Updated as per the latest trends & stats on 4th January 2021

For all those who are planning to outsource, you can Download our Software Development Outsourcing Guide and read it on the go! Check out the guide and find answers to all your questions about outsourcing software development.

India has emerged as the favorite outsourcing destination for companies planning to shift their business processes outside. There can be many advantages of outsourcing to India, cost benefits and vast IT talent pool are just two! However, you need to be completely informed before outsourcing to India and this write-up covers everything you might want to know.

There was a recent survey stating that 80% of firms in Europe and the US choose India over any other country for their outsourcing requirement. Another report by Korn Ferry study states that India will have 1 million surplus skilled tech workers and will become the technology leader by 2030. This will be in a time when the majority of the companies would be facing the challenge of talent crunch. 

Although other countries like China, the Philippines, Ireland, Ukraine, and Mexico are giving tough competition to India, the country remains to be the most preferred outsourcing destination. If you are also planning to outsource software development to India or have been outsourcing to the country for some time, here is a complete guide covering everything you need to know about outsourcing to India. 

What Is Outsourcing?

There are several questions that you might have in mind when we talk about outsourcing to India. However, for beginners, the first question would be to know the true meaning of outsourcing. 

So, let's start with the basic question- 'What is outsourcing?'

In simplest terms, outsourcing is the process of getting your business operations performed outside your in-house infrastructure. You are said to be outsourcing when you hire remote developers, dedicated teams, distributed teams, freelance professionals, or get your complete project completed at some external location.

Different people have different definitions for outsourcing depending on their requirements. 

You could choose to outsource product development, MVP development, a specific task, a full project, or hire some experts/teams to work on it by joining hands with top software development companies offshore. All in all, it is the act of joining hands with an expert to get your tasks done. 

It all started in the 1950s and 1960s when the rallying cry of diversification was at its loudest.

Businesses started looking forward to broadening their corporate bases and leveraging economies of scale. Their main agenda was to identify what processes they needed to keep in-house and which they could outsource to other economies for protecting profits. It became an official business strategy only after 1989 when businesses acknowledged getting services and support services for cost-savings.

IBM and FDS initiated outsourcing software development 40 years ago and it is still striving. 

Over the years, several business strategies came in and flew by but outsourcing stayed. And today, it has become an imperative business strategy of global corporations, startups, mid-sized companies, enterprises, and all others to get the highest level of service without increasing their budgets.

Now, a strategic partnership between the two firms for achieving the best outcome from an outsourcing venture has become the way out.  Especially the pandemic of 2020 enabled more businesses to outsource to India and similar destinations to experienced web development companies. This became their sole way to ensure business continuity. And even in 2021, this practice continued to empower businesses aiming for digital transformation. 

By outsourcing, businesses can now get their hand on the best talent without being bound by geographical or economical boundaries. They can hire AI engineers, blockchain experts, chatbot, RPA, ML, IoT, and other developers for various new development frameworks and libraries unhindered. They need not worry about the technology front of things in their digitalization initiative as long as they outsource. 

Not only did outsourcing agencies offer experts to take on projects or fill in skill gaps, by outsourcing to India, companies also managed to get new digital products out, modernize their legacy systems, and much more on the technology front.  

Outsourcing, Offshoring, Or Nearshoring?

Knowing the meaning of outsourcing is not enough for a successful business venture. It is imperative you have a clear understanding of what strategy you are adopting, without confusing it with anything else. 

Right at the mention of outsourcing, thoughts start hopping from outsourcing to offshoring to nearshoring. They are interchangeably used to denote, what we call, getting work done from anywhere but in-house. 

So, are all these three the same? 

Or is there any difference between the three? 

Let’s break down the three for a clearer understanding of these terms. 

We have already discussed what outsourcing means in the last section. Here, let’s throw light on the meaning of offshoring and nearshoring, and how they differ from outsourcing. 

Why Offshoring?

It is well known that the cost of labor in Western countries like the United States is really high. Developing countries like India have a vast pool of talent that is available at a comparatively inexpensive rate. By shifting their operations to these developing countries, companies can leverage the cost differentials and get their services completed at a much lower price. 

