Outsourcing Software Development: The Smartest Way to Speed Up Digital Transformation

There’s always been a balance needed between modernizing software while keeping up with market demands. But let’s be honest, we mostly focus on market demands and leave modernizing behind. Internal engineering teams are overloaded, hiring skilled developers takes too long, and regulatory hurdles slow progress. The result? Missed product deadlines, security risks, and competitors gaining ground.

Forward thinking companies are getting around this overload by using outsourcing. Outsourcing software development can accelerate your company’s digital transformation, but only if done correctly. The companies that succeed don’t just treat outsourcing as a simple cost-cutting measure. They use it to access specialized talent, reduce risk, and speed up development while maintaining strategic control.

Why In-House Development Slows Digital Transformation

Building everything internally can seem like the safest approach, but it’s often the slowest and most expensive. Here’s why:

1. Hiring Takes Too Long

Recruiting experienced software engineers is a slow process, especially in specialized fields like cloud computing, cybersecurity, and AI. ​According to research by Josh Bersin, a U.S. human resources adviser, the average hiring process takes approximately 45 days. In the technology sector, this duration can extend significantly. For instance, at Meta, the process from referral to job offer has been reported to take about four months. These extended timelines highlight the challenges companies face in swiftly acquiring technical talent.​. For senior or specialized roles, it can take six months or longer to find and onboard the right people.

2. Internal Teams Are Already Overloaded

Most in-house engineering teams spend 60–80% of their time maintaining existing systems, according to McKinsey. This leaves little bandwidth for innovation. Even if companies manage to hire new talent, existing technical debt often slows progress.

3. Compliance and Security Create Roadblocks

Industries like finance, healthcare, and government must follow strict regulations such as HIPAA, GDPR, and PCI-DSS. Ensuring compliance requires deep expertise, and many internal teams don’t have specialists in regulatory security. Notably, 80% of financial institutions have experienced data breaches attributed to outdated authentication methods, highlighting the critical need for modernized security protocols. ​

Additionally, a study found that 16% of healthcare systems acknowledged vulnerabilities due to old legacy systems, underscoring the importance of addressing outdated infrastructure to maintain data security. ​

4. Modernization Requires Niche Expertise

Many companies rely on COBOL, SAP R/3, or Fiserv Premier, which require highly specialized knowledge. As of 2023, over 43% of banking systems still run on COBOL, but the number of experienced COBOL engineers is declining. Finding developers who can bridge legacy infrastructure with cloud-native technologies is increasingly difficult.

5. The Cost of Delays Is Higher Than the Cost of Outsourcing

Gartner reports that 56% of digital transformation projects are delayed due to a lack of technical resources. Every delay means higher operational costs, lost revenue, and increased security risks. Companies that outsource strategically can cut project timelines by 40–60% while maintaining control over product direction.

How Healthcare Bluebook Leveraged Outsourcing to Achieve Rapid Compliance

Healthcare Bluebook, a company dedicated to helping consumers find affordable, high-quality healthcare, faced a significant challenge: developing a web application to meet impending compliance regulations within a tight three-month deadline. Despite having an internal development team, capacity constraints necessitated external assistance. Partnering with Acklen Avenue, they successfully:

Delivered the project ahead of schedule and under budget, ensuring timely compliance.

Maintained seamless collaboration between internal and external teams, enhancing efficiency.
Utilized an agile development process, allowing for flexibility and rapid iteration.
This collaboration not only met critical compliance requirements but also exemplified how outsourcing can effectively augment internal resources to achieve strategic objectives.

How to Outsource Software Development Without Losing Control

1. Define the Scope of Outsourcing

Outsourcing shouldn’t mean handing over full control to an external vendor. The best companies keep:

• Product strategy, architecture, and core development in-house.
• Non-core development (UI builds, integrations, testing) outsourced.
• Specialized projects (AI, cybersecurity, compliance-heavy applications) handled by external experts.

By leveraging outsourcing strategically, companies can reduce costs, accelerate development timelines, and access niche expertise without stretching internal teams too thin. This approach ensures faster innovation, stronger security, and compliance with industry regulations, while keeping strategic control in-house.

2. Choose a Partner, Not Just a Vendor

Many companies fail with outsourcing because they choose low-cost vendors rather than strategic partners. The best outsourcing firms:

• Have deep expertise in your industry.
• Work collaboratively with your internal teams.
• Prioritize long-term success, not just short-term project delivery.

3. Maintain Oversight With Agile Development

Outsourcing works best when companies stay involved. Successful companies:

• Hold weekly check-ins with outsourced teams.
• Define clear success metrics (code quality, delivery speed, security).
• Use agile development cycles to track progress.

4. Prioritize Security and Compliance From the Start

Security and compliance risks are among the biggest concerns for companies considering outsourcing. According to Deloitte’s 2024 Global Outsourcing Survey, governance challenges—especially around AI adoption and data security—are key obstacles for organizations outsourcing critical functions.

To mitigate these risks:

• Work with outsourcing firms that meet industry security standards likeSOC 2, GDPR, and HIPAA compliance.
• Use role-based access controls (RBAC) to limit external access to sensitive data.
• Conduct regular third-party security audits to ensure compliance with internal policies and regulatory requirements.
• Include contractual security clauses that hold vendors accountable for maintaining compliance and implementing secure coding practices.

5. Start With a Pilot Before Scaling

To minimize risk, many companies start with a small, controlled outsourcing project before expanding. A good pilot:

• Lasts 3–6 months and focuses on a standalone feature or non-critical application.
• Establishes KPIs for speed, quality, and communication.
• Ensures internal and external teams can collaborate effectively.

Outsourcing Is a Competitive Advantage

The companies that move fastest aren’t debating whether to outsource—they’re figuring out how to do it strategically. When used correctly, outsourcing allows companies to:

• Speed up digital transformation by 40–60%.
• Reduce hiring bottlenecks and skill gaps.
• Improve security and compliance with industry specialists.

By strategically selecting outsourcing partners with proven expertise, companies can overcome internal limitations, expedite project timelines, and ensure compliance with industry standards.