Software Development Outsourcing - A 2020 Guide

Software Development Outsourcing – A 2020 Guide

Last updated on June 23rd, 2022 at 04:30 am

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For today’s business, technology is the glue that holds the entire operation together, whether you’re bricks and mortar high street store or an online startup.  With countries around the world currently in lockdown, technology has never been important; in particular, software.  

It’s a hard fact that software now means life or death for the modern business – and you rarely get more than one chance to get it right.  For this reason, choosing a software development provider is one of the biggest decisions that you’re likely to make. 

Been around the world

For most businesses that don’t have the benefit of a huge IT department, outsourcing software development is the obvious choice.  Over the last 10 years, much has been said and written about software development outsourcing and, like other aspects of technology, opinions, and trends change as we learn more about the options available.  

The options

It used to be that we would look for software development outsourcing close to home as this was the most obvious solution.  However, in recent times, companies discovered the benefits of looking for development services further afield.  This led to a few new methods of software outsourcing including: 

Offshoring – The act of outsourcing software development to a country far from your own – often a developing country – in order to take advantage of less expensive labor costs.  Although this method is undoubtedly a money saver, it’s not without its problems.  Different time zones, language difficulties, and customs issues have all contributed to a decrease in popularity in offshoring over the last few years. 

Nearshoring – An enduringly popular choice, nearshoring is the act of outsourcing software development to a country close to your own both in terms of culture and in distance.  This allows companies to tap into emerging new skill sets and take advantage of cost savings without any major issues.  Nearshoring your software services usually means that you’ll be within the same or similar time zone as your supplier and will enjoy a similar working culture. 

Onshoring – This is the practice of moving software development services from another country back to your own.  Reasons for this could be cultural, economic or simply down to the fact that you can now afford to develop a partnership locally.

2020 Vision

As we’ve mentioned, times change within technology and development services and, never more so than in 2020.  In these unprecedented times, we can expect major changes to business as we know it and, in particular software development outsourcing.  As the world adapts to these troubled times, software development will become all-important, and, here, we’ll take a look at what we can expect from 2020.

Location, location, location

In a European IT Sourcing Study by Whitereach, 74% of businesses said that they would be outsourcing the same or more of their software development in 2020.  As this study was conducted in 2019, that figure is likely to now be much higher.  So, where will these businesses be finding their outsourced software development?  Let’s take a look:

Eastern Europe

As with 2019, Eastern European countries will continue to dominate the development outsourcing market this year due to rapidly growing skillsets and the use of cutting edge technology.  In 2020, we expect businesses to be outsourcing software to:

Poland – Between 1990 and 2015, Poland enjoyed a huge GDP growth per capita in terms of European and OECD countries and was listed 9th in the top Digital Nations.  Known for a strong work ethic, Polish software developers are among the most skilled in the world and are passionate about staying on top of the latest trends and current technology.  Predictions are that more and more businesses will outsource software development to Poland, during 2020 and 2021 for these reasons as well as for cost savings. 

Ukraine – Software development outsourcing to Russia and Ukraine has grown massively in recent years, largely due to the cost savings to be had.  This is, however, no longer the only reason as the region develops its tech community.  There are now around 185,000 IT professionals active in Ukraine within over 1500 software development companies.  Added to the attraction is the cultural compatibility and, the fact that about 80% of Ukraine’s software developers speak English. 

Western Europe

Great Britain

Surprisingly, in 2020, the UK is set to stake its claim on the software development outsourcing market.  This is due to the fact that more and more UK students are choosing software development as a career.  

This has led to the fact that this year, tech and software vacancies in the UK are thought to reach a cool one million, meaning that development companies will be able to take advantage of the intern and new staff salaries in order to offer more attractive rates for outsourcing. 

Around the world, developed countries are experiencing alarming shortages in tech talent – hundreds of thousands of vacancies according to many.  For this reason, we’re likely to see an increase in software outsourcing locations across the globe in 2020. 

The Skillset

In the fast-moving world of technology, it won’t come as any surprise that the desired skills for software development will also go through some changes in the next 12 months.  Those in the know predict that the most sought after skills in outsourcing companies will include: 

AI / Machine Learning – With a huge number of businesses, particularly within the shopping, leisure and hospitality industries, looking to streamline their operations through automation, artificial intelligence skills will be huge for outsourcing.  From the e-commerce checkout process to customer service, brands will be looking for software outsourcing companies who specialize in developing AI-assisted software.

Cybersecurity – As software development becomes more sophisticated, so follow the hackers.  In the next couple of years, we can expect to see software outsourcing leap forward in the field of cybersecurity.

Data Science – In 2020, data continues to be a driving force in the world’s marketing departments and, so, it follows that outsourcing companies will be used with increasing frequency in this important sector. 

Web Development Frameworks – We’ve already seen a surge in this sector over the last 18 months and outsourcing to software developers overseas doesn’t show any sign of slowing in 2020. 

CI / CD – Continuous Integration & Continuous Deployment is going to be red hot for 2020 software development services.  As brands focus on streamlining the process to improve the quality of the end solution, software development outsourcing services will need to step up to the task.  The outsourcing company will, in all likelihood, hire dedicated specialists in code and error detection rather than offer a standard software developer for these niche tasks. 

In terms of qualifications, when looking for outsourcing companies, many brands will be listing AWS, CompTIA, and Docker among the most desirable qualifications for developers. 

The Contracts

In the past, contracts between a client and an outsourcing software development company have been largely traditional, ‘all rights reserved’ and rigid in order to protect both parties.  Whereas this has been a necessity whilst outsourcing was in its infancy, it’s likely that outsourcing contracts will become more fluid and flexible in the coming months.  

Many brands looking for custom software development are now choosing to go with an outcome-based contract in which payment is based upon results and performance rather than output levels.  Although this may seem one-sided, it does actually benefit both parties as, if the outsourcing company performs well, it is likely to receive financial bonuses as well as recommendations. 

The Relationships

This is an area in which we’re likely to see some major changes in 2020.  Whereas, in the past, a relationship between a brand and a software development company was very much that of ‘Client and Vendor’, this will now start to evolve.  

Following a trend that started to sprout green shoots over the last couple of years, the traditional relationship will now start to morph into the project management partnership.  For both parties, this will mean shared goals and shared responsibility in terms of outcomes.  

This new and proactive kind of outsourcing partner relationship will mean that the two companies become more connected with deeper levels of communication to make sure that the desired goals are achieved.  Brands are likely to insist on dedicated software engineers for their projects when considering an outsourcing partner. 

The Equipment

As brands seek the highest level of software development possible, they will also be seeking the best quality project management tools.  This means that they will, to some extent, be choosing outsourcing software companies based on the equipment that they hold.  

For outsource software such as artificial intelligence, this means that software companies will need to make sure that they are prioritizing investment in equipment in order to sell their outsourcing services. 

When it comes to software outsourcing, you would need a crystal ball in order to predict the myriad changes likely to affect the industry in the next 12 months.  Having said that, we can be sure that artificial intelligence, virtual reality, and mixed reality will feature big in the skills required for software outsourcing.  

Therefore, for the outsourcing company, the 2020 focus will be on niche skills, cutting edge technology, and reactive service.  The outsourcing company will also need to be receptive to the idea of forming partnerships with clients rather than relying on standalone contracts for software outsourcing.