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How IT Outsourcing Helps in Challenging Times

3 Reason IT Outsourcing Helps in Times of Tech Layoffs featured image

How IT Outsourcing Helps in Challenging Times

In times of tech layoffs, it is important to rethink hiring strategies. Outsourcing may become a solution for companies dealing with software development, technology, and IT. In this article, we will compare IT outsourcing and in-house tech teams and why outsourcing is a better solution today. 

As tech layoffs occur very often, employers and employees are worried about the effects. The recent job cuts will likely lead to devastating impacts on health, life, and the economy. Stanford business professor Jeffrey Pfeffer says that the latest layoffs are caused by “social contagion.” 

Simply put, companies are firing staff because others are doing the same. The copycat behavior can be tracked once you see this chain of layoffs and the number of people laid off below.

examples of layoffs in tech occurring from late 2022 and early 2023


Imitative behavior is not the only reason for downsizing. Increased interest rates, inflation, and the decline in economic growth are the other important reasons for offloading workers. 
Although layoffs will impact many industries and organizations, IT talent demand won’t decrease. “Doing more with less” will likely become a slogan for many businesses—and outsourcing vendors should expect a flow of new clients. 

Let’s see why IT outsourcing and IT staffing may become a solution to the situation. 

Companies looking to outsource IT services can find reliable companies to explore, shortlist, and partner with on The Manifest. 

IT Outsourcing vs. In-House IT Departments

With massive layoffs and IT resources lacking, businesses will still need someone to do the work, complete IT projects, and develop or modernize software. As a result, many will have a choice to make—hire in-house staff or outsource. 

in-house IT departments and outside IT companies compared for quality

As you can see, outsourcing is a good fit for those who want to reduce or optimize software development costs without compromising the code quality. Unlike in-house recruiting, outsourcing gives access to a vast talent pipeline. It’s an incredibly beneficial option for fast-growing development teams that need quick scale-up and specific skills.

Moreover, if your project has no clearly outlined requirements and will require changes, outsource providers will easily cope with that as they usually have well-established change request management procedures, whereas in-house teams are resistant to changes.      

Why Is Outsourcing Good in Times of Layoffs?

Perhaps layoffs will cause an increased demand for overseas developers due to lower IT services costs. The latter includes a large number of services. 

IT outsourcing companies offer custom solutions, mobile and web applications, and enterprise-grade solutions like custom ERPs, DWHs, and CRMs. In addition, they provide cloud transformation and migration services, modernize legacy systems, offer software audits and support, and many more. 

So, why is delegating your IT initiatives to an outsourcing provider better than retaining an in-house team? 

Here are some of the key benefits: 

three reasons outsourcing IT is beneficial to companies in times of layoffs

  1. Improved relationships
  2. Deep industry expertise
  3. Reliable team and project management

So, why outsource instead of hiring in-house teams? Let's deep-dive into the three reasons for outsourcing a software vendor to develop your IT projects.

1. Relationships: Quick hiring, transparency, and second opinion

Relations with an outsourcing vendor can be pretty transparent and efficient. Gathering the required IT resources usually takes from two to four weeks. Everything you need is a detailed description of the requirements of each team member. 

Based on your requirements, the vendor will select the right people quickly. Unlike in-house recruitment departments, IT recruiters have hundreds of talents in their pipeline. They are more expert in distinguishing experience and hard and soft skills required to work on a particular project. 

The secret of successful relationships between a client and a provider is transparency. Quarterly reports showing the project status, issues, and plans are typical for reliable outsourcing vendors. Each quarter, they will demonstrate what’s going on, what has been released, and what is to be done.

Moreover, if customers have doubts about the feature, technology stack, or whatever is related to the project realization, they can ask for a second opinion. 

Some vendors provide this added value when you can get additional consultations with experts to verify your idea or get professional advice. In contrast, in-house teams will have to search for external experts. It will definitely take time and be costly. 

2. Expertise: Agile, mature SDLC, and UX research

The expertise of the outsourcing provider is measured not only by the competence of its workers but also by the maturity of operational processes inside the company. 

Why do vendors’ teams achieve outcomes faster than in-house teams? That’s because they follow various methodologies to manage projects. 

Agile is the most popular methodology that allows for getting results as fast as possible. Developers can continuously improve the software in each sprint (lasting 2-4 weeks), show demos, and get customer feedback. In contrast, in-house teams can neglect project management practices and do everything on the fly. 

In-house teams often don’t know well the SDLC (software development life cycle) principles and execute the project in the manner they get used to. It leads to devastating issues that aren’t so easy to fix. Outsourcing companies have worked for years and are well-versed in the best practices of SDLC. 

The latter usually consists of several critical stages that mustn’t be eliminated: product discovery, planning, UI/UX design, development, testing and QA, deployment, and maintenance and support. 

It’s worth mentioning that user experience (UX) is often disregarded by in-house teams or can’t be done appropriately due to the lack of UX expertise. Professional custom software development companies involve a UX specialist to do this job: conduct interviews with users, and create buyer personas and user journey maps. This part of the project is often the most important as it is a fundament for describing business processes (as to be) and future software requirements. 

Outsourcing providers are also good if you need specific services for your industry. For example, most IT companies specialize in multiple industries like banking, insurance, or healthcare, which means they have experience building software with industry-specific features. 

If talking about quality, IT companies use special tools like SonarQube to check the code quality; developers cross-check their code as well. Quality assurance processes are set up to monitor the code quality, software performance, and the alignment between the released features and the initial requirements.

3. Team Management: Regular reporting, learning and development, employee retention

With an outsourcing provider, you won’t have a headache thinking of monitoring the work done by your employees, their learning and development, certification, and training classes.

By the way, there are points of view that retaining workers costs the business an extra 35% of the workers’ checks. If you hire overseas developers, you won’t spend money for retainment—employee retention is the vendor’s business.

In outsourcing, you, as a customer, can ask to replace one team member for another. That will be accurately done, eliminating possible risks. The knowledge will be transferred, and the new team member will be onboarded. 

Outsourcing Is a Good Option for Businesses During Tough Times

Despite significant layoffs, tech specialists are highly sought. Outsourcing can be a good solution for those looking for highly-skilled developers for a limited period of time. Outsourced teams are more result-oriented, focused on quality outcomes, and more efficient than in-house IT departments.   

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