According to IT Outsourcing Statistics provided by Computer Economics, outsourcing is picking up the traction: large companies have increased their expenses on outsourcing from 6.3% to 8.7%, small - from 6.7% to 7.8%, and midsize companies - from 4.7% to 6.5%. Moreover, nowadays we can provide even more examples of companies that outsource successfully, such as Slack, Skype, Studytube,WhatsApp, TransferWise, Pricena, etc.
Taking into account the tech talent shortage, outsourcing is becoming even more desirable, as it solves a number of problems ranging from cost reduction to the challenge of finding the needed specialists.
Nearly 75% of companies currently outsource IT services, while 87% are planning to outsource at the same or an increased pace. Meanwhile, the green bar clearly provides evidence regarding the future outsourcing growth.
The 2018 Deloitte Global Outsourcing Survey Presentation
IT Outsourcing Success Stories: Examples of Companies Built by Remote Teams
Is outsourcing really a good thing to do? Will the outsourcing companies survive in the next decade? We examined 9 IT outsourcing success stories to learn how world famous companies use outsourcing to grow their businesses and outrun their competitors on the global market, while cooperating with remote teams.
How Nearshore Outsourcing Helped Slack Reach $7.1 Billion
Slack, an American cloud-based collaboration tool, was started in 2013. Currently, it is one of the far-famed tools that owes its success to outsourcing, as they hired a Canadian design team MetaLab to help them transform their beta version of the product into a successful one. By outsourcing logo creation, website design, web and mobile applications the company raised a $250 million investment for a total valuation of $5 billion in July 2017. Their latest valuation in August 2018 showed that Slack stands at $7.1 billion.
Slack is deservedly one of the best examples of companies that outsource successfully. By relying their beta testing on MetaLab, they were able to receive valuable feedback, which helped them create a tool that reached 15,000 users within 2 weeks of launching. In May 2018, the number of users reached 8+ million with large companies like IBM, BBC, and Oracle utilizing Slack in their daily activity.
WhatsApp Hires Offshore Software Developers in Russia
Back in 2012, WhatsApp had only 30 full-time and 5 part-time employees in their small office in Mountain View. But this didn’t prevent it from becoming one of the most popular chat apps worldwide, racking up over 50 million downloads in just 3 years after its launch. In 2014, just two years after launch, the company was sold to Facebook for $19 billion.
With barely any starting capital (the seed round was $250,000), WhatsApp needed to keep operation costs down. To build and launch the product, the company turned to Eastern Europe in an attempt to source the required tech talent. WhatsApp hired offshore developers from Russia because “there are excellent engineers there”, according to co-founder, Jan Koum.
Most of the in-house employees were focused on customer support and operations, while development was handled offshore. However, while WhatsApp initially contracted most of its engineering staff offshore, it relocated some of the contractors to the USA later on.
Citigroup Cuts a Quarter of 11,000 IT-related Positions to Move Them Offshore
One of the leading American financial services corporations worldwide, Citi has been outsourcing its tech operations since 1992. The company runs multiple offshore locations across India, the Philippines, and Poland. Moreover, in 2012 Citigroup has reportedly cut 11,000 jobs at its HQ, at least a quarter of which were IT-related positions. Most of their IT operations are now carried out offshore.
Alongside their so-called “centers of excellence” (offshore development centers run by Citigroup) the company has ongoing relationships with a number of outsourcing companies, including TATA Consultancy Services and Wipro.
Citigroup is not the only banking giant to have moved tech skills offshore: Other names include Bank of America, Barclays, Goldman Sachs, and J.P. Morgan.
Klout’s Founder Moves to Singapore to Hire Offshore Development Team for the Product
As the original influencer ranking platform, Klout is a startup that has benefited greatly from offshore development. To bring his idea to life Joe Fernandez, the startup’s founder, went to Singapore and hired a custom made development team there. He stayed for 4 months, working closely with his developers to build a beta version of the product.
