In-house IT team vs outsourced IT team
Cost and Benefit analysis
Hiring in-house teams is pretty expensive and needs much time and money to develop such a caliberious team that can bring fruitful results.
Outsourcing, on the other hand, brings much saving in cost and efforts to manage the whole project.
In a study led by industry experts, outsourcing can reduce 15% to 20% in cost savings. While both in-house team and outsource team have their own pros & cons have several challenges, outsourcing has proven to be more fruitful in comparison to the project handover to in-house team. Especially, when it comes to performance measure and quality control, outsourcing has manifold advantages over the other side. There are the following key factors that helps us to evaluate the performance in either of the two options:
- Cost Factor: Hiring in-house team for working on IT projects is much costly and requires huge capital investment. On the other hand, outsourcing is best for saving substantial cost when hiring a team for the project.
- Time factor: On average, the time required to hire a talented in-house team is four times that of the time it takes to hire an outsource team.
- Risk factor: In-house team requires consistent handling of issues related to the project running, but outsourcing this work can relieve significant amount of risk involved while carrying out the project.
- Efficiency factor: Outsourcing team members are much motivated because they get opportunity to work at an international level. This in turn, enhances the focus of company management to its core functionalities. In-house team may put extra bit of work pressure and keep focus diverted from the core functions of the company’s management.
- Availability & Promptness: Outsource team can start work straight away, while in-house team may require a lot of challenges while initiating on the project.
- Level of motivation: In-house team members need consistent training to keep their motivation up. While, outsourcing team members don’t need as much extra motivation to perform better.
One of the major challenges you could face is finding the suitable resource through outsourcing is something like “ finding a needle in a haystack”
Of course, the success or failure depends on the selection of the outsourcing team that will work better or worse than expected. Therefore, the selection of the most caliber and talented team is the biggest challenge for the company that is seeking to outsource.
| Caution | – Outsourcing can be a Challenge
You can risk your brand name with outsourcing, which is quite a sensitive issue. It takes time to make a trustworthy brand name that involves a long process of service delivery to customer satisfaction. And once you attained the level there’s no point to slip it. As customers place their trust in the company but if they get to know the resources are contracted out they could lose their confidence, for so many reasons.
They can be insecure about their confidential and exclusive data can’t handle in the right way, and yes the quality of the work is another important thing to make them feel reluctant to trust in you.
A simple solution to this problem is, outsource only the necessary resources and don’t compromise on the level skills and talent you’ve required. Check the communication barricade beforehand.
Why outsource Software & IT Services When An in-House Team is There?
Well, that question is valid. Firstly, the important point about outsourcing need is not necessarily at the cost of firing in-house Software & IT professionals. Some urgent need of getting the project done in a short span of time might be one of the reasons that necessitate the need to outsource some talent. Though the reasons for opting for the outsource option are manifold, we will discuss only the major ones.
1. Significant reduction in cost and efforts to manage in-house team
The cost and efforts to manage in-house team and other environmental expenditures will put significant savings to the company rendering outsource services. As mentioned earlier, in-house teams usually demand much higher compensation including ample increment each year. Furthermore, the Admin or HR staff gets more burden to manage in-house teams and it coupled with multiple environment related problems. Savings in both costs and efforts are one of the major reasons why companies are switching to outsource Software development and IT services.
2. Getting started with the project straightaway as you want
According to research, the average time it takes to hire IT professional ranges from 51 days to 56 days in the world. This seems too awkward to waste a huge amount of time when you need to begin a project on an immediate basis, but cannot avail it through in-house. Outsourcing solves this problem quite sensibly and helps you to keep your clients satisfied on quick services.
3. Diversified skills and plenty of new ideas sharing
Projects that require unique ideas and plenty of expertise is one of the biggest concerns that company owners and senior management are expressing related to their junior staff. The trick is simple: more the skilled brains involve more the bountiful ideas generate. Outsourcing provides this opportunity to hire a team of diversified skills to make unique product design and develop something new with more interesting features.
