The Pros and Cons of Outsourcing Software Development

Software development outsourcing is a low-cost and efficient way for big companies as well as MSMEs to get custom software developed. Know what benefits and problems come with outsourcing your software development work and how to select the right company for doing this work.

Software outsourcing is a common method for tackling your product development roadmap. It's a strategy that is used by the biggest companies in the world (fortune 500s) and the smallest (startups). When it comes to software outsourcing, individuals commonly are referring to off-shore or near-shore outsourcing.

Offshore outsourcing is when you are outsourcing outside of your country, commonly across an ocean (hence the off-shore name). If you are nearshoring, you're typically outsourcing outside of your country but to either a neighboring country or one that is quite close.

However you navigate the outsourcing world, it is important to recognize that outsourcing isn't just a blanket solution you can approach. You need to understand the pieces of the puzzle, what inherently leans to your advantage and what serves as a typical blocker. In order to most efficiently leverage the outsourcing landscape, you need to properly plan ahead.

Software Outsourcing: The Pros & Cons

In navigating this remote ecosystem of software outsourcing, it is important to understand the good, the bad, and the ugly. Software outsourcing can be an incredible asset for your company, but it only is if you use it properly and understand the risks that are associated with it (meaning you plan accordingly).

We'll walk through the pros and cons of software outsourcing, and for each con, explain what you would need to do in order to help mitigate the potential risks to limit the exposure of that specific con.

The Pros of Outsourcing

There are wonderful reasons why you should consider outsourcing your software development. These advantages are ones that companies around the world are leveraging. There are three main advantages when it comes to outsourcing: cost efficiency, flexibility, and operational efficiency.

Cost efficiency

It's a known-fact that software outsourcing is a cost-efficient pathway to look towards. The beauty of arbitraging your local currency is that you can use those economics to your advantage. Outsourcing lets you find talent at a fraction of the cost, while still paying them a handsome wage in their local currency.


One of the greatest assets that outsourcing has is that it gives you ultimate flexibility. When hiring an in-house developer, they become an employee and that means payroll. With outsourcing, you can hire a developer for a specific project or even for a long-period of time, but you have way more flexibility to scale your team up or down, to coincide with your business needs.

Operational efficiency

When you look to outsource your software, you're inherently reducing overhead by not dealing with hiring infrastructure. As an operation, you don't have to deal with standard HR processes. If you work with an agency, you also then don't have to deal with ensuring this developer has benefits as well as a team with them who can help manage their workflow. You leverage the agency's infrastructure so you don't have to build it yourself.

The Cons of Outsourcing

While outsourcing is wonderful in many ways, it does come with a ton of risks. These risks can be disastrous and lead to you losing a ton of money in your outsourcing relationship, so it isn't just important, it is absolutely instrumental to ensure that you understand these risks and plan accordingly to mitigate their potential impact.

Over at Aloa, their business model centers around helping companies leverage the advantages and navigate the disadvantages. Their infrastructure and tools help companies ensure that they don't get bogged down by these cons that so commonly can be the downfall of an outsourcing relationship.

Navigating cultural/language barriers

When working with different cultures, you're inherently adding variables. Sometimes the teams you work with aren't fluent in your native language or are used to phrases and sayings that have different meanings in their home culture. To ensure you don't slip through any cracks here, do your best to speak as straightforwardly as possible. Remove any sayings or jargon from your vocabulary. For example, instead of saying, "Let's table that for now," you should instead say, "Let's talk about this later. For now, let's talk about XYZ." The more specific you can be, the better!


When working with an outsourced team in a different time zone, just be sure you have transparency and understanding as to what working hours will be and when you can expect your team to be responsive. If you know your team will only be awake until 1pm your local time, then be sure to make pushes to production in your early morning, so your team is awake to handle any hot-fixes. Communicate and plan ahead - that is the key.

Assumptions & business acumen

A big gap that can be seen is when your team makes assumptions about your business because they don't have the proper understanding of the use-cases of your business. Business acumen is a crafty skill, but it is hard to establish proper acumen for a business operating in a country that isn't your own! So, be sure to remove all assumptions. Make sure your development team understands your business, understands why they're coding what they are, and understands the implications of the features they are working on. If you can teach your team the business reasons behind their work, it can help them more efficiently tackle their tasks without making inaccurate assumptions.

So there you have it. Outsourcing is wonderful in so many ways, but it does come with risks, and those risks are some of the cons of outsourcing. These cons are navigable - you don't have to be a prisoner to the limitations of outsourcing, so long as you plan ahead.

David Pawlan
David Pawlan
Aloa Co-founder

David is here to try and help change the world, one step at a time. Currently, David is working in Aloa to help bring efficiency and accessibility to the software development industry. Outside of Aloa, David is passionate about social justice issues, currently focused on working towards shrinking the racial wealth gap. David is currently living in South America as a digital nomad.


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