Amidst fast-paced and competitive markets, companies seek ways to streamline operations, reduce costs, and stay ahead of the competition. One compelling strategy is outsourcing, particularly in software development. According to a recent study by Deloitte, over 70% of companies who outsourced their work did so to cut costs and improve efficiency. This trend is not just a fleeting phenomenon but a strategic move many businesses adopt to remain agile and innovative.
As renowned management consultant Peter Drucker famously said, “Do what you do best and outsource the rest.” This quote encapsulates the essence of why companies outsource. By focusing on their core competencies and entrusting other tasks to external experts, businesses can boost their overall performance and drive growth.
But what drives this shift towards outsourcing? Why do companies (both large and small) opt to delegate their software development needs to external partners? In this article, we will delve into the top 11 reasons why companies choose to outsource.
Getting to Know Companies That Outsource
Outsourcing software development is a strategy used by many top companies to save costs, access global talent, and speed up innovation. There is a constant fight between nearshore vs. offshore outsourcing, but the truth is that they both bring successful outcomes if they suit your business. Now, let’s explore some of the foremost examples of companies that have succeeded by outsourcing.
Apple: The Use of Global Expertise
Apple outsources parts of its software development to enhance its products efficiently. For example, Siri voice recognition was developed by external experts. This allows Apple to integrate advanced features quickly and maintain its innovative edge.
Slack: Early Success
Slack’s Early Success is a testament to the significant growth potential that outsourcing can bring. By outsourcing the development of its mobile apps to MetaLab, Slack was able to rapidly create a user-friendly mobile experience. This move significantly contributed to its growth, as evidenced by its current 38.8 million active users.
Skype: Global Reach
Skype outsourced much of its early software development to a team in Estonia. This decision was crucial for Skype as it allowed it to offer a high-quality communication tool that quickly gained worldwide popularity. Skype now has over 2.27 billion active users.
Alibaba: Initial Growth
Alibaba outsourced its website development to U.S. developers in its early years. This helped Alibaba overcome technical challenges and build a robust platform, which consequently led to its massive success. Alibaba now has over 163 million monthly active users across its platforms.
GitHub: Expanding Features
GitHub outsourced the development of its Atom text editor. This way, GitHub enhanced its offerings without pulling resources from its core platform. The company continues to be the leading platform for developers, with over 30 million users.
Why Do Companies Outsource?: 11 Reasons
From cost savings to gaining a competitive edge, we will explore the benefits that outsourcing brings to the table. You may be a startup looking to scale quickly or an established enterprise aiming to focus on core activities. Knowing these reasons can help you decide whether to integrate outsourcing into your business strategy.
Here are the top 11 reasons why companies choose to outsource.
Reason 1. Cost Efficiency
Outsourcing can lead to significant reductions in operational costs. By hiring external teams, companies can save on salaries, benefits, and overhead expenses. For instance, businesses often save up from 40% to 60% on labor costs by outsourcing. LITSLINK offers competitive pricing models, which help companies achieve substantial cost savings without compromising on quality.
Reason 2. Access to Global Talent
By outsourcing, companies gain access to a vast pool of global talent. They can tap into specialized skills and expertise that might not be available locally. The diversity in talent leads to innovative solutions and top-notch work. LITSLINK boasts a team of over 300 highly skilled tech professionals from around the world, each bringing unique expertise to every project.
Reason 3. Focus on Core Business Activities
Outsourcing non-core functions lets companies concentrate on their primary business goals. The improved focus, therefore, boosts efficiency and drives growth. By outsourcing IT support, a company can dedicate more resources to product development and marketing.
Reason 4. Scalability and Flexibility
One of the biggest advantages of outsourcing is the ability to scale operations based on demand. Companies looking to outsource can quickly adapt to market changes without the burden of hiring and training new employees. This flexibility is especially crucial for businesses experiencing rapid growth or seasonal demand. As a software development outsourcing company, LITSLINK has a proven track record of providing scalable solutions tailored to your business needs. With years of experience and multiple success cases, we ensure you can adjust resources as required.
Reason 5. Access to Advanced Technologies
Business outsourcing companies often have access to the latest technologies and tools. By leveraging these advanced resources, companies can stay competitive and innovative without significant investments in new technology. LITSLINK’s team is constantly learning and exploring cutting-edge technologies to deliver state-of-the-art software solutions. Besides, we have tech specialists who are experts in different technologies. For instance, if you need a software developer who knows a specific programming language like Python, we’ll provide one.
Reason 6. Risk Management
By sharing responsibilities with outsourcing partners, companies can reduce the impact of market fluctuations, regulatory changes, and other uncertainties. This risk distribution helps stabilize operations and ensures continuity. LITSLINK has a proven track record of managing complex projects, which reduces risks for our clients through reliable and consistent delivery.
Reason 7. Faster Time to Market
External teams often have the expertise and resources to speed up development timelines, which is crucial for staying ahead of the competition. LITSLINK’s efficient development processes and experienced team ensure your projects are completed on time, which helps you reach the market faster. In fact, due to our agile approach and expertise, we complete projects 30-50% faster than our competitors.
Reason 8. Enhanced Service Quality
Specialized business outsourcing companies often have higher standards and more experience in their fields. This results in better outcomes. The improved quality leads to enhanced customer satisfaction and loyalty. LITSLINK prides itself on delivering high-quality software solutions that exceed client expectations and foster long-term partnerships.
Reason 9. Competitive Advantage
Outsourcing allows companies to focus on strategic initiatives and innovation, which provides a competitive edge. By delegating routine tasks, businesses can allocate more resources to areas that differentiate them from competitors. Outsourcing teams help companies maintain a competitive advantage by delivering innovative solutions and freeing up internal resources for core activities.
Reason 10. Focus on Innovation
When non-essential tasks are outsourced, internal teams can concentrate on innovation. This focus on creativity and new ideas helps companies stay relevant and competitive in a rapidly changing market. LITSLINK’s dedicated R&D team stays ahead of technology trends and ensures your projects incorporate the latest innovations.
Reason 11. Better Resource Management
By outsourcing time-consuming or specialized skills-intensive tasks, companies can use their resources more effectively, leading to increased productivity and efficiency. At LITSLINK, we understand the importance of resource management. We ensure efficient resource management and provide the right talent for your project needs, optimizing workflows for maximum productivity and giving you the reassurance of a well-managed company.
Wrapping Up
Outsourcing is not just a trend; it’s a strategic decision that can significantly enhance your business operations. From cost savings and access to global talent to better focus on core activities and faster time to market, the benefits of outsourcing are clear and compelling. Companies like Apple, Slack, and Skype have successfully leveraged outsourcing to achieve remarkable growth and innovation. By considering outsourcing, you can also tap into these benefits and take your business to the next level.
At LITSLINK, we understand the unique challenges and opportunities that outsourcing presents. With our team of 300+ skilled professionals, cutting-edge technologies, and a proven track record of delivering high-quality software solutions, we are well-equipped to help you achieve your business goals. Whether you need to scale your operations, access specialized skills, or accelerate your project timelines, LITSLINK is here to support you every step of the way.
Are you ready to take your business to the next level? Contact us today to learn how our outsourcing services can provide the solutions you need to stay competitive and grow. Let’s work together to turn your vision into reality.
