Overview Of Outsourcing Software Development

By now it should be clear that outsourcing software development can effectively support your business in reaching its objectives and goals, but it brings also risks along that will need to be managed thoroughly. In the previous articles we discussed the benefits and risks and what aspects should be managed in what way to mitigate these risks. In this article we will give you a brief overview of the most important topics that encompasses outsourcing software development.

Article 1 – The road to outsourcing software development

In article 1 we have explained that outsourcing and offshoring are definitions that are used interchangeably. Unfortunately, this is wrong because outsourcing means that you contract work out to another organization, whereas offshoring (and nearshoring and onshoring) means getting the job done in the same or another country. Furthermore, we discussed the forms of outsourcing within the IT-environment:

• Application services: the software application that uses and explore information for positive impacts on business performances.
• Infrastructure services: makes sure the applications will run. Processing power, scalability, connectivity etc.
• Operational services: makes sure the core IT environment keeps up and running.
• Value-enabling services: makes information assets more valuable.

If you have identified a business need on why you want to outsource software development, it’s important to think about what in the IT-environment you want to outsource and where you want it to be outsourced to.

Click here to read more about the various forms of outsourcing.

Article 2 – The benefits of outsourcing software development

 In today’s economy, it’s difficult to stay competitive and find skilled IT-employees. This forces many organizations to look beyond their own organization and country to operate and innovate. Outsourcing software development can bring many benefits (if managed well) to your organization. Here we will merely explain the less obvious benefits, for all the benefits click here.

 Reduced time to market: when you outsource your work offshore you will work with another organization in a different time zone. This will allow you to take advantage of the so called ‘follow the sun’ approach. Which means that you can maximize productivity by handing off work to a team that wakes up earlier or later.

• Geographical advantage: if you outsource your work to another country where you have customers or want to enter a new market it’s easy to have access to a skilled team that already operates in that country. This way you can create good will with local customers and establish strategic partnerships to gain easier entrance to a new market.
• Maturity in processes: collaborating with another company overseas encourages to formally document processes, as well as communication. This increases business knowledge and maturity in the organization as a whole.

Article 3 – What should your software development outsourcing strategy be

 Outsourcing software development isn’t a strategy on itself but evolves from a business strategy. Outsourcing requires a sound strategy and therefore it’s important to identify the current situation of your business. Ask yourself the following questions:

1. Does my organization lack in performance in critical processes compared to competitors?
2. Does my organization have superior performances in critical processes compared to competitors?
3. Does my organization lack in performance in non-critical processes compared to competitors?
4. Does my organization have superior performance in non-critical processes?

To get an answer to each of these questions click here

Article 4 – Managing the largest risk in outsourcing software development

 In article two we have explained the benefits of Global Software Development (GSD) and it's increasing usage within Small Medium Enterprises (SME’s). GSD is mainly used to gain a competitive advantage through efficiency in time-to-market and effective resource allocation. As a consequence, software developers and management have to collaborate with their counterparts all over the world. This results in linguistic, geographic, cultural and temporal risks. The benefits of GSD will only be achieved when the risks are properly managed. Click here to see what the risks are and how they can be managed.

 Article 5 – How to make your outsourced project a success?

 With the increase of new information technology and the desire of businesses to take advantage of lower costs of production and skilled labor in other (developing) countries, the export of software development has increased significantly. Offshore software development is a big industry, but sometimes offshored projects don’t live up to their expectations. The critical success factors allow managers to distribute the company’s resources to the areas in offshore outsourcing that make a difference. Click here to see the discussed critical success factors.

Article 6 – Roles in outsourcing software development

 Outsourcing software development today is no longer just a simple relationship between buyer and supplier where the main goal is to safe costs for the buyer and increase revenue for the supplier. Especially in software development, long term relationships are valued highly because technology and skills can be leveraged for better business results. This shift leads to a new goal, that is: creating a win-win situation, rather than trying to get the highest or lowest price for a product or service. This change in attitude means the roles within outsourcing (business process management) have changed as well, from a competitive to a partnership-like role. See the figure below to understand the relationships. And click here to get a more detailed overview of the roles.