Pros and Cons of Outsourced Software Development

There are a lot of benefits to taking the quick-and-easy approach of outsourcing software development. But there are drawbacks as well. Here we look at the pros and cons — as well as some alternatives.

Christopher Tozzi, Technology analyst

March 7, 2023

5 Min Read
software code

You need to develop an application stat, but your in-house development team either doesn't exist or lacks the time or expertise to write the code you need.

How do you solve this challenge? The quick-and-easy solution is to outsource development of your app to a third-party team.

But the quick-and-easy approach is not necessarily the best approach. Before deciding to outsource software development, it's critical to weigh the pros and cons, which we explore in this article:

What Is Outsourced Software Development?

Outsourced software development is the use of third-party developers — meaning those who are not employed by your business directly — to write some or all of your software.

Related: Attracting Senior Software Developers: Salaries, Workplace Culture Matter

Typically, an organization that chooses to outsource development hires a firm that specializes in software development outsourcing. The organization describes its requirements, then leaves it to the outsourcing company to fulfill them.

Advantages of Outsourced Software Development

In many cases, outsourcing software development offers a number of benefits:

  • Faster timelines: If you lack the in-house staff to meet your development requirements — or if your in-house staff is tied down with other projects — outsourced development is a way to get the code you need as quickly as possible.

  • Broader expertise: Outsourced software development can be a way to connect with programmers who have special skills, such as knowledge of particular programming languages, that your in-house developers lack.

  • Cost savings: Outsourced software development may lead to lower overall costs for a project, especially if the alternative is to recruit and hire additional full-time developers.

  • Financial predictability: Although there is no guarantee that your outsourced development project will stick to its original budget, outsourcing tends to lead to more predictable costs because the outsourced development firm will generally be bound by a contract to complete work at an agreed-upon cost. With in-house development, it's easier to end up with cost overruns that you can't negotiate down or force external vendors to absorb.

These are the main reasons why businesses turn to outsourced software development today.

Disadvantages of Outsourced Software Development

On the other hand, a number of risks and challenges may arise when you outsource development:

  • Software maintenance: Most software also needs to be maintained and updated over time. Those requirements may be harder to meet when you outsource development because you either have to pay the outsourced development company to maintain your software indefinitely, or you have to ask your in-house developers to do it — a task that they may find challenging if they didn't write the code.

  • Inconsistent quality: Code written by outsourced developers can certainly be high-quality. However, in general, it's harder to force outsourced developers to adhere to quality (and security) standards than it is when you work with in-house developers.

  • Communication challenges: With outsourced development, there is typically less communication between business stakeholders and programmers. As a result, it may be more difficult to ensure that software remains in alignment with business needs, especially if those needs change after development has begun.

For these reasons, outsourcing software development is generally not the best approach for applications that a business needs to maintain indefinitely, that have high quality and security standards, and/or that require complex, ongoing communication between business stakeholders and developers.

Alternatives to Outsourced Programming

If you decide that traditional outsourced development isn't a good fit for your project but you also can't complete the project with your existing in-house team, there are some alternative solutions available.

The most obvious is simply to hire more programmers onto your staff. That's usually your best bet if you need tight control over application quality and security, and if you'll be using the app long enough to justify paying for full-time developers to build and maintain it.

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Alternatively, if you don't want to commit to more full-time developers but you also don't want to outsource, you could hire developers on a contract or freelance basis. Contract developers are similar to outsourced developers in that they can be hired to complete specific projects, but by working with individual contractors (as opposed to an outsourced development firm) you will typically have more control over how the programmers work, as well as more opportunities to interface with them and review their code as it's under development. The tradeoff is that you'll have to expend more effort managing them, too.

Another solution to consider is adopting a low-code development strategy for your app. Low-code may require you to sacrifice some control, but because it reduces the amount of time necessary to write an app, it can be a way to meet development needs quickly and at a lower cost without having to outsource.


Outsourced software development has its benefits. But it also has its limitations. If you decide that outsourcing your project wholesale isn't the right idea, consider a creative alternative, like working with contract developers or taking advantage of low-code programming platforms.

About the Author(s)

Christopher Tozzi

Technology analyst, Fixate.IO

Christopher Tozzi is a technology analyst with subject matter expertise in cloud computing, application development, open source software, virtualization, containers and more. He also lectures at a major university in the Albany, New York, area. His book, “For Fun and Profit: A History of the Free and Open Source Software Revolution,” was published by MIT Press.

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