The Science Behind Why Outsourced Development Teams Succeed

June 20, 2024

Have you ever been banging your head against the wall trying to solve a problem, only for someone else to come along and immediately see a solution?

A fresh perspective can often provide new insights and help find new solutions. This is why outsourcing development is seen as a strategic approach in pushing the boundaries of innovation for companies.

But why exactly is this the case?

What exactly is the science behind why outsourced development teams are a catalyst for innovation? Let's take a look at some of the most compelling studies on the subject.

The Power of Diversity

Through the inherent diversity aspect present in distributed outsourced teams with a global workforce, companies can unlock the potential for increased innovation and creativity.

Research by Harvard highlighted evidence of how diversity unlocks innovation and drives market groups. It found that in companies with diversity policies, employees were 45% more likely to report a growth in their market share and 70% more likely to report capture of a new market.

More than market share, diversity in outsourcing can also improve performance due to a wider talent pool with differing backgrounds, points of view, and ideas put to the table, as well as improved skill bases.

Two heads are better than one – in this case, two different heads are even better. A Massachusetts Institute of Technology study cited that remote teams produce a “collective intelligence” when collaboration, empathy, and diversity are present. 

Characteristics of Outsourced Teams

These characteristics are observed in outsourced teams as there is a need for:

  1. Collaboration: To get the work done no matter where they are in the world
  2. Empathy:  To connect with clients, their challenges and goals and help them get past them
  3. Diversity: To gather different complementary specialties needed to carry out projects and deliverables

By having people from different backgrounds collaborate constantly, companies can leverage the niche knowledge of these people, combine it in different ways, and come up with unique and fresh ideas that can lead to innovation. 

This is evidence that outsourcing software development teams with a diverse pool of global talent creates a positive return for the company and contributes to nurturing innovation in work environments.

Access to a Network of Top Talent

Elastic, outsourced teams provide businesses with flexibility for any type of development project. Assemble a team of expert engineers, designers, and product managers for your next software project.

Mitigating Cognitive Biases

Cognitive biases are inherent limitations that can hinder the innovation process, as there is a kind of automated understanding and response in our brains to simplify the things around us. Our brain tends to have cognitive biases in an attempt to simplify, break down information, and fill in the gaps for better absorption and understanding of the things around us. 

There are over 175 identified cognitive biases that can limit organizations. Former Product Manager at Slack, Buster Benson, provides a great cognitive bias list that groups these biases into four problems that biases help us address.

Too Much Information 

Since there is so much information in the world, our brain has no choice but to filter most of it out - using biases. This is why we’re more likely to notice things that are already primed in our memory or repeated often (ex. attentional bias and context effect). This is also why we’re drawn to information that confirms our existing beliefs (confirmation bias) and why it's easier to notice flaws in others than it is to notice them in ourselves (bias blind spot).

Lack of Meaning

Most of the information that does get through our brain filter is disconnected, but we’ll attempt to find meaning and connections to fill in the gaps and make it easier to process. We simplify numbers and projections to make them easier to understand (normalcy bias). We make assumptions about what other people are thinking or about past or future events based on our own limited understanding (curse of knowledge and telescoping effect).

Desire to Act Quickly

Since we have limited time and information, we unconsciously focus on the things that we already understand and gravitate toward the easier or less risky choices. This is terrible for innovation as we prefer to focus on things we’ve already invested in (sunk cost fallacy) or things we can have a personal impact on (egocentric bias).

Choosing What to Remember

With so much information coming in and out, we can’t possibly remember everything. So we discard specifics and form generalities (stereotypical bias), reduce events and lists to their key elements (misinformation effect), and change memories or facts after we experience them (misattribution of memory).

All these biases are naturally occurring in every human. However, they can cause organizations to stagnate if all decisions are made in a silo and there are no new perspectives to challenge and break up biases. How can these biases be mitigated in software development projects through outsourcing teams? The diverse pool of thinkers and professionals in an outsourced team can work complementary to each other and bring in fresh perspectives and new ideas that can help project ideation and execution.

Removing In-House Teams’ Analysis Paralysis

Diversity in outsourcing can overcome this phenomenon that often stifles innovation due to the close-mindedness that naturally comes with the deep knowledge and experience within a particular domain. In connection to cognitive bias, in-house teams can have “analysis paralysis” due to the many variables in consideration within the company that stop them from moving forward or coming up with new and innovative approaches to the problem.

Outsourced development teams can bring new perspectives as they are not bound by prior failures or preconceived notions within the industry and organization. They can challenge the status quo and introduce innovative solutions that may have been overlooked internally.

This can work particularly well with a hybrid model, where elastic teams augment in-house engineering talent. This strategy provides immediate access to expertise you may not have in-house while bringing in a fresh perspective to break up analysis paralysis.

Fostering the exchange of ideas, challenging existing systems, and stimulating creativity can lead to a breakthrough in innovations within the company. Due to the fractional nature of outsourced teams, these experts can be used to kickstart an innovative new solution with specific expertise and then allow your in-house team to sustain the project long-term.

Outsourcing Towards Innovation

According to a recent study, there is “a clear convergence of digital innovation and outsourcing practice.” 

Outsourcing development teams can significantly enhance innovation within organizations and help them reap these benefits. Embracing outsourced development teams can be a strategic move for companies aiming to foster a culture of continuous innovation and gain a competitive edge in today's fast-paced business environment.

In its 2022 Global Outsourcing Survey, Deloitte noted that companies are looking towards the prioritization of capabilities outsourcing, especially for specialized sectors such as data and analytics and cybersecurity:

“Organizations are turning to outsourcing to fill gaps, drive value, and provide end-to-end solutions as they build a blueprint for the future.”

Final Thought

By leveraging external expertise of platforms and global talent networks such as Gigster, companies can improve productivity and creativity, mitigate cognitive biases, benefit from diversity, and overcome close-mindedness associated with in-house development teams' prior knowledge. These are all factors for cultivating innovation, which can in turn help companies stay ahead amid the evolving global business landscape.

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