How is COVID changing the software outsourcing landscape?

The COVID pandemic brought a lot of uncertainty to everyone, including business. Software development outsourcing is no exception. When it happened, nobody knew what sort of impact it would have. A year later, we are much smarter and we can confidently say that outsourcing did well during the pandemic, but it will emerge just a little bit different. In this article, we are analyzing various ways in which outsourcing will permanently change as a result of COVID.

In 2020, spending on IT was forecasted to surpass $1 trillion worldwide. With that much money at stake, everyone wondered what impact COVID and the ensuing chaos and economic uncertainty would bring. Some of the most pessimistic commentators believed that weakened businesses would cut unnecessary spendings and limit innovations, hurting outsourcing in the process. Others predicted an opposite scenario - a big increase in demand for software development outsourcing driven by companies forced to change their business model and innovate in order to survive in a new contactless economy.

Both alternatives sound rather extreme. Did any of them come true? Well, the earth did not shatter in the end, but there were some changes. Let us take a lot at them.

New way of building relationships with clients

With the limited possibility of an in-person meeting, it takes more effort to build lasting relationships with potential clients. Online strategies such as webinars, newsletters, and ebooks are more important. But in order to work, they require a lot of effort and consistency.

Another interesting trend is account-based marketing, which emphasises individualized approach to communication with leads. With account-based marketing, you create a separate account for each of your leads based on their unique characteristics, strengths, and weaknesses. Those will impact the way you will communicate with them on a day-to-day basis.

Software outsourcing providers were quick to adopt account-based marketing because an individualized approach to lead nurturing makes sense in an industry where a single closed lead can lead to a project worth millions of dollars.

Remote work has become a (lasting) standard

Software developers have always enjoyed working remotely. But now it is increasingly not just a privilege, highly associated with the profession, but also a must. It means that they often have to leave their comfy custom-designed office spaces and find a way to enjoy working from home more than occasionally.

With that, many devs often experience a big increase in the number of meetings (now conducted remotely with tools such as Zoom or Google Hangouts) and find it harder to focus. Losing a work-life balance can have a massive negative impact on one's performance and overall happiness. It is a big challenge for software outsourcing companies to overcome and those that will find a good solution will find it much easier to acquire and retain software developers (more on that later).

With that, many devs are actually starting to miss working closely with people. Imagine that!

More projects

Contrary to some pessimistic predictions, there are now more projects to do than ever, as many companies are trying to move online to mitigate the impact of COVID. For example, many local offline marketplaces moved to the web to continue selling and buying goods, establishing online marketplaces that mimic the feel and functionalities of the traditional ones. Some other companies are forced to make an even bigger change and turn their entire business model around in order to cope. These include companies that made their business around onsite events such as conferences or graduation ceremonies, which now tend to take place online only. It's great news for outsourcing providers.

However, one would be too hasty to assume that the optimistic scenario came true without some big problems in the mix. Leads are not endless, their average level of difficulty increased. All that when there is almost no way to meet with the client in person to discuss the project. And there is another big challenge that troubles many software outsourcing vendors - the increasingly fierce competition for talented software developers.

And more competition … for developers

All that increase in demand makes it even more difficult to find sufficient numbers of skilled software developers. It takes increasingly sophisticated acquisition strategies to keep up.

For companies interested in hiring and maintaining large teams of software developers, it becomes very important to devise elaborate acquisition and retention strategies. They must include efforts to establish the company as an authority in a given field (e.g. Node.js development) as well as a fun place to be in. Such efforts may include organizing meetups, taking part in conferences, writing ebooks, blog articles, making webinars for developers, and conducting intensive marketing efforts to make all the efforts visible.

Beyond software development and marketing, many companies are forced to step up their game in the area of human resources. Specialized tools for finding leads and subscription-based services that make it easier to find developers based on extremely specific criteria and contact them easily are becoming a must in the industry. They include screening platforms and sourcing tools, but also paid versions of popular professional social media platforms such as LinkedIn dedicated to recruits. Of course, tools aren't everything. It takes a lot of experience to make them worth the investment.

Not that many vendors can do all that. As a result, large outsourcing providers stand to benefit from the increased demand much more than small companies.

Nearshoring in software development

As quality in software development becomes increasingly important, and companies are searching for outsourcing providers that they can actually travel to and meet with when COVID ends, nearshoring is becoming a preferred method of getting software development outsourcing - check out these scenarios to find out the typical business contexts in which such relationships are established!

What do you think about these changes in software development outsourcing? Have you noticed some more in the context of your organization? Or perhaps you believe that some companies experience the pandemic very differently? Let us know!