Business in the new format can look like a chaise longue on the ocean beach instead of a crowded office. Many successful businessmen have transferred software development to outsourcing. Thus, competitive advantage of outsourcing software development is not fully appreciated and well evaluated. It still gives too many questions with unclear answers and stereotypes like “cheap means worse”. Let’s figure out what it’s like, what are the competitive advantages and risks of outsourcing software development.
Reasons why outsourcing of software development is a right solution
Globalization and innovative technologies give companies the opportunity to save resources and streamline business processes. Outsourcing is one of the most common methods and modern trends. Delegating some of the functions to other companies, on one hand, reduces costs, but on the other, concentrates on the development of the main lines of business. Moreover, this is an additional way to attract external resources – knowledge, experience, to involve fresh staff without excessive obligations and risks.
Here are 5 reasons why outsourcing works and makes sense.
- Cost savings is certainly the main motivation of companies to implement projects partially or completely outside the home implement. Moreover, software developers outside of the leading industrial nations are significantly cheaper, often with the same qualifications.
- Deadlines and time pressure often lead to unfinished or defective products. If a software project takes off unexpectedly, only additional staff can help. What is important, such help will be only temporary and will no longer be required.
- Specialized knowledge of specific technologies is often needed only at the specific points. If you do not have necessary specialists among your staff, attracting them through the outsourcing program can be a great solution. Companies prefer to employ all-rounders, which are more flexible. The quality of service in the case of outsourcing is significantly increased, as a third-party company undertakes to monitor the quality of the contract work.
- From the point of view of the implementation of strategic tasks, outsourcing makes it possible to concentrate resources on primary production and improve operational control so far. In addition, the process of introducing new technological or managerial operations is facilitated.
- Outsourcing helps companies maintain their compactness. It is very useful if you do not want to maintain a large staff and create a complex corporate structure. You can also use outsourcing to reorganize a business or optimize operating expenses.
How to avoid outsourcing risks
Presumably, all agencies or start-ups wanting to save costs have never thought about IT outsourcing to Poland, Ukraine, or India. Together with the greatest advantages and reasons how and why outsourcing software development works, there are still certain risks. Outsourcing can work if you follow a few rules. Another advantage becomes clear only at second glance: No matter which programming language, developers are almost always available at short notice. Every year, 20 times more software developers leave universities in India than in the USA, and the Indian IT industry employs more than 4,000,000 people. For an agency that is currently looking for iPhone developers in the USA labor market, these are almost perfect conditions.
Here are the most important rules following which outsourcing makes sense.
1. Keep a realistic picture of your project
Time passes, but one thing remains unchanged: startups and small businesses try to implement an extensive scope of projects with as little financial input as possible. There are cases where the projects only go as far as being implemented by the cheapest contractors via the dedicated websites – all for the sake of budget savings. Some people, however, do not take into account that such solution is rarely a working one. An implementation of a Youtube clone for $500 is just unrealistic, even if the idea seems like a shortcut to get a huge profit at first.
Note: the fact that outsourcing software development is cheaper does not mean that you won’t have to assess your implementing capabilities realistically and employ significant investments.
2. Have a detailed plan of your project
A specification sheet, project planning and project controlling are basic parts of every project that you consider seriously. How should someone at the other end of the world know what you want if you do not know it yourself?
3. Pay attention to intercultural communication
Basically, the developers from other countries understand what you want from them. Nevertheless, there may be misunderstandings due to cultural differences. A typical “submission of the software at 12 o’clock” means that too. What seems clear to us can be occasionally interpreted by members of other cultures in the wrong way. Even in European countries one can come across such experiences. So a Spaniard who is two hours late for an appointment, just has the feeling of being slightly behind schedule, whereas for Americans being late for more than 15 minutes is really annoying. Actually, it can even lead to the termination of the contract.
In order to avoid misunderstandings in terms of content and deadlines, such obviously self-evident points should best be made in writing. However, there are differences to note, especially with Asian cultures: a “yes” is not always to be understood as an American “yes”. These differences often lead outsourcing companies to unprepared companies, and such complications can be easily avoided with a well-structured approach and accumulated experience. The contact with other cultures can even be an interesting enrichment for the daily work of both sides.
4. Mind the culture and religion
A special point in the cultural differences is the religion. For example, if you work with an Indian developer, keep in mind that it is a common thing to have a rest from work not only on public holidays such as Gandhi’s birthday but also on some Hindu holidays. If your company is from the US and your partners are from Ukraine, your teams would probably have different state holidays as well. If you didn’t know such peculiarities beforehand, you can mess up the work. That’s why it is best to ask the developer for a listing of state or the religious holidays in the early stages of cooperation.
5. Engage the developer as much as possible with your team
A developer from Asia or Eastern Europe should not be a foreign body in the company. If you simply specify that a product X should be completed in Z days, the result is usually devastating. Many bad experiences with outsourcing have their origins in such an approach. It is great idea to integrate outsource developer into the company’s internal project planning and the project controlling. This should be one of the most important rules for successful outsourcing to a developer.
Companies choose outsourcing directions depending on their needs and financial possibilities. Some dedicate only two or three functions to the outsourcing, for some it is easier to keep a staff of ten employees and at the same time outsource the maximum amount of work. Nevertheless, they have one goal – to increase the flexibility of the company’s business model and reduce operating costs. Given the growing popularity of outsourcing, it copes with this task. Just try it!