Outsourcing Software Development to Lower Wage Countries: A Comprehensive Guide for Small and Medium Businesses

The practice of outsourcing software development to lower wage countries is a worldwide trend, driven by the desire for cost savings and access to a skilled workforce. This article explores the benefits and considerations for small and medium businesses (SMBs) in outsourcing their software development through the lens of DevOps practices and explores the various types of companies that benefit from this approach.

The Benefits of DevOps Outsourcing

DevOps outsourcing brings several advantages to projects, including better risk control, lower failure rates, reduced unplanned work and rework, and faster resolution of security issues. For large companies like Netflix, DevOps plays a crucial role in various areas, such as cloudification, big data, data science, machine learning, and the Internet of Things (IoT).

Kinds of Companies That Outsource Software Development

Various types of companies, especially small and medium businesses (SMBs) and startups, can benefit from outsourcing their software development projects to lower-wage countries. This can help them achieve quality software development at a reduced cost while focusing on their core business.

Small and Medium Businesses

Small and medium businesses can collaborate with lower-budget DevOps companies from lower-wage countries. While this approach can offer significant cost savings, the quality of the project is not always guaranteed. Companies should carefully evaluate the capabilities of these vendors to ensure they meet their needs.

Startups

Startups often outsource software development to lower-wage countries to develop software products at a lower cost. By doing so, they can potentially obtain a good project at a cheaper price, which is crucial for their growth and success.

The Global Perspective: Offshoring in the Modern Economy

Offshoring is a controversial topic, often associated with negative connotations in America. However, the global economy necessitates a flattened world. Companies in America, for example, outsource various aspects of their business to lower-wage countries for cost savings and access to a globally diverse talent pool. This is evident in the development of iPhones and Android devices, which comprise parts manufactured in several countries.

Costs and Benefits of Offshoring

The cost of living in the Bay Area, where many top software developers are located, is exceedingly high, making software development expensive there. In contrast, regions like Kansas offer lower costs and a large pool of trained developers who have relocated from Silicon Valley and took pay cuts. While the quality of the software development might not match that of the Silicon Valley developers, it is still a viable option.

For example, an Oakland-based company that needs to develop a software product but is not focused on software development may have several options. They can hire a local software firm, staff up with software developers and product managers, or hire a software firm in another area such as Kansas. While Kansas is cheaper, the communication gap and time zone differences may introduce challenges.

Another option is to outsource to a country further away, such as Nepal. While the skill level of the developers may be lower, the price is significantly reduced, and the company can still produce a quality product. However, managing the process and dealing with cultural and linguistic differences will require additional effort.

It is important to note that while companies can outsource to countries outside of America, the local workforce, especially in the tech industry, may still have concerns about job security and economic impacts. Hollywood, for instance, has been bringing productions back to the U.S. with financial incentives, and a growing number of companies across the globe are embracing a distributed workforce.

Conclusion

Outsourcing software development to lower-wage countries is a viable option for small and medium businesses and startups. It offers cost savings and access to a diverse talent pool. However, companies should carefully weigh the pros and cons, including quality, communication, and cultural differences. As the global economy continues to evolve, companies can still benefit from selecting the best option for their specific needs.