Outsourcing FinTech Product Development: Why Choose It and How It Works?

Outsourcing IT operations and software development services seems to be a common practice among businesses these days. In 2022, 79% of businesses outsourced their software and app development, according to Deloitte. That's a very high percentage, which indicates that outsourcing is a popular choice for companies of all sizes. It is not surprising, as outsourcing comes with many benefits.

This article will serve as a mini guide to outsourcing product development and its characteristics. If you are considering outsourcing your app development or IT operations, make sure you read our article to make an informed decision later.

Outsourced Product Development: What Is It?

Outsourcing is the process of hiring a specialist from outside the company (sometimes even from outside the economic area) to perform some of the tasks or complete projects that a company’s team would otherwise be unable to work on. Many different processes can benefit from outsourcing, and one of them is product development. The outsourced team can be responsible for designing, developing, and/or maintaining a particular product, with the hiring company keeping overall control and ownership. It is usually done to reduce costs or access an otherwise unavailable talent pool.

Software firms can outsource the development process to external specialists, not just specific tasks. Leveraging the expertise and resources of the outsourced team to complete their projects faster and more efficiently is a great way to improve the workflow. Nonetheless, it is important to carefully select the outsourcing partner to ensure the cooperation will go smoothly.

How Can Outsourcing Financial Product Development Benefit Your Business?

Outsourcing product development may help your company in many ways, regardless of whether you typically offer fintech app development services, work with healthcare-related technology, or do something entirely different. Since there is no restriction on what the external team can work on, this strategy can apply to virtually any industry.

One of the main benefits of outsourcing is reaching previously unknown talents who might be highly skilled or experienced in app development. They can be hired in different cities, areas, and even countries and work remotely. Even though they will technically not be part of your company, they may bring a fresh point of view regarding your own projects.

Outsourcing usually also means lower costs, especially when working with remote teams from areas with lower labor costs. This enables organizations to allocate resources to other, more immediate needs or simply to keep the saved funds for future investments.

Software development companies can also scale their operations more efficiently when outsourcing, as the number of hired professionals can be easily adjusted, based on project demands or current budget. Adding two, five, or more people to the team can be easily done, without the need for a lengthy process of hiring people to work in-house.

There is much, much more to outsourcing, but listing all of its benefits would be difficult, as different businesses have different priorities and values. That is why every company should thoroughly evaluate their goals and needs to find out if it will be the right solution for them.

Outsourcing Your Financial & Banking App Development: The Disadvantages

The coin has two sides, and outsourcing app development also comes with its own set of drawbacks. Some of them are less serious than others, but all should be considered before deciding to hire a team from outside your company.

One commonly cited disadvantage is the potential lack of control over the development process and quality of work. Not being able to regularly see the physical progress of the project can lead  to a lack of trust in the remote, outsourced workers.

Communication problems can also arise, especially if the hired specialists reside in another time zone or come from different cultures. While adjusting call times or working hours can mitigate the issue a bit, it might be difficult to solve problems that stem from cultural differences or language barriers.

Another problem is, of course, data privacy and confidentiality. Letting outside contractors have access to sensitive information can pose a risk to your company's security. Remember to have clear guidelines and protocols for data protection set when working with outsourced workers. You should also monitor the access and usage of company data, especially if related to confidential or secret projects.

Should You Hire In-House or Outsource?

The answer to this question depends on the specific needs that you have, as well as your expectations for the quality of work, and the level of control you want to maintain over the project. Remember, that with remote work, you do not have the same level of supervision as in the office.

Other factors to consider are the availability of specific skills you may need for particular tasks, your budget, and the timeline for completion. If your project is short-term or the deadline is close, outsourcing may be a more effective option, as the in-house recruitment processes could delay the start of the actual work. In-house is definitely better when you know the project will take a long or require consistent work on a set schedule. It is also the preferable option if the project involves sensitive information that you should be kept within the organization.

If you need a special set of skills or expertise that you can’t find in your area, consider outsourcing. It will be easier to find a specialist with the necessary qualifications outside your firm, as the number of companies providing app development services that are willing to work on projects and provide expertise is always higher than the pool of local talent available.

Outsourcing: The Solution for Everybody

66% of businesses in the United States outsource at least one whole department. The number speaks for itself, showing that outsourcing is a common and appreciated business practice. If you are considering outsourcing product development to an outside team, thoroughly research potential partners to avoid collaborating with incompetent or unreliable companies. This will ensure you find trustworthy specialists who will help you complete your project without hassle.

Whether you are a small startup or a large corporation, outsourcing can be a viable option, and there is almost no limit to the types of services you can outsource. Product development is just one of many, so if you ever need assistance but can't handle the workload in-house, reach out to outside experts.