Factors That Affect Cost Of IT Outsourcing

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Mai Le

2022-09-08 07:50:16

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Since the cost of outsourcing IT is affected by a lot of different factors, and it can be impacted by the global market fluctuation, it is impossible to say with absolute certainty what it will cost. Therefore, each IT outsourcing deal has its own checklist to decide the rates. In this article, VNEXT Global will suggest some popular factors that can have a thorough impact on the cost of IT outsourcing. Let’s get started!

 

What To Consider When Deciding The Cost Of Outsourcing IT Services?

1. Cost of domestic living

2. The development team size

3. Tech stacks

4. Level of development team members

5. Project complexity

 

1. Cost Of Domestics Living

Obviously, the countries with lower expenses of living would be more affordable than those having higher ones. For example, the US, the UK, Germany, or other EU countries are never in your potential IT outsourcing checklist if you are a startup or an SME (small-and-medium enterprise), because your budget for IT outsourcing services is quite small, right? That is the reason why the IT outsourcing market in Vietnam and India has grown sharply in recent years. 

 

2. The Development Team Size

Your software product, surely, needs more than one function. At least, you need a Project Manager (PM), a Business Analyst (BA), a backend developer, a frontend developer, an UI/UX designer and a tester (maybe automation or manual tester).

 

The more complicated your software is, the more resources you need. More employees can shorten your project timeline, but they absolutely cost you a larger, even much larger, budget. However, we suggest that it is much better to develop a high-quality software product as fast as possible so that you can release it soon, even though it may cost you a lot of money at the initial stage.

 

vnext global factors affect cost of it outsourcing

 

3. Tech Stacks

Of course, as aforementioned, your project requires at least a Project Manager (PM), a Business Analyst (BA), a backend developer, a frontend developer, an UI/UX designer and a tester. It is a combination, a smooth combination of different tech stacks. The more tech stacks you need, the more developers you must hire, because it is impossible that a developer knows about or is good at all stacks. Or in some cases, the tech stack you need is quite rare on the market, leading to the cost to hire a developer working with that stack is higher compared to the average rate.

 

4. Levels Of Development Team Members

Developers, or engineers, are at various levels, such as senior, middle, junior and fresher. As a result, their rates vary according to their knowledge and ability. 

 

In a software development project, tasks are assigned to members based on their level. Simple tasks are given to less experienced developers, maybe in the junior or fresher level. Meanwhile, senior and middle developers will handle the complicated parts of the development process. They may spend some time instructing other junior or fresher members to get accustomed with the difficult tasks. The more high-level developers you hire, the higher rates you must pay.

 

5. Project Complexity

The more complex your software development is, the more employees you need, the higher work effort you require. As a result, you have an intention to find senior or middle IT talents, leading to the higher rates. And if you want to be different, more outstanding than your competitors, you may require the latest technologies, or the unpopular tech stacks, leading to increased budget for your software development project.

 

In case of emergency, you may require them to work overtime to push the timeline. The overtime rates, obviously, are much higher than the ordinary ones. 

 

vnext global factors affect cost it outsourcing

 

Final thought

Beside the above factors, there are a lot of other things that can have an impact on the cost of outsourcing IT companies. When discussing the cost of outsourcing IT services with your IT outsourcing vendor, you should agree on some metrics to set the most reasonable price, bringing mutual benefits to both parties.

 

If you are looking for a trusted IT outsourcing company in Vietnam, VNEXT Global is the ideal choice. With 14+ years of experience, we surely can help you to optimize your business digitalization within a small budget and short time. Currently, we have 400+ IT consultants and developers in Mobile App, Web App, System, Blockchain Development and Testing Services. We have provided solutions to 600+ projects in several industries for clients worldwide. We are willing to become a companion on your way to success. Please tell us when is convenient for you to have an online meeting to discuss this further. Have a nice day!

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