How Outsourcing Is Different From Offshoring?

The main difference between outsourcing and offshoring is summed up in the table above. You can go through this blog "Are Outsourcing And Offshoring Different? Let’s Find Out" to understand the difference between the two better. 

Why Nearshore?

As mentioned, companies majorly look for nearshoring when their main agenda is to avail the business process efficiency offered by outsourcing but without actually experiencing any risks of time zone gap or cultural barrier. Most companies feel that outsourcing could create complications if the company is oceans apart. Nearshoring eliminates all these barriers and provides a smoother communication flow. 

So, if you are a company in Sri Lanka, outsourcing software development to India would basically mean nearshoring for you!

How Outsourcing Is Different From Nearshoring?  

While the benefits of nearshoring might impress many companies, the challenge of cost, advanced technologies, service variety, etc., remains a hindrance. 

When you choose to outsource solely depends on your company's requirements. But, we can certainly tell you if outsourcing is for you or not. Keep reading to know more. 

How To Know If Outsourcing To India Is For You?

Now that you distinctly know what outsourcing, offshoring, and nearshoring are, there’s one question that is sure to hit your head! The one question that most companies, entrepreneurs, CTOs, solopreneurs, technical co-founders, and enterprises ask is if outsourcing to India is the right choice for them or not! 

Well, we are here to answer that for you!

But before we go forward, there is one more thing that you need to know- Whether you should outsource at all or stay with the in-house team only. 

To understand this, let's start by studying the table encapsulating the differences between outsourcing and in-house development. 

Apart from knowing the differences between outsourcing and in-house, there is one more thing that could help you make a better decision. This would be knowing the pros and cons of both in-house and outsourcing. So, let's break it down for you. 

Pros & Cons Of Outsourcing

There are two sides to each coin. There are the good points about a particular strategy. But at the same time, There can be its negative effects as well. Same goes with outsourcing. It has its own pro and cons. So, let's have a look at those.   

Pros of Outsourcing

The main reason why companies started to outsource software development in the very first place was to cut down their operational cost. By shifting their processes to a third-party, companies can not just leverage the cost difference prevalent in the global market, they can also hire the best remote developers without paying a huge package sum.

Let's sum up the pros of outsourcing:

• You save cost to company in outsourcing
• You reduce the stress that you in-house employees have
• You get access to a global unlimited technology stack and tech experts
• You find yourself committed to perform
• You can launch your product faster

While you are getting the tasks completed in some other place, your employees can produce better plans to scale, now that they are stress-free. Apart from that, you can also enjoy the freedom to choose from the endless technology stack available in the market and be sure to get the best results as they are committed to perform. 

Cons of Outsourcing

Every coin has a flip side! If outsourcing comes with a broad spectrum of advantages, it also has its own share of cons. You might find it difficult to find the best IT outsourcing company in India that you can trust and contract your services to. It's not as easy to screen an outsourcing vendor through virtual interviews or simply going through their portfolio as you do not get to meet them.

Let's sum up the cons of outsourcing:

• You need to invest time and efforts in finding the right vendor
• You might face threat to your IP
• You might face a challenge while communicating with the remote teams

Apart from that, lending your work to a third party always comes with a level of risk and security threats about your ideas being stolen. You might even find it difficult sometimes to overcome the barrier of communication. You will also need a good engagement model to build your offshore development team. 

            

Pros & Cons of In-House

We just highlighted the pros and cons of outsourcing. However, its counter, in-house development also has is own limitations and benefits. In-house development is all about getting the work done by inhouse team, whether existing one or expanding and including new members into team for the new project. Considering everything, there can be various pros and cons of in-house development, some of which we have discussed below.  

Pros of In-House

Many companies still believe that in order to see the magic unfold within an organization, it is imperative that the talent is put under the same roof. The camaraderie and the sharing of ideas that can take place within the same environment cannot be done when the teams are oceans apart.

