Why do Companies Choose to Outsource Work? Key Reasons + Statistics

Why do Companies Choose to Outsource Work? Key Reasons + Statistics

Within the past several years, outsourcing has become a go-to solution for numerous companies. It provides businesses various benefits, facilitating their growth, and allowing them to leverage new opportunities. Outsourcing is a comprehensive strategy for both large companies and SMEs, offering them a competitive edge.  

The global market size of outsourced services is currently estimated at $92,5 billion. Around 68% of the US companies and 48% of the UK-based organizations outsource their services. The IT outsourcing industry is expected to reach a market value of around $425,19 by 2026. Also, approximately 300,000 jobs get outsourced each year out of the US. 

The mentioned numbers prove that the outsourcing market is growing in leaps and bounds. This makes many business owners wonder: “why do companies outsource software development?” 

Various reasons make companies opt for outsourcing, and Qubit Labs is here to explain them. So, let’s have a closer look at the topic. 

 

Why Do Companies Choose to Outsource Work? To Improve Profitability

The main goal of the companies that decide to outsource their services is to reduce or control costs. If they entrust their software development services to local specialists, any requirement changes will significantly affect their budgets. At the same time, when organizations outsource, they will remain within the budget because the salaries of foreign developers, say, from Eastern Europe, are much lower compared to their Western colleagues.

Having a team of remote workers gives you higher chances of boosting the revenue because you won’t have to allocate money for supplying another office and all the additional expenses. Besides, you get skilled professionals right away without having to spend time and resources on their training. 

Outsourced teams save a lot of money while delivering high-quality projects. Plus, you won’t have to worry about motivating them, providing bonuses, or purchasing the equipment. Your outsourcing vendor will handle these tasks. You’ll get a set of services for a reasonable price, which will be several times lower than having in-house employees.

#1 answer to the question: “why do companies choose to outsource work?” — to boost revenue and control costs.

 

Why Outsource Software Development? To Accelerate Growth

The tech market is competitive. So, only those companies that are flexible enough can offer timely solutions to the customers and survive under such conditions. The statistic proves that only half of the newly established companies survive for more than five years. The chances of failure are high, so the organizations require something more than just an idea to be successful.

But what do they need then? Faster development. 

A business that strives to outrun its competitors needs suitable people and infrastructure to leverage the growth opportunities. But all this requires time, which is already limited. So, outsourcing comes as a silver bullet in this case. 

When outsourcing their services, the companies speed up all the processes, from hiring to training, getting down to the project right away. Outsourcing significantly facilitates talent acquisition, allowing businesses to skyrocket and outrun their competitors.

#2 answer to the question: why outsource software development? — to facilitate all the processes.

 

Why Do Companies Outsource Software Development? To Access Global Talent Pool

Hiring bottlenecks often affect the company’s performance. If it can’t find the right specialists, its work slows down because the team is unable to achieve the expected goals. 

But outsourcing prevents organizations from dealing with this issue by offering them to hire software engineers from any country and with any tech stack. Your outsourcing vendor will match you with the right specialists, ensuring productive cooperation and smooth communication. 

Also, you can hire outsourced specialists to help you with certain tasks but whom you don’t need on a long-term basis. You just need to come up with the requirements for a desired professional and assign responsibilities. In this way, you get high-quality services without spending money on hiring a full-time employee. 

#3 answer to the question: why should I outsource software development? — to get access to a large selection of skill sets on the global market.

 

Why Should I Outsource Software Development? To Focus on Core Business Goals

Having the right people in the right places and delegating the tasks are the prerequisites for success. If your specialists pay enough attention to the primary business tasks and have enough time to fulfill their responsibilities, you won’t have to worry about the results of their work. 

However, if your employees are loaded with various duties, juggling multiple responsibilities, and constantly switching their focus, they might be at risk of burning out. Such pressure won’t give your team members enough opportunities to excel and achieve the expected results. They simply won’t have enough motivation and resources. 

What can you do in such a situation? Hire outsourced specialists with sufficient expertise in the area to handle non-core business tasks. This will reduce the stress level of your current employees and allow them to channel their energy in the right direction. 

#4 answer to the question: why do companies outsource software development? — to improve the internal focus.

 

Why do Companies Choose to Outsource Work? To Gain Insights and Knowledge

The tech trends are constantly evolving, and it’s critical to stay on the same page with them. However, if your employees are highly involved in the projects, they might not have enough time to keep an eye on all the updates. And not every company can afford to regularly spend money on training.

That’s when outsourcing comes into play. You hire skilled developers, and they help your team gain expertise and come up with new ideas. Your company will reap the rewards from working with outsourced specialists by receiving new skills and insights.  

#5 answer to the question: why outsource software development? — to pick up new skills. 

 

Why Outsource Software Development? To Free Up Time and Save Money

When hiring an in-house employee, the companies usually spend between 16% and 20% of their salary on onboarding activities. Accordingly, the average cost per hire is usually around $4,125. And for companies that are looking for several new specialists at once, this number multiplies several times. 

Are such expenditures necessary? Yes, they are but only in case you hire in-house employees. If you opt for outsourcing, you’ll save a couple of thousand dollars and invest this money in other business areas. 

Besides, companies often outsource secondary tasks to remote specialists while focusing on activities that promote their growth. In this way, you streamline the processes and free up your time.

#6 answer to the question: why do companies choose to outsource work? — concentrate on higher-level practices and invest in core business areas 

 

Why Outsource to Ukraine with Qubit Labs?

The Ukrainian tech industry is one of the fastest developing in Eastern Europe, which makes it outrun the competitors and attract companies from Western Europe and the US. 

You may wonder: what else is good about outsourcing to Ukraine? Here are some notable reasons:

  1. In Ukraine, around 212,547 specialists work in the IT industry.
  2. Ukraine is now home to more than 110 R&D centers for several global giants, including Microsoft, Apple, IBM, and Skype.
  3. Ukraine IT outsourcing costs range from $25 to $60 per hour.
  4. The export of the Ukrainian IT industry reached $853 million in 2020.
  5. Ukraine takes 1st place among the most competitive countries in the Technology sector on the list of technical skills among 60 countries.

These are only a few cases that make Ukraine a top-rated outsourcing destination, and your talent sourcing provider will help unleash the talent of local developers. 

Hire one tech specialist or build a scalable team with Qubit Labs. We have access to a pool of over 212,000 developers and will help you hire the best talent. Save your time and budget with us while focusing on core business goals.

Don’t hesitate to schedule a free call with our consultants to get the best deal. 

 

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Oksana Zabolotna
HBD at Qubit Labs
Oksana is a team leader of sales and marketing team at Qubit Labs.