Why Automotive Companies Outsource Software Development Services
What so intrigues us about automobiles? We fall in love with our vehicles. We fall out of love with them. We change them. We follow the latest model releases. But do we know what brings our cars to life in the first place? The answer may be surprising: code. Lots of code.
Cars are driven by software. And where there’s software, there are bugs — plus multiple updates and cybersecurity issues. These issues need to be monitored and rectified in the interest of safety, if not innovation.
IT outsourcing companies can provide solutions for disruptions and help automotive companies tackle challenges caused by emerging trends.
Is outsourcing the development of software truly worth the time and expense? Let’s dig deeper.
Why do automotive companies choose to outsource?
Software is consuming today’s auto industry. Even some of the main hardware components in cars include lines of code. As software development continues to rapidly evolve at a rapid pace, automotive companies find themselves relying heavily on digital technologies.
“The shift from ‘hardware performance’ to ‘software experience’ will continue at full speed.”
McKinsey & Company, Productivity drivers in Automotive SW development
Auto companies must be equipped with quality, state-of-the-art software to succeed in the current automotive market. Apart from that, there are many other things they have to keep an eye on cost control, navigation systems, prediction of road conditions.
Why outsource automotive software development? Because it’s one of the best practices to ensure the reliability of cars, improve their performance, and enhance the driving experience. And there are many tips on how to do software development outsourcing right.
While most automotive companies are solvent and successful, it’s no easy task to gather an outstanding software development team under one roof. This is where IT outsourcing can come in handy.
Advantages of software outsourcing for automotive:
- Staying on top of the latest trends in the automotive market
- Streamlining and optimizing internal operations
- Increasing the safety of vehicles
The more innovative the technology, the bigger the chance something will go wrong. For this reason, hiring a competent software development team is vital.
Key automotive industry players have already started outsourcing software development — and many of them have chosen to do so in Ukraine. It’s an excellent decision because Ukraine has some of the most desired IT talents, and at a relatively lower cost.
If you’re curious to know more, peruse these top 50 IT outsourcing companies.
When it comes to finding the best software development companies for automotive outsourcing, it’s not always all about the money. It’s about finding the vendor who will successfully complete the project.
Challenges of outsourcing software development
Automotive software outsourcing is a tricky business. Be aware that cultural differences, miscommunication, and lack of motivation can cause irreversible problems. But once you know how to outsource software development successfully, it should be a smooth ride.
What sorts of obstacles should you be prepared to face when outsourcing software development?
Cost
By outsourcing software development, you reduce the amount of in-house software developers, thus saving money on overhead. However, when the project requires developing highly sophisticated software, finding and hiring a competent, qualified team might cost more.
In either scenario, you’ll get a quality product, and that’s what matters most.
Competition
With the recent rise in autonomous driving, competition is to be expected. It is difficult to find experts in this industry, and car manufacturers have started to consider collaboration to tackle the challenge.
You’ll need to keep your game strong to get the attention of the best IT outsourcing companies.
Misunderstandings
The automotive outsourcing industry has no geographical boundaries, and you may need to hire an IT team in another part of the world. in which case. So, whether you want it or not, you’ll have to deal with people from various countries.
Being prepared for this will help you avoid frustrating situations that may arise from cultural differences and miscommunications.
Constant innovation
Innovation can be a challenge. Keeping up with innovation requires original ideas and specialists who can successfully implement them.
Looking again to McKinsey’s Productivity drivers in Automotive SW development report, we see that connected cars require much more than basic firmware. Moreover, OEMs are continually changing their requirements, making it harder for automotive companies to get a clear perspective. It’s for these reasons that new innovations are more of a challenge, rather than an advantage, for automotive companies.
2019 trends and tendencies in automotive technology
Despite various digital transformations penetrating the automotive industry, it continues to evolve, causing auto companies to continually accelerate their tech development efforts.
What is currently shaping the automotive sector? According to PwC, these are the five trends that will transform the automotive industry:
#1 Electrified, autonomous, shared, connected, and yearly updated cars
PwC believes the cars of the future will look nothing like the cars of today.
They will be “eascy,” that is, electrified, autonomous, shared, connected, and yearly updated. They will make the driving experience much more flexible and individual. As a result, on-demand car services will become even more prevalent.
#2 User-focused approach
Today’s younger generation tends to be tech-savvy, and it will be the generation to define the future of the automotive industry by focusing on sustainable mobility solutions.
Also, considering that gas prices only continue to increase, electric vehicles (EVs) will become more attractive than gas-powered vehicles. By 2030, PwC believes that more than 55% of all new cars sold could be fully electrified.
#3 Change in mobility needs
Young people today prefer to use a vehicle rather than own it. This shift will be another driving force in the automotive industry.
When we combine autonomous and shared trends, we get four types of mobility:
- Unshared and not autonomous
- Already shared but not yet autonomous
- Still unshared but already autonomous
- Already shared and already autonomous
While self-driven private cars still prevail, before long, fully autonomous shared electric cars will occupy the lion’s share of the market. Rising automotive AI/AR technologies and the focus on machine learning may make this happen sooner than we expect.
#4 Increase of autonomous and shared forms of mobility
By 2030, it is expected that Europe’s vehicle inventory will reduce from 280 million to 200 million vehicles.
Owning and maintaining a vehicle is expensive and can be a hassle, especially for those in cities, where parking and garage facilities are costly, inconvenient, and possibly scarce. Shared ownership of vehicles, especially autonomous vehicles, would be a welcome force and a driving mobility trend.
This mobility trend will lead to an increase in vehicle use and a decrease in vehicle inventory on the global automotive market.
#5 Change in the automotive value chain
The automotive sector will undergo a complete reorganization that will cause suppliers to deliver customer-oriented innovations. Surprisingly, the amount of money automotive companies invest won’t matter as much as the type of investment companies make.
The overall business model is also about to change, and mobility services will be the driving force behind it. The product — the automobile itself — will no longer be the only key player; manufacturers and suppliers will have to recognize and adapt to that change.
Bottom line
The number of new technologies driving the automotive industry is overwhelming. Now, companies have to focus on linking a car’s hardware and software to create a vehicle that is safe, efficient, and comfortable. To accomplish this, auto companies often outsource software development.
However, software outsourcing comes with its own challenges — an abundance of innovation being the main one. It’s crucial to find the right vendor to stay abreast of all the new transformations. Manufacturers and suppliers must also be ready to face the changes that are coming to their industry.
At the same time, young, tech-savvy generations are shaping automotive technologies. Their goal is to introduce shared autonomous vehicles into daily life as soon as possible.
If these players don’t come along for the ride, they’ll soon find themselves on the side of the road.