Let's sum up the pro of in-house development:

• You have in-house developers that fit your corporate culture
• You enjoy face-to-face communication with the team
• You can give and receive real-time inputs 

You can directly share any inputs with them and get any changes implemented right in front of you. The talent you hire in-house is aware of your company policies and fits right into your corporate culture. Moreover, it is always easier to communicate with your teammate's face to face than through some virtual channel. 

Well, there are a number of pros and cons associated with outsourcing to India as well as in-house development. You need to analyze all these pros and cons and connect the dots with your business processes and requirements to come to a conclusion regarding your outsourcing decision. 

Still unclear if outsourcing is the way for you or not? 

Signs That Tell You To Start Outsourcing

There are many signs that giveaway your need for outsourcing. If you are experiencing or noticing any of the below-mentioned signs in your company or your team, it is a sign that you should definitely go with outsourcing. 

• No Resource to materialize the idea

  Whether it is a startup or an established enterprise, new ideas are what keep it interesting for your clients. However, this could not be possible if you do not have the required resources to transform your latest app ideas into a reality. Especially if you are a startup, outsourcing can take you a long distance by helping you materialize all your new startup app ideas.

  Don't believe us?

Read: How far can outsourced development take your startup?

• Crossed deadlines

  Do you see yourself running behind schedules most of the time? If yes, it is time you start outsourcing your business processes. If your deadlines are usually cross and you are not able to complete tasks as planned, you might be in need of a software outsourcing company.

• Stressed Team

  Have a look at your team members. Do they look stressed? Are they multitasking and unable to give their best to any of the tasks? You are in dire need of outsourcing if this is the case with your company as well. You can even hire remote developers from India to reduce the stress on your existing team or plug any particular technology gap.  

• Zero Innovation

  Innovation is the key to growth and if your teammates have stopped coming up with new ideas, it's a sign they are either overworked or are having a dry spell of ideas. With outsourcing, you can bring in someone with a fresh perspective and new take on things to foster innovation.

• Tighter Budget

  Cutting down costs and better affordability was the reason why organizations started to outsource. If your company is also experiencing your budget getting smaller, outsourcing could be the best option for you.

• Unsatisfied Clients

  The aim of any organization is to build a large base of satisfied clients. But, if, of late, you are experiencing that your clients are leaving more unsatisfied than satisfied, you are unable to fulfill their requirements. When you outsource, the outsourcing vendor takes care of some business processes so that you can focus on improving your client services & offering custom software development solutions.

Which Is The Best Country To Outsource?

By now, we're certain you must have realized that outsourcing is the approach that you must adopt in order to scale, cut costs, and include the latest technology stack. The next question you need to address is "Which is the best country to outsource?"

A recent Korn Ferry study claims that most countries are expected to experience a tech talent crunch by 2030, which might cost them around $162 billion in revenue. However, India will have 1 million surplus, high-skilled tech workers, by 2030, making it a tech leader. 

As per the A.T. Kearney's 2019 Global Services Location Index, India is ranked one in terms of attractiveness for outsourcing. There are over 500 companies in India that are catering to the varying requirements of the western countries. Apart from that, there are some interesting and eye-opening statistics for outsourcing to India. 

In fact, a Deloitte study, conducted on some global businesses, revealed that over 59% businesses are already outsourcing to India. Not just that, 22% of those that are not currently outsourcing to India are planning to do the same in the coming times. 

Outsourcing to India Statistics

It is the large talent pool in India that is driving more business to the country. And the outsourcing to India statistics are also majorly revolving around the talent pool itself.

Here are some other numbers that will certify India as the best outsourcing country in the world.

Aren't these reasons enough to compel you to start outsourcing IT services to India?

No?

Let's find out some more!

Why Should You Outsource  To India?

Over the years, India has gained popularity as an outsourcing destination across the globe. It is statistically proven that the country is the preferred choice of most of the countries over most outsourcing companies in  Western Europe or other Asian countries. There are many reasons why this country has gained preference. In fact, many Indian companies are even GDPR compliant to ensure safe and secure outsourcing. 

