “onshoring.” As a disadvantage, you may have to pay a higher price for development services in your own country. As a result, many businesses are trying to outsource their IT requirements to other nations.
  • Nearshoring is shown by companies nearby, who outsource web development services to one another. Nearshoring is often defined as a good mix of cost-effectiveness, quality, and the physical proximity of your outsourcing partner.
  • IT services may be outsourced to a company headquartered outside of the country. This is the least priced option, but bear in mind that communication may be difficult due to the time difference.

There are many factors to consider when outsourcing your company’s IT projects, including cost, proximity of the outsourcing partner, and your needs for a qualified outsourcing partner. There definitely are some advantages and disadvantages of IT outsourcing software development.

What are the Advantages of an IT Outsourcing

Some or all of your IT team could be taken over by an experienced outsourced service provider. What are the advantages of outsourcing software development?

  • You have unique access to a team of professionals. An outsourced team can help your business run more smoothly because they have a team of experts who can help with everything from cybersecurity to data management.
  • They are available 24 hours a day, seven days a week. A managed IT company will always be there to help you, even if you have downtime. This benefit of outsourcing gives you the opportunity to get back up and running quickly even if your computer doesn’t work. When it comes to night, weekend, and holiday hours, you won’t be limited or charged more.
  • The service is of top quality. An outsourced software development team is interested in your company because it wants to keep you. This is why, most of the time, they have to keep proving their worth to your company to keep you on board.
  • They’re usually less expensive. There are many costs associated with keeping employees, even if you only hire one or two people. These costs include things like recruiting replacements, giving raises and benefits, and giving employees time off for things like sick leave or training.
  • The company’s internal resources can focus on expanding. There is more time to grow your business and come up with new ideas if you outsource your IT needs to a third party.

What are the Disadvantages of an IT Outsourcing

IT outsourcing has many benefits, but you’ll have to be aware of the disadvantages of outsourcing.

  • Less power is in your hands. If you use a managed IT service, they can help you set goals and priorities, but you won’t be able to keep an eye on what they’re doing or quickly change course.
  • It’s possible that you have communication issues. If you choose an IT outsourcing business model, you might have problems communicating with the team.

The chances are you won’t meet your IT staff in person, and they might not get back to you quickly. Communication should not be a problem when you hire a team with IT management, though.

The Time Zone Remark

The time zone of an information technology outsourcing company may be the same as yours, but there are still reasons to hire a team from another country. It has its pros and cons.

Assembling in the same time zone means that everyone can work together and communicate in real-time. With nearshore engineers, there is less need to meet early or stay up late at night to talk. A meeting doesn’t have to be planned weeks in advance.

It’s also good to outsource in another time zone. There’s always someone online, which is great for providing 24/7 customer care and for developing products faster. The efficiency with continuous workflow increases so it is a good reason to choose to outsource.

Our Experience

As an outsourced team, we developed Burgundy (haven’t been released yet), a pocket budget that allows users to monitor their spending in real-time by synchronizing with banks. That is, the user will not have to add money after each trip to the store since everything will be tightened in the program itself.

The client came to us with a formulated idea and a vision of technical solutions. Our part was to develop everything from scratch. We used the scrum methodology, which, in our opinion, suits best in outsourcing projects: it brings total higher productivity, makes management of changing priorities easier, increases predictability, and accelerates time to market.

In such a model, approximately once a week, the client may make changes to priorities and new improvements to the product. On the demonstration, there is always one of the developers with the client who demonstrates the result of the work, because they know the product best from the inside.

Though working with a single team gives you easier control over the product, this is not the only way to outsource. As a business owner, you may outsource different parts of a product to various companies. We ourselves have a few projects of this kind, e.g. iWTX, a marketplace for land-based travel products.

This project had software development and management. Our team tasks include all the following except booking, engines, etc. The key communication chain in this picture is the product owner from the business side.

Why choose IT Outsourcing?

We tried to explain the advantages and disadvantages of outsourcing but when to choose it?

When costs must be cut, many businesses are looking into outsourcing because it can help them save money, and this is a good thing when the economy is unstable.

When you need to focus on important business issues, it takes time and money to hire, train, and keep people who don’t work for you.