The first version of the product was funded by Joe himself, his friends, and family (seed funding was just $200,000). Yet, in just under 4 years, the company had attracted a colossal $40 million in funding, and later was sold to Lithium Technologies for $200 million in 2014.
TransferWise Relies on a Ukrainian Dispersed Development Team
According to TransferWise, a global money transfer service, they don’t “do offshoring, outsourcing or use consultants”. However, the company admits having a number of “independent workers”, who form an integral part of the core engineering team.
The company’s dispersed development team is located across Estonia and Ukraine. The company has been particularly active in hiring Ukrainian developers from the Lviv region in the western part of the country. Meanwhile, some of the developers who worked with the company in its early days are now relocating to join the core TransferWise team in Estonia.
Marek Unt, Head of PR at TransferWise has often stated the value of Ukrainian technicians for their “quick technical wit and engineering education”.
StudyTube Hires Remote Software Engineers in Ukraine
An online education platform, StudyTube, also relies on nearshore programmers. Based in the Netherlands, the startup initially leaned on part-time engineers. However, the company soon realized that the approach was not best suited to building a solid product. For this reason, StudyTube decided to source its required engineering talent nearshore. Again, the company hired Ukrainian developers. The startup has already secured 3 rounds of investment totalling €1,500,000 and continues to scale.
VP of Engineering at StudyTube
"Our Kharkiv team is made up of reliable people who produce high quality code. Now that our internal processes are well established, we’re happy with how the remote model is working out for us."
Read more about StudyTube’s experience in Case Study.
Offshore Mobile Developers Helped Pricena’s Android App Reach 50,000+ Downloads on Google Play
Since its launch in 2013, Pricena has been offering its users accurate price information for electronic devices and home appliances across stores in the United Arab Emirates. In June 2015 Pricena partnered with Daxx to hire mobile and full-stack developers who helped them build iOS and Android apps as well as develop the web version of Pricena.
This cooperation was successful as in November 2015, Pricena was recognized as the Online Startup of the Year when their Android App reached over 50,000 downloads and 4.3 stars on Google Play.
“The offshore developers are my full-time employees. They’re part of the day-to-day aspects of our business, we solve problems together – it’s not a short-term partnership. When you work with dedicated developers, you know they’ll do their best to deliver high quality.”
Read the full Case Study.
How Nearshore Team Helped TenderApp Non-Technical Entrepreneur Launch Tech Product
TenderApp, a Netherlands-based tender intelligence platform, was launched in January 2019. Thanks to the cooperation with a nearshore team of 4 developers, they managed to develop a new product from scratch, implement features as well as stabilize the product for its successful launch to market.
“Offshore cooperation isn’t only about cutting costs. It’s also about having good people on your project and making sure everybody is satisfied with their work, which is something hard to reach in the Netherlands. I also like that our Daxx team is really dedicated to our project. They don’t have multiple projects in progress, so they don’t need to prioritize. It’s really valuable these days.”
Read the full Case Study.
Oktopost, Top Ranked Social Media and Content Marketing Software, Hires Nearshore Developers
Oktopost, a social media management platform, was launched in 2013. They operated in 3 countries and had 22 employees –14 in Israel, 3 in Ukraine, and 5 in the U.S. In 2018, they hired software developers through Daxx that helped Oktopost extend their roadmap and add flexibility to their business – something that they couldn’t have done without recruiting this talent. The key advantage of creating a development hub remotely is the increase of the available talent pool.
Oktopost Co-Founder and VP Product
“I can certainly say that offshore development helped us extend our roadmap and develop the things we weren’t able to develop earlier.”
Read the full Case Study.
Daxx Will Help You Gain Positive Outsourcing Experience
At Daxx, you will be the one responsible for your software development project, working directly with a dedicated team of talented software engineers. Our process is simple, just:
- Describe your needs and staffing requirements - it's up to you to start by hiring one developer or an entire team.
- Interview, hire and manage your software developers by using tools and methods you prefer.
- The team starts working under your command, while our retention program will minimize turnover and keep your team happy.
- Focus on the development process while we handle taxes, payroll, office management, HR, etc.