If you are still in doubt about outsourcing development to India, here is a brief of the main reasons that make India a magnet for all organizations looking to outsource IT services to India.

Vast Talent Pool

As discussed above, the talent pool in India is getting over 3.1 million additions each year. You can be sure to find the talent that you are looking for from this country. This is a convincing reason to outsource web development to India.  

Easy Communication

With over half of Indian population speaking English now, the language has become obsolete. Any other communication gap is filled by the hundreds of communication, collaboration, and remote working tools used by the companies. 

World-Class IT Infrastructure

With IT hubs like Bangalore, Gurgaon, and Hyderabad, India has proved itself to be at par with all the developed nations when it comes to IT infrastructure. There are many IT outsourcing companies in India that can help you fulfill your outsourcing needs. Even the startups and SMEs in India are now using advanced technology tools to provide excellent web solutions. 

Cost savings

It goes without a doubt that the cost of hiring a developer in India is much lower when compared to the cost of hiring a developer in any other developed country. Not just that, by outsourcing, you can save on the cost of office space, software addition, etc. 

Supportive Govt. Policies

One of the reasons why you should prefer India for outsourcing software development is the favorable and supportive government policies. The Information Technology Act and all other IT policies in India are supporting the industry's growth. 

Unlimited Tech Expertise

India, as we know, has a large populace that is working in the IT sector. So, there will an unlimited talent when it comes to any type of requirement for your project. Be it building a team, getting a complete project managed by an outsourcing company, or hiring single developers to plug the tech gap, the unlimited tech talent in India never disappoints. Whether it is developers for mature technologies or the next-gen tech or the latest frameworks, you will be spoilt for choices when you choose to outsource to India.  

Favorable Time-zone

Outsourcing to India means you can enjoy a favorable time zone. There is a time difference of 9.5 hours in the Indian and East coast timing whereas the Indian timing is approx 12.5 hours ahead of the West coast time. This gap in time can be utilized by companies to ensure that they have a team working round the clock. Your in-house team would be working in your time zone while the outsourcing team would work in their respective time-zone. And if there is an overlap in the time in the time zone, it can be best utilized to collaborate with each other. 

High Standards for Quality

Another reason why India is coming up as a favorable outsourcing destination is because of the high quality standards that it offers. Many companies feel that outsourcing to an offshore location might hamper the quality of their codes. However, that's not the case with India.  India 

Flexibility to Scale

Apart from these, there are many other perks of outsourcing software development to India like consistent quality, round-the-clock support, faster project delivery, and much more. To get a detailed explanation of all these advantages, you can go through this post:

Read: Top 10 Advantages of Outsourcing to India in 2019

What IT Services Are Outsourced To India?

When it comes to outsourcing, there are a number of services that companies outsource to India nowadays. Whether it is accounting services, payroll processing, insurance services, data management, legal services, or any other service, India is the country to choose for outsourcing all services. 

However, the talent in the IT pool has been attracting companies from far ends of the globe for outsourcing IT services to India. The field of IT industry is vast and one can outsource a number of services in this domain. Here are some of the commonly outsourced services in India. 

#1. Web Development

Outsourcing web development services to India is one of the preferred choices of organizations. There are many reasons that could convince you to outsource web development to India. They can be related to quality, affordability, technology specialty, and much more. 

#2. Mobile App Development

If you have a mobile app idea, outsourcing app development could help you get all the required features and functionalities to make it successful. Whether you want native app development, cross-platform app development, you can get it done in a hassle-free manner through outsourcing. 

Want to know how much mobile app development costs?

Read: App Budgeting 101: The Real Cost Of Building A Mobile App In 2019

#3. Enterprise Solutions

Enterprises need to undergo digital transformation to leverage evolving technology and gain a competitive edge. Be it application modernization, migration, consultation, system integration, or any type of maintenance & support to digitize your enterprise, outsourcing enterprise solutions can simplify and quicken your digital transformation. 