4. Work efficiency and performance boost like rocket
Setting up 24/7 working hours enhances productivity. This is only suitable and possible for the organizations where the business is tending to expend. Especially in this modern era, where several small companies are emerging into medium and large size organizations, outsourcing becomes a necessity to meet the urgent need of skilled professionals. Furthermore, this will pull down the burden from management that can focus more on performance building measures and, hence, overall productivity can boost substantially
Global Outsourcing Trends
The strongest demand in IT revolves around some key players who have significant opportunities to work on globally. They are developers who work on backend cloud, web, iOS, Android, and MySQL. Backend web/cloud developers have twice as much demand as developers of MySQL. The 12 major countries that contribute on top outsourcing destination in software development:
From Eastern Europe: Poland (average hourly rate $38), Romania (average hourly rate $44), Ukraine (average hourly rate $37), and Russia (average hourly rate $33).
From South America: Brazil (average hourly rate $47), Mexico (average hourly rate $39), Argentina (average hourly rate $41), and Columbia (average hourly rate $46).
From Asia Pacific: China (average hourly rate $24), Philippines (average hourly rate $28), India (average hourly rate $21), and Pakistan (average hourly rate $18).
Emerging trend of Software and IT Outsourcing in Pakistan
Especially in the IT sector, Pakistan has become one of the favorite nations to provide outsourcing services. In the last four years, the IT industry has grown by 100%. In 2016, the country’s IT industry had worth $3.3 billion, which was increased to $3.5 billion in 2017. By next year, it has further increased to $4.1 billion. Last year in 2019, this has been worth $6.5 billion. These statistics indicate that the figure will surely cross $7 billion in 2020. Especially the revenue from e-commerce is expected to reach $1 billion by this year. From 2016 to 2019, the IT industry export has doubled its worth. This trend shows that Pakistan is gaining more momentum on providing more IT related services through outsourcing. The industry analysis has shown a steep upward graph of the total revenue by next five years.
Leading software brands from developed countries such as the USA, UK, Germany and China have increasingly become interested in acquiring IT services from skilled software and web developers in Pakistan. E-commerce ($1 billion worth) has played the leading role in making worth of the whole IT sector in Pakistan. According to a research study, Pakistan stands at fourth on the best outsourcing providing country by location. The rank is getting up due to tremendous potential of talent in Pakistani IT professionals, specifically because Pakistan is now ready for 5G network technology.
Employees annual packages in US vs hourly outsourcing rates from US vs Outsourcing from East Europe/ South America/ Russia Sovereign States / Far East Asia vs Hourly outsourcing rates from Pakistan
According to an authentic source, software development employees get annual pay between $80,000 to $130,000. While the statistics for IT staff is even higher. On the other hand, outsourcing the software development will cost on average $30 to $50 per hour in the USA. While hiring the same outsourcing software developer from Eastern Europe costs $25 to $50 per hour. Hiring from Africa costs $20 to $40 per hour. The highest saving comes from Asia Pacific region which costs $18 to $38 per hour. On average, outsourcing from Russian Federation costs $33 per hour. Outsourcing from Far East Asain countries costs $24 to $30. More specifically, Pakistan is on top of the figures that charges the least but provides world class outsourcing in software & IT services. Pakistan has tremendous potential to excel in the IT sector in the future. The 5G is just coming to Pakistan that will boost this country to the top in Asian Pacific.
What makes Pakistan favorite for IT outsourcing services
- A large number of Skilled population has proven Pakistan as a country that can reach on the top of outsourcing service providers in Asia.
- One major reason for Pakistan as becoming the future of outsourcing hub is the lowest Service charges. Infact, this meets the first major goal of outsourcing (i.e. reducing cost by a substantial amount).
- Pakistan is the 4th largest English speaking nation. This fact put it at a prominent place on the globe. A quick and responsive communication is the key for getting the desired outsource team, so you can keep in touch with the team progress.
- Perhaps one of the best reasons is that Pakistan already has fast and reliable internet services. With the initial successful test of 5G technology in this country, outsourcing services are likely to become on the top notch in the world-share by next few years.
Things to consider when choosing the best outsourcing team in Pakistan
1. The process should be quick and responsive
2. They can think out of the box: talented and innovative
3. Must possess expertise and knowledge about their core work
4. They must have thrust to excel in IT as compared to industry expert
5. They must have a backup plan for any inconvenience or urgency
6. Must have team members of diversified background and experiences
As a leading mobile app development and other software and IT solutions provider in Pakistan, SUAVE Solutions has such dedicated software development teams that have quite expertise in providing software and IT solutions to companies seeking to outsource software & IT related projects.
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