Supported mainly by remote work, outsourcing for software development has been snowballing even before the pandemic. The number of startups going for tech outsourcing is expected to increase even further, according to the 2022 State of Tech Staffing report by Commit. The company also explores the benefits, challenges, and concerns associated with tech outsourcing.
A lot has been said about the post-pandemic ‘new normal’ and how it has dramatically changed the way we work. This is not one of those stories. This is a data-driven story of what senior tech leaders expect, specifically in tech development going forward.
Changes brought about by pandemic-influenced realities accelerated where the high-tech and other sectors were headed. But that doesn’t necessarily mean remote, although remote work certainly plays a big part in the context of an average professional’s life, tech or otherwise. The pandemic also accelerated the gig economy and the Great Resignation.
In fact, the computer and information technology sector is where the highest number of workers who quit in 2021 want to start afresh, according to ResumeBuilder. The tech sector is also one of those few sectors which had the semblance of remote work, and wherein IT pros could offer their services as outside experts before the novel coronavirus broke out in December 2019.
The benefits of remote work are acknowledged by 99% of respondents of Commits’ 2022 State of Tech Staffing report. The top benefits of remote work, according to respondents, are higher productivity (53%), cost-saving (33%), better cross-team collaboration (32%), better employee health (29%), and an expanded talent pool (27%).
All this has culminated into what the IT and tech service provider Commit says is “a clear supply and demand issue, where more software developers are in higher demand than ever before in today’s Dev teams.â€
Commit’s study is based on feedback from 200 senior tech leaders (CTOs, CEOs, VPs HR, Recruitment or Talent, VPs in R&D, engineering or technology) working in US-based startups that have received an investment round of $1M or more in the past six months.
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The Israeli company expects a 70% jump in outsourcing for software development at startups. In 2021, startups outsourced 17% of software development, will outsource 21% in 2022 and are slated to outsource 36% in 2023 if trends continue to hold.
“As remote work becomes the norm, a lot of companies have taken this opportunity to hire anywhere in the world. They can see that it’s fueling unprecedented productivity and growth, as they have become accustomed to virtual meetings and cloud,†said Commit.
UI/UX designer is among the jobs being outsourced the most at 34%. Software developers are a close second at 31%, while QA at 28% stands as the third most outsourced job. Commit found that outsourcing is influenced significantly by funding rounds of startups, especially for software development jobs.
“As startups move from MVP to gaining revenue, and they have raised their Round A, which is typically a large amount of money, they can’t keep up with demand and need to turn to outsourcing to meet the pressure to deliver,†Commit explained.
The company illustrated this with the following:
Curiously enough, software development outsourcing declined in Round B.
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It is important to note that outsourcing software development is a two-way street in terms of the advantages it offers to both professionals and organizations. Scalability of team size, according to CTOs, is the top advantage (42%), followed by efficient utilization of time (39%) and higher productivity (~30%), respectively.
Benefits of Outsourcing Software Development According to C-Suite Executives | Source: CommitOpens a new window
Once again, the need to outsource software development varies according to the funding stage of the startup. For example, a Round B startup outsources software development primarily to save time and scale or resize teams. A seed-funded startup outsources software development to reduce risk, save costs, and scale-up teams.
Top Benefits of Outsourcing Software Development by Funding Stage | Source: Commit
That is not to say outsourcing doesn’t entail challenges in staffing and managing engineering teams. Only 2% of respondents said they do not face any challenges in outsourcing tech jobs. The biggest one by far is the length of time to hire quality talent (66%), followed by the lack of team leads and time zone differences, both tied at 51%.
The average time to hire developers is currently upwards of 7.5 weeks. Meanwhile, the focus of startups is primarily on hiring core tech workers without offshore middle management from the same location as the developers. “Both of these challenges could be solved with a smart outsourcing strategy, where remote work trends are embraced to hire not only developers, but middle management, too.â€
Tech startups can have a huge growth potential but without scalability, they can fall flat. Startups also need to perform a quantitative analysis of cost vs. scale while addressing concerns such as the quality of work, compliance risks, communication barriers, and more.
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