Software Outsourcing - Features and Benefits
What is software outsourcing?
Software outsourcing is the strategic use of external resources to
perform development services that have traditionally been handled by internal
staff. Typically, an outside software developer is contracted to produce an
application that is designed specifically for you and according to your exact
requirements.
When would a company consider outsourcing?
Usually outsourcing is a viable option for companies
in the following situations:
- Limited or no internal development capabilities
- Do not have significant resources to handle the project
in the required timeframe
- Lack the relevant technological expertise required for
the proposed application.
In order to determine if it is right for your company, it is important to
first analyze the benefits and considerations of outsourcing in
relation to your company’s needs.
What are the overall benefits of Software Outsourcing?
There are significant benefits to outsourcing. These include:
-
Access to an experienced team. A software development
company has already put together the team you need. It is not
necessary to recruit new talent, train them and bring them up
to speed on your project, therefore the lead-time to starting
the project is reduced.
-
Access to technological expertise. Technology is moving at
lightening speed. It can be difficult for companies to remain
current. Software developers make it their business
to acquire the skills necessary to service the ongoing advances in
technology.
The likelihood of having a successful project is increased
when you are able to rely on an experienced team of
professionals who use the technology you require as part of
their everyday business.
-
Reduce HR costs.
Hiring new staff for a short-term project is very costly,
particularly if there are no subsequent projects that require
their services. When outsourcing, HR costs are limited to the
project duration.
-
Control Project Costs.
The project cost is agreed upon up front so there are
no surprises as far as the project budget is concerned. The
product specifications, conditions, and deliverables should
be agreed upon in the project contract.
-
Increase Project Management Capabilities.
An experienced software
development company understands and utilizes project
management principles. These are fully integrated into the
process they use to deliver your project to you. Their skills
can be added to your own to ensure the successful completion
of your project.
-
Improve efficiency of in-house staff allocation.
Scheduling of your resources
is more efficient since in-house personnel can be assigned to
current, critical, or ongoing projects. Finding time for a
new project can be difficult when current in-house resources
are being utilized to their maximum capabilities.
-
Timely Project implementation and completion.
A well-defined and planned
project should be delivered within the timeline set out in
the project documentation provided by the software
developer.
Having a team dedicated to the project eliminates the need to
pull staff when more urgent or daily issues arise. When the
project is outsourced to an experienced and professional
software developer, in-house work can be better managed, and
the completion date of your project will not be affected by
day to day in-house issues.
-
Knowledge and Expertise Continuity.
High technical staff turnover is a major
concern of many organizations. An in-house project that spans
a half-year or more runs the risk of losing some of its key
technical personnel. This is not just a costly problem. It
can also seriously jeopardize the success of the project.
When a project is outsourced, the risk of losing knowledge
and expertise is significantly reduced. The consulting
company as a whole is responsible for completing the
project.
How to evaluate the Cost Benefits of Outsourcing:
The general perception is that outsourcing is more costly than
developing the same project in-house. This is based on the per hour
cost of outsourcing development. However, to realistically
compare these two options, there are other cost factors that must be
considered:
- In-house employee salaries
- Number of internal resources required. Recruitment costs if new
skill-set employees required.
- Benefits such as: holidays, sick time, overtime, vacation
- Training required
- Overhead: software, hardware, manuals etc.
- Efficiency losses:
- time required for in-house staff to:
- recruit/acquire staff,
- ramp up/prepare for project,
- complete project in-house. (Billable project hours
required may be more)
- time and resources taken from other in-house projects
These issues are all factored into the hourly rate of a software
developer, and may be well below your internal costs. It will most
likely take less time to complete the project using an outsourced
developer as well. As a result you will
see the cost benefits of the product much sooner.
This alone may compensate for the difference in costs of
in-house vs. Outsourced development.
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