The financial technology sector (Fintech) has long ceased to be a short-term trend. It is now a promising area for development, a whole industry with its ambitions.
With the increasing importance of digital technology in the financial and banking sector, more and more major players have begun to turn their attention to both incorporating technologies into their projects and creating new ones. Often one can find a symbiosis when individual fintech solutions collaborate with banks. And banks, in turn, integrate third-party payment systems and learn how to work in the new system of coordinates.
But while the efficiency of technology is growing, demand is growing at a high rate. The market wants to adapt to IoT, blockchain, and NFT, increasing the complexity of fintech solutions. In turn, the demand for experienced developers is growing, and the number of developers is not growing as fast.
Increasingly, large financial services companies are turning to outsource companies to ensure quality solution development and budget wisely. After all, hiring an entire department for 3-6 months is not the most cost-effective idea.
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Reasons for outsourcing
It is impossible to name one reason for outsourcing Fintech development. There are many reasons, and they often differ depending on the market segment, target market, and other individual features of each company. But what all companies have in common is that they want to get a quality software product with the lowest possible operating costs.
According to commercial requirements, two different verticals of fintech outsourcing are conceivable.
Outsourcing product development
PDO is the practice of outsourcing all solution development, support, and maintenance processes to a third-party company. Such companies are often referred to as outsourcing service providers. They are responsible for the entire product development cycle, its stability, uptime, and (not always, but often) for the technical support and possible extensions. But like any other approach, PDO has its pros and cons. Let’s learn more about them:
Pros
- Leveraging real-world experience with skilled personnel
- Reduced costs
- Speed of development
- Time to market
- Relevance of the implemented technologies
Cons
- Dependence on the contractor
- Reduced control over the workflow
IT Outsourcing
IT outsourcing is not unique to fintech. It is widely recognized and has been used in many industries to cut expenses, accelerate TTM and unlock in-house resources for other critical business objectives. Outsourcing IT services range from full IT infrastructure to the development of a particular piece of software. Outsourcing fintech development becomes a prevalent driver of cloud deployment as well.
Pros:
- Cost savings.
- Leveraging third-party expertise
- Using up-to-date technology
- Optimizing time costs.
Cons:
- Dependence on clear and competent terms of reference
- Need for constant contact to exchange information
Summary
Whatever decision the company makes, whether to outsource the entire development of the product or to hire contractors for some part of it, it will still be in the black. Outsourcing is no longer a novelty and experienced companies have long ago developed their internal processes to create the product as efficiently as possible and assembled experienced teams. Choosing between outsourcing and self-development can be compared to buying pizza and cooking. Homemade pizza isn’t bad, but a pizza place will also do quality, and more importantly, faster and cheaper.