Improving Development Performance Through Strategic Software Outsourcing

For nearly a decade, Novatics has been driving the growth of high-performance companies by offering technology consultancy focused on system design and development. Our goal is to enhance our clients’ ability to deliver value through cost-efficient, high-quality software — and ultimately, better business outcomes.

Throughout our journey, we've had the opportunity to collaborate with various companies and leadership teams, gaining firsthand insight into how strategic the decision to outsource or hire a development consultancy can be. Many managers share common doubts and face recurring challenges during the decision-making process — largely because this decision involves critical factors that, if not properly addressed, can increase the risk of failure in software projects.

Raianne Rodrigues, UX Designer and Head of Product - digital transformation project with a health tech company.

To help mitigate these risks, we conducted research and compiled our experience, client feedback, market studies, and best practices for building successful partnerships in software development outsourcing and nearshoring strategies.

This study is designed to support managers in their decision-making journey. We’ll share valuable insights and best practices related to evaluation criteria, processes, governance, risk management, and cost benchmarking — information that can be extremely useful for leaders in choosing a reliable software development partner.

Our lean value-driven outsourcing roadmap.

When is Outsourcing a Good Option?

As companies navigate their digital transformation journeys, it's common for leadership to face challenges such as:

• The development team is fully committed and cannot take on new business demands.

• The team lacks the capacity to deliver at the desired volume or speed.

• The team needs to supplement its expertise to meet the specific requirements of a project.

In these situations, outsourcing or hiring a development consultancy often presents a viable way to reduce costs without compromising quality. According to Deloitte’s report "Outsourcing and Shared Services 2019–2023", companies spent more than $700 billion on outsourcing in 2022 alone. In software development specifically, investment is projected to reach around $147 billion by 2027 — with 60% of companies relying on outsourced teams.

These numbers, combined with the post-pandemic context, reveal key trends:

• Companies will continue to invest in digitalization but are under pressure to deliver more with fewer resources.

• Remote work is now a proven model, with governance and infrastructure adapting accordingly.

• Some managers, under pressure to accelerate delivery and reduce costs, made poor choices — either by expanding in-house teams (raising complexity and CAPEX) or by prioritizing the lowest-cost services (with cost as the sole deciding factor).

Ultimately, the lesson learned is the need to find a balance between cost and quality. The ideal partnership allows the client to benefit from the technology partner's expertise, mitigating risk and accelerating delivery — while ensuring the provider has sufficient resources to manage operations sustainably.

For instance, Novatics is a consultancy specialized in software design and development. All our consultants are fully dedicated to their projects and undergo continuous training and development, ensuring high-quality delivery, solid work methodologies, and efficient project knowledge management. Bringing in a team with technical expertise and a structured approach not only supports solution design and execution but also boosts creativity, delivery capacity, risk control, and cost efficiency.

"Companies outsource IT in pursuit of enhanced performance. Internal departments often struggle to keep up with current technology, while providers have expertise in following trends and providing cutting-edge software and systems. They have more experience due to the variety of issues faced and can offer specialists in specific areas." –
Jérôme Barthélemy, published by MITSloan.

Another advantage of outsourcing is the ability to scale services based on project needs. For example, at Novatics, we offer a Squad as a Service model, which enables flexible team sizing. From the start, each project has a defined consultant allocation plan — but the client can adapt it as needs evolve throughout the project lifecycle.

A Word of Caution

Despite its many benefits, outsourcing is not without risks — and these are often underestimated by companies. In the upcoming articles in this series, we’ll delve deeper into the benefits, engagement models, risk management practices, and quality indicators. We’ll also provide practical advice to help you choose the right provider and execute your project successfully.

Conclusion

As discussed, outsourcing continues to be a strategic option with considerable benefits. However, the success of this strategy largely depends on choosing the right partner. Cost should not be the only deciding factor — top talent in the creative technology industry typically comes at a premium.

In this series, we will explore key aspects that support sound decision-making in selecting the ideal software development partner.

We hope this introduction has helped you understand outsourcing as a vital strategy for companies seeking to grow sustainably and deliver value through technology.