Software outsourcing trends: How distributed teams empower digital transformation

Igor Tkach, CTO at Daxx, looks at the global software outsourcing trends, and how distributed teams can empower digital transformation.

The fourth industrial revolution is here and the global technology landscape is changing rapidly. This universal digitalisation wave makes companies think 2-3 steps ahead of the competition and find more resources for their rapid business transformation.

Keeping this in mind, business leaders consider software outsourcing as an efficient way of balancing their digital transformation needs and budgetary constraints.

While helping international tech business owners reach their strategic goals with offshore engineering teams, I’ve noticed a number of growing software outsourcing trends.

Here’s what CEOs need to put on their radar to make the right outsourcing decisions.

Global software outsourcing trends

The rise of emerging tech

According to Forrester research, on top technology trends: IoT, blockchain, machine learning, artificial intelligence (AI), cloud computing and automated SIEM software will reveal another dimension of the world in the upcoming years. They are already blurring the lines between the physical and digital worlds, and bringing advanced solutions for business automation, security orchestration and risk management to the market. And those who embrace these technologies wisely can reap maximum benefits.

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That’s why leading outsourcing providers constantly monitor the market to keep up with the latest advancements and develop their expertise accordingly. This helps them meet the growing customer demands for more technology-driven services and solutions.

Focus on information security and privacy

The growing cyber security risks are increasing the demand for advanced security automation, data loss prevention, and threat intelligence. Following this tendency, software outsourcing companies put a lot more emphasis on complying with industry standards and security regulations.

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The introduction of GDPR is making a great impact as well. Now outsourcing vendors conduct regular security audits and update their information security strategies to meet the new requirements. They look for the most efficient methodologies and technologies for data protection and conclude well-thought-out service-level agreements (SLAs) with their clients.

Before entering into an outsourcing agreement, make sure your potential development partner has a well-defined security policy and adheres to all information security standards. I suggest going for outsourcing providers which also have software security testing among their service offerings. This way, your business will be protected from potential intruders, huge reputational damages and financial losses in the long run.

Growing talent shortage

Today, technologies are developing at such a rapid pace, that labor markets can’t keep up with the demand. Even in booming areas such as the US and the UK talent shortage remains a real challenge.

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Every single day, a big number of progressive technology-driven companies and startups are entering the US and UK tech markets. And, to keep their businesses afloat, companies need experts with specialised skills which can support and adjust their products to changing consumer demands. Yet finding the necessary expertise locally is becoming increasingly difficult.

In this scenario, outsourcing software development to less dynamic regions like Eastern Europe becomes an attractive alternative. This region is not as saturated with hi-tech companies as the US and Western Europe but still offers a decent tech talent pool and a wide range of software outsourcing providers and startups. Thus finding and hiring the necessary experts here is much easier.

Value added services

Earlier, the cost factor was a key motivator for business leaders to outsource and find cheap “hands for hire”.

Now experienced software outsourcing providers are getting closer to their clients and switching their focus from simple execution to delivering value and becoming reliable business transformation partners. They provide their expert guidance, consult on the best practices and technologies, analyse the needs of the target audience, and adapt the product accordingly. This way, clients perceive their distributed team as their key business enabler and an integral part of their in-house team.

Distributed Engineering Teams in the Digital Transformation Era

Accelerating the digitisation of your business with the help of distributed engineering teams becomes much easier, here’s why:

Quick availability

Building distributed teams means accessing a greater variety and caliber of software engineering talents. Finding experts in emerging disciplines overseas is not only easier but also more cost-effective. From my experience, the average time to recruit the first members of an offshore development team is 3-4 weeks.

Faster product launch

Outsourcing some of your digital transformation functions or projects to an offshore vendor will allow you to build your team with less effort and in a shorter time frame.

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Your software outsourcing partner will handle all the recruitment and administration hustles while you will retain full control over your development process. This will lead to faster product launch and delivery.

Enhanced service quality

Generally, the service quality depends greatly on the software outsourcing destination you choose. For instance, Eastern European vendors adopt a similar business culture and mentality to their Western counterparts which enables them to be on the same page with their clients and deliver the desired product quality.

Different approaches to software outsourcing: US vs Europe

In my experience, European business executives prefer a selective and balanced approach to building dedicated development teams. They put forth a lot of time and resources when it comes to choosing the right candidates, and strive to maintain integrity between their in-house team and offshore developers.

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Europeans are more inclined to outsource an entire project and delegate all development initiatives to their offshore vendor, whereas US business leaders often perceive their offshore development team as a secondary unit. They have a more cautious approach to software outsourcing and are deeply concerned about the security and privacy of their assets. That’s why they often choose to delegate the execution of separate roles to their offshore developers and rarely give access to the entire system and code.


Overall, the software outsourcing industry is inching towards more automated and value-added services, utilising the latest technologies, and security practices.

I believe that these tendencies will lead to more effective partnerships, better ROIs, enhanced service quality and increasingly sustainable and measurable business results.

Written by Igor Tkach, CTO, Daxx
Written by Igor Tkach, CTO, Daxx

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