If you run a fast-growing company, everyone who manages it gets excited when the company is young or growing. Your business has grown, or you expect a lot of new customers to come to your place of business. Many businesses need help because of rapid growth. Outsource, again.

What Is IT Consulting?

An IT consulting firm helps organizations become more effective by simplifying and enabling software development that helps cut costs, increase communication, improve performance, acquire competitive advantages, and generate new goods or services.

Because IT is a difficult field to learn, it is beneficial to hire specialists that can help you achieve your objectives with accuracy and quality. Many IT consulting organisations offer unique services to meet your needs. There are very few IT consulting company business models.

Hiring a tech consulting company means hiring expertise, knowledge, and a range of services. IT consulting services are significant in enterprises since they ensure a whole process, from marketing research to software product delivery.

What are the Advantages of IT Consulting?

Here are some of the main advantages of IT consulting services.

Stick to the business basics. The difficulties of handling IT-related activities are taken on by the service provider, leaving you and your staff free to focus on key business responsibilities.

Enlarge knowledge bases. Technology solutions and services are made more accessible via IT consultancy.

Reduce downtime. Companies that try hiring an IT consultant have access to planned, measured methods for continuous system maintenance, security backups, and disaster recovery that limit downtime to a minimum.

Manage costs and expenditures. A tech consulting service can help you minimize overall expenditures and operational expenses by helping you create a budget and strategy that meets your individual demands.

Get on-demand resources and talent. This is one of the benefits of hiring IT consulting services. You can rely on the partner to provide quick access to on-demand resources and expert skills.

Get more done. This is a fact: technology increases productivity. Technology facilitates communication, cooperation, and information transfer, enhancing productivity, performance, and overall employee engagement.

Reach a technology edge. This is one of the main benefits of hiring it consultants. With the support of a skilled IT consulting partner, you may obtain a competitive advantage in today’s ever-changing digital environments.

What are the Disadvantages of IT Consulting?

There are a couple of downsides to consider when using an IT consultant.

  • You have minimal control over the business process used to create your products. It doesn’t mean that you cannot decide on milestones, but primary decisions are to be made by the company you hired.
  • Complicated communication. You and your product’s development team can’t talk to each other directly, which can cause some problems when you work together, but it’s a case only if you hired the wrong company. This is the toughest among disadvantages of IT consulting.

Our experience

As an example of an IT consulting partnership, look at the Dozens app. It has all the goods and services you need to invest, manage, spend, and earn more effectively and responsibly.

The technical execution of native applications for iOS and Android was completely handled by our team of over 80 professionals. We made it feasible to offer a fully-fledged Dozens challenger bank to the public in under nine months. We also kept business development and consulting difference on our side.

The client had come to us with a vision of the future business but had only slight ideas about how to implement it and which technologies they would need. So, we helped to develop the product vision, set its mission, design, and software architecture, and then our team developed the whole product and delivered it to the market. The difference between consulting and development is that at consulting we make decisions on the same level as the client.

Why Choose IT Consulting?

If you need more expertise for your technical decisions. Think of it as a project in which you give the outsourcing company full control over the software development of your project. They are in charge of all of these things: managing teams, getting requirements, taking risks, and delivering a finished product. As said, the difference between IT consultant and software developer is that the consultant brings a lot of decisions to your product, whereas the developer doesn’t.

If you need to cover every technical process in software development. Startup companies often use this model when they don’t have a real in-house team to work with and they don’t know how to use a certain type of IT tool. It’s also a good idea for teams who are already working on other things, and there isn’t a way to open up recruitment right now.

Questions to Be Asked Yourself

So, we discovered the difference between software development and consulting service. When evaluating whether to outsource any or all of your development tasks, examine the factors that are most essential to you. To begin with, we suggest you discuss responses to the following questions:

  • What is my project’s flexibility?
  • Which talents does my project require?
  • How many resources do I have?
  • How engaged do I want to be?

These are some questions you may ask outsourcing companies to learn more about their services:

  • What partnership models do they provide?
  • How much does each model cost?
  • What possibilities do they have for client involvement?
  • Who has the provider worked with, and are there testimonials?
  • How do they assess and establish expert teams?
  • What is the company’s culture?

By answering these questions, you’ll have a better understanding of what your company needs and what suppliers can do to help it succeed and what is the difference between business development and consulting. And subscribe to get more information about business insights in fintech.

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