The new year has arrived and it promises to be a great one for software development companies. According to a research carried out a few years ago by UK’s National Outsourcing Association, 70% of surveyed companies said they will increase outsourcing work by 2020. There is increased emphasis on custom software development activities to maximise the value of software while ensuring reduction of cost and zero compromise on quality.
Major drivers behind increased outsourcing
Companies look to outsource activities on the basis of the following factors:
- Cost: Outsourced software development is cheaper than in-house development. Especially when the development activity is done in countries having high availability of tech talent at lower wages, like India.
- Skills: A major obstacle to innovation in companies is the lack of experts in technology. This can be overcome by outsourcing to companies who focus solely on technology and hence, have many people with significant experience in technology.
- Operational efficiency: For companies in most sectors, software development is not a core revenue generating business activity. Take for instance a company like Pepsi. Their core business is in food/beverages. While software can enable them conduct business in a better way, for example, by speeding up manufacturing activity, developing the software is not their main activity. Outsourcing that to companies for whom it is a main activity will ensure Pepsi can continue focusing more on manufacturing food/beverages instead of management of software development projects.
Outsourcing engagement models
Companies usually select one of the following 3 outsourcing engagement models:
- Out-staffing: Hiring additional members for helping with development. This can be in the form of hiring a dedicated team or a complete development centre.
- Product development: The complete development process is outsourced. The client has a particular set of requirements and the vendor delivers a custom software developed as per the specific requirements.
- R&D outsourcing: In this model, the vendor is asked to evaluate the technical feasibility of investing in emerging technologies and prepare a proof of concept.
Choosing a suitable engagement model is important for companies.
5 things to keep in mind before outsourcing
Before you begin outsourcing, there are 5 things to keep in mind:
- Clarity about the reasons behind outsourcing and the objective you wish to achieve from the outsourcing endeavour.
- Possible need for expertise other than software development, like business analysis, market research etc.
- Evaluate whether the software development need is one-time or ongoing.
- Outsourcing involves various degrees of loss in ownership and control depending on the engagement model chosen. Companies should think about how much loss of control is acceptable to them.
- Evaluate the budget you can allocate to the development process and select the engagement model accordingly.
Outsourcing risk management
Despite the advantages of outsourcing, there are certain risks involved. Let us analyse the risks and see how they can be managed.
- Care must be taken to ensure a comprehensive vendor selection process. Keep in mind that there must be a reasonable trade-off between price, expertise and terms of cooperation. This will help in making decision about which vendor to choose. Selecting the wrong vendor can lead to loss of time and money.
- Lack of a proper objective and roadmap for the project can lead to development of a product that nobody wants. It is necessary to do proper research for identifying the product need before the development starts.
- Miscommunication and chaos can happen between the client and vendor if there is no proper communication channel and defined guidelines about ownership. There must be a communication plan before the development starts, defining when meetings will take place and the reports the vendor should send to the client. Also, the responsibilities and accountabilities of the vendors and the clients need to be established in advance.
- Leak of confidential and personal information is a huge problem today. The client must ensure the vendors have a proper system in place to minimise cybersecurity risk.
Now that you have an overall picture of outsourcing, it is time to get a clearer picture by reading more articles on this topic before jumping into outsourcing:
- App/Software Development: Outsourcing vs In-House Development – A Detailed Comparison
- Benefits of a Dedicated Team Model in Software Development
- Guide To Hire Mobile App Development Company
- Why should you hire remote team for software development?
Once you are ready to outsource, bring on board a trusted vendor to help you meet your business needs with technology. We at Acropolis can be your trusted advisors and take care of the complete development, testing, integration, implementation and maintenance of the custom software that you need. Contact us right now to have our technology experts at your service! All you need to do is have a detailed discussion with us about your needs, and upon your approval of our recommended solutions, we will deliver quality software that will help you achieve your business goals! And at affordable rates too! Even better, our services are available to businesses anywhere in the world! We cater to clients from US, UK, Australia, Germany, France and many more countries!