#4. Product Development

The next important service that most organizations, be it an established enterprise or a budding startup, outsourcing product development could help you get the product developed. You can even ask for a prototype or MVP of your project before they move to create the final product. 

#5. Digital Marketing

Being there in the digital ecosystem isn't enough for any brand. It needs to create its presence, become visible online, and leave a strong impression. This is why you need digital marketing! Getting outsourcing services for digital marketing can help you strengthen your online presence and boost online visibility to increase sales. On a similar note, SEO outsourcing has gained raging popularity in recent years, allowing organizations to avoid hassles and save a lot of money in the process.

#6. Digital Transformation

Another major sector where the majority of the businesses are planning to join hands with external vendors is in their digital transformation initiatives. There are different requirements for companies aiming for digital transformation. It could be tapping on new technology, updating their old legacy systems, or simply launching new digital products to solve new problems. Companies are looking for digital transformation partners that can enable them to offer required solutions like low-code expertise, next-gen technologies, and more. 

How To Find The Best Outsourcing Company In India?

Now that you know which services are best suited for outsourcing, it is imperative that you find the best company for IT outsourcing to India. While there are a number of companies that you can turn to for your IT outsourcing requirements, you need to be careful in choosing the software partner. Finding the right outsourcing company is the key to your outsourcing success. It determines how successful your outsourcing venture would be and how long it would last. 

There are a number of ways to find the best IT outsourcing company and one very effective and simple way is to ask the right questions. There are many questions to ask when outsourcing web development, IT services, or any other solution. Here are the four questions that you should never forget. 

• What is your web development process? Guide me through it.

• What does custom software development mean for you? Will it be custom-made or theme/framework customization?

• How relevant is your experience to my industry?

• How involved do you expect us to be in the development?

By asking all these questions, you can ascertain to find the best IT outsourcing company; a company that understands your business requirements and has experience in your targeted industry. Make sure to screen the remote teams like you would any in-house hire during interviews to ensure success in your outsourcing ventures. 

Classic Informatics has risen to prominence in the past two decades for the exceptional services it has offered to its offshore clients. We believe that to foster long-lasting relationships, we need to offer something that others do not. Our assistance in all kinds of projects and consultation has enabled us to attain client satisfaction. 

What Are Some Problems With Outsourcing To India?

Outsourcing in India has become a big industry and there are many companies that are dedicated to offering services to third-party companies. A sizable populace of India is in the IT industry and has thousands of remote developers offering their services to foreign countries contracting to the country.

Despite the boom that outsourcing has seen in the past few years, there are many companies that have had their own inhibitions and doubts. Here is a quick snippet of some of the problems that people think they might face when outsourcing to India:

• Language Barrier

  Many companies feel that outsourcing to India might be a problem owing to the language barrier. However, as discussed above, India, with over 300 million English-speaking individuals presently, is expected to have over 2 billion English-speaking people. This certainly makes the language barrier one of the myths around outsourcing to India. 

• Time zone difference

  The next issue that people feel they might face when outsourcing IT services to India is the time zone difference. They feel that the time gap might pose a big challenge and even create misunderstanding or disrupt real-time inputs and interactions with the remote developers or teams. However, any professional offshore company would be ready to flex their time as per your requirements. Moreover, you need not worry as time zone difference becomes obsolete when you use the agile software development model and have specified timings for meets and video conference calls with the teams working with you. 

• Project Control

  Many of the companies outsourcing software development to India feel that they might lose control over their project when they work with remote teams. This might seem like a big challenge in outsourcing development to India but you can simply overcome it by clearly defining the extent of control in the service contract.

• Unskilled Professionals

  The next problem that companies feel they might face when outsourcing software development to India is that unskilled professionals might be assigned to their tasks. But this should not be an issue as most companies offer you the freedom to choose the developer you like after screening them. You can even ask for a replacement if you do not like the quality of work done by them. 

  

• Theft of IP

  With China becoming the leader in offering pirated software & other products in the world, many companies in the west feel that their intellectual property might be at risk if they outsource to the Asian countries. However, most of the service providers that allow you to outsource development to India follow a non-compete and non-disclosure agreement. You can even secure and protect your IP by following these tips while outsourcing. 

