What Defines IT Outsourcing Price and How to Optimize Your Costs

April 14, 2021

Since 2020, businesses faced the new social distancing reality that is pushing towards investing in remote management tools, excellent delivery services, and other types of software digitalizing and automizing processes. How to Optimize IT Outsourcing Cost Process

At the beginning of the Coronavirus pandemic, these intentions were rather chaotic and impulsive as businesses were facing the collapse threat. But steadily, these remote models are evolving in outsourcing strategies, according to BCG forecast.

In 2021, the global trend shows that businesses are searching for more sustainable pricing models and contract terms after an impulsive decision to save what’s left in the previous year.

And the digital market has numerous options to offer to this demand, with different price tags and seniority levels ranging from country to country.

We’re here to describe the specifics of the IT outsourcing cost model in 2021 and provide practical recommendations on how to pick the one working in a long-term perspective and with the real value-for-money.

The Benefits of IT Outsourcing in 2021

Numerous companies refer to an offshore development team with a bucket list of demands. For years, our clients are expecting outsourcing software development to be cheap, of fair quality, and having certain risks. In the circumstances of global lockdown, it promised a new highly important advantage: an ability to digitalize fast.

And this perk outweighed all other advantages in 2020. But in 2021, businesses recalled there are other benefits outsourcing should bring — and have started demanding them back.

In practice, the recent digitalize-to-survive rush has led to the critical number of inaccurate software solutions and outsourcing models on the market.

This year, companies have more time and knowledge and are willing to change the situation and an accurate solution for their digital needs. And here, an ability to calculate the IT outsourcing cost and prevent all the possible risks is the basic skill a business owner should master.

How to Optimize IT Outsourcing Cost Remote

2 Factors that Define IT Outsourcing Costs

For those who have no idea how the IT market works and are cautious of the hidden costs of outsourcing, start by considering the country and the level of expected expertise first.

These two factors will work as a needed lens to choose among the relevant options and pick a good outsourcing pricing model for your company.

Location

Geography plays a determining role in defining the cost of outsourcing. Commonly, the developers from the USA and Western Europe have the highest hourly rates on the IT market, having a reputation of top skilled professionals.

For these locations, the seniority level doesn’t make much difference — Junior specialists are still paid higher than others.

If you’re searching for cheaper options, Ukraine and India are commonly associated with the average cost savings of outsourcing.

At the same time, developers from Eastern Europe in general and Ukraine, in particular, are paid slightly higher and offer a sustainable quality for this money. Latin America is also the market with modest pricing models.

Expertise

Like in any other sphere, knowledge, and skills define the cost of outsourcing. Senior specialists are paid higher than entry-level developers. In practice, the situation is more complex, though.

You may assume on saving money while hiring a mid-level offshore worker, for example. But you can easily end up paying twice more than expected because the project scope appeared to be dynamic and requiring extra skills constantly. And so, it would be cheaper to get a Senior developer right away.

How to Optimize IT Outsourcing Cost Developer

How to Optimize Outsourcing Development Price: 4 Recommendations from Intellectsoft Experts

Even though the benefits of IT outsourcing are convincing in theory, its misguided application may bring unsatisfactory results — like the inability to control the total cost of ownership and achieve the needed quality of service.

To prevent this disappointment from happening, Intellectsoft experts have prepared the top 4 recommendations that will help you get the real value for money while requesting IT outsourcing.

Sign a Detailed Contract

According to the BCG report, the majority of problems in outsourcing success come from intransparent pricing structure, poorly tracked objectives and KPIs, and inadequate contract management.

Basically, all these things should be discussed at the very beginning of your cooperation with the outsourced team. Otherwise, numerous unexpected spendings will increase your overall IT outsourcing cost on the way.

Select the Relevant Seniority Level

Requesting the IT expert or tech talent is not always necessary. Most software-related tasks can be performed by a middle specialist with solid experience in this field. At the same time, the complex digital solutions require top-quality development by one or more IT specialists.

That’s why, for example, you should hire a development team of experienced professionals for building a mobile app from scratch but a sole developer with a lower seniority level for adding a smoothly working delivery in an already existing app. Knowing the needed seniority level will save your outsourcing cost.

Check Both Hard and Soft Skills

Many business owners practice a result-oriented approach. Because of that, they rather think they achieved a mutual understanding with the development team than achieve it actually.

To prevent this from happening, establish the common language with your job applicants: double-check if they get you right and offer relevant options, not only whether they possess the needed skills and experience.

In this context, make sure time zones and different cultural backgrounds won’t be an obstacle for your business communication.

How to Optimize IT Outsourcing Cost Team

Be Flexible, But Evaluate Strictly

Even if you’ve signed a detailed contract and determined your project needs and limitations correctly, the dynamic world we live in will inevitably call your cooperation to evolve.

Nevertheless, these shifts shouldn’t work as an excuse for getting an inaccurate result. You can agree on changing terms and making slight software adjustments, but your outsourced software-building project should still have a fixed scope, time, and resources. If you hire a team that didn’t create for you the software you’ve ordered, this team failed. It’s objective.

How You Can Hire an Outsourced Team from Intellectsoft

Since we’ve determined how an outsourced price should be calculated and how the team should work, you’ve ready to order this service in a smart way. To save you time and effort on searching, we offer our help in getting professional IT outsourcing.

We work by sticking to all the recommendations mentioned here. Our process starts from discussing the project and determining all the possible risks in advance.

Then, we’ll cooperate by assigning the responsibility areas transparently. In particular, the client stands for a product and the Intellectsoft team takes all the personnel and resource-related tasks. Follow the link to learn more about our dedicated development team service.

With IT outsourcing from Intellectsoft, you will enjoy numerous advantages — including scaling velocity, real-time assessment, experience-proven expertise, and critical onshore resourcing.

If you’re looking for a reliable outsourcing partner for an affordable cost, you came to the right place. Talk to our experts and find the top-matching solution and cost of outsourcing IT services so your business can start benefiting from it today!