Cost cutting is one of the key reasons behind virtually every decision to outsource software development. Apparently, it’s not just about the money, but the long-term savings from hiring a development team abroad easily outweigh the occasional challenges of managing a remote team.
When you outsource, you save directly by paying lower hourly or monthly costs. Rates may vary substantially from region to region, from one resource type to another and for different technologies, but you will typically see considerable savings right away compared to what you would have been paying in your domestic economy. As mentioned earlier, however, these savings are not based solely on the “raw” cost of labor, but rather on a combination of benefits provided by the flexible cooperation models used in outsourcing. Let’s take a look at the less visible financial incentives of outsourced software development.
Indirect savings: flexible team size adjustment
The main benefit of hiring offshore resources is, of course, the flexible team size. When you are no longer bound by the terms of employment contracts, you are free to ramp up and ramp down when necessary and no longer need to pay for benched resources awaiting their next assignment. As a rule, offshore development companies require an advance notice in case of termination, but these requirements are reasonable and let you dismiss a team without overpaying and having any hard feelings about letting people go. The same flexibility makes it possible to augment the team with the necessary type of resource on a temporary, ad hoc basis without having to hire anyone for a prolonged period of time.
Indirect savings: standard overheads
Office rent and supplies, sick and paternity leaves, health insurance, kicker tables, fridges full of refreshments and snacks, pizza days and corporate beer nights – you don’t have to pay for any of this when you outsource. Let your offshore partner handle all of that in exchange for a steady flow of work. Not only does it convert into a pretty penny saved every month, but also takes away a colossal amount of administrative work that would otherwise have to be done to accommodate all of the above.
Indirect savings: taxes
A major incentive to outsource software development to an overseas vendor is the ability to save on taxes through exemptions or deductions. The size of these savings may vary depending on the legal entity you are contracting and their location, but you can expect to have an overall smaller tax burden when hiring a foreign contractor for developing custom software for private use or re-sale. If in doubt, talk to a reliable accountant in your area to get a full breakdown of potential savings.
Advantages of partnering with Cortlex
A software development company located in Belarus, which is often referred to as the emerging Silicon Valley of Eastern Europe, Cortlex offers all of the above and complements the economic incentives with its broad technical expertise and fine-tuned processes. No matter if you are seeking a partner for a one-time project or aim to secure a relationship for years to come, Cortlex will make sure you will be well-served in any capacity. Feel free to drop us a line and our sales team will get back to you in no time.