How To Succeed When Outsourcing to India?

Any venture you undertake, challenges are bound to arise. Instead of getting discouraged by them, treat them as stepping stones to your success. In outsourcing as well, you can treat all the challenges and problems as stepping stones to your outsourcing success. 

While outsourcing, you are bound to face some challenges, and overcoming them could be a way to succeed. But there are a number of other tips and practices that could help you succeed when outsourcing to India. 

Tip For Outsourcing Success

When joining hands with an outsourcing firm, there are a number of tips that might help you succeed. Excited to read some simple yet effective tips for outsourcing success?

Here they go:

• Thread Together In-House & Offshore Teams: Treat your remote teams like your on-site teams and tie them together to the main objective. Avoid treating them like hired help. The offshore developers you hire should be able to share a close connection with the in-house team at any point during the outsourcing venture. 

• Foster Culture of Success: It is imperative that you start fostering a culture of teamwork and success by appreciating each achievement of the remote developers. 

• Leave No Room For Assumptions: Ensure that everything you expect from the offshore teams is clearly specified and no services are left as assumptions. State even the obvious in your outsourcing contract to avoid any misunderstandings.  

• Give Access to Information: As the offshore dedicated teams or remote developers are working on your project, it is crucial that you give them access to all the important information. Use a collaborative tool that allows easy access to the files and data while keeping it secure as well. 

• Focus on Communication & Collaboration: The success of any outsourcing venture depends majorly on how effectively you are able to communicate with the distributed team. Regular team meetings, for constant communication by leveraging communication tools, is the way to go for project managers to successfully outsource to India. 

• Perform Due Diligence: As discussed above, selecting the right outsourcing firm is a critical factors determining your outsourcing success. You need to check a number of things including your request for proposal, outsourcing firm's pedigree, its IT capabilities, and other things from the due diligence checklist for finding success in your outsourcing. 

• Protect Your IP: Your intellectual property, your software idea is the foundation of your process and it needs to be protected. You would not want any threat to it. So, you should trademark it and protect it legally before outsourcing software development to India. 

• Be Careful With Outsourcing Contract: The outsourcing contract is the legal document that binds you and the outsourcing firm together. It needs to be carefully created with all the required details for a smooth outsourcing venture.

What Is The Cost of Outsourcing To India?

Now that we know the reasons to outsource to India, the challenges of outsourcing to India, and tips to succeed in this venture, you would be wondering how much would it cost you to actually outsource to India. The salary of the remote developer or the dedicated team that you hire in the offshore location is not the only cost that you incur when outsourcing software development to India.

There are some added costs and hidden costs as well that make up your complete outsourcing bill. Here are some of the main elements added to the outsourcing cost:

• Hiring & selection cost

• Cost of communication & collaboration tools

• Getting software licenses

• Transitioning to outsourcing cost

• Updating your systems & IT infrastructure to be in sync with the remote teams

• Creating outsourcing contracts

• Getting IP rights & trademarks for protection

• Ad-hoc costs like SSL Certificate, sample, travel, etc. 

For instance, you are getting an MVP developed by a remote developer or outsourcing company in India. This team would include 1 junior developer, 1 mid-level developer, 1 designer, 1 QA engineer, and a Project manager. The time taken is around 320 hours or four sprints. here is a breakup of the cost of outsourcing it.  

Conclusion

Whether you want to cut costs, including advanced technologies, or focus on growing your business, outsourcing to India could be the right step.  There are many advantages of outsourcing that you can enjoy; cost benefits you can leverage, and a technology stack you can bring to the table when you choose to outsource development to India. 

We, at Classic Informatics, a global web development company. serve our clients with an endless technology stack. Our outsourcing models cover remote developers, dedicated teams, and managed projects. we completely tailor our processes to suit your style and meet your requirements. We have also been ranked one of the best outsourcing companies in India by sites like Clutch and GoodFirms.

Last Updated On 4th January 2022; Published On 22nd November 2019