Remember the time when the whole world got its silk from China, spices from India and cotton from Egypt? The world of IT is veering towards the same concept, sourcing development of specialized software where it’s made best. In the truly flat world with data traveling in real-time across continents and time zones, there’s really no reason to work in any other way.
Trying to kill “offshore” is bound to fail. Indian software development companies such as Infosys, TCS and Wipro are all over three decades old and thriving. More such companies continue to see growth. Meanwhile, the nearshore lobby too has seen big successes. Software companies have sprung up in Mexico, Argentina, Chile to service the Americas. Countries of eastern Europe and Russia are experiencing searing growth serving the nearby western European companies where development costs are much, much higher.
The whole pie is bigger than ever before and in our opinion, will continue to get bigger. We say that because new software has been hitting the market in waves, like a huge ocean of opportunity. Trace it to decades ago and you’ll see words like Fortran and Cobol, A++ and C++, Java and Lava, SQL and YQL, Ruby and Rust, all kinds of Visuals, .NET and so on. The list is growing and don’t think anyone is keeping track or auditing it. And now there’s Saas and the cloud. There are apps for the mobile phone, for smart phones for tablets and pads. Every software company today needs to run to stay in the same place as it was yesterday. And every corporation, no matter which sector it operates in, needs software and its own customized applications if it wants to be a differentiator. Do you see the demand for software development going down? Is the sky green?
Produce it wherever
So while large banks and government departments and pharmaceutical companies contract out the software development to experts because they’d rather concentrate on what they know, here’s a puzzle. Why are start-ups in the technology sector outsourcing not just their HR and Payroll and Accounts but also the development – if only in part – of their core product? Because just as Department of Labor raised productivity of goods dramatically in the industrial age, getting experts across the world to do your work (under controlled conditions, naturally) will get it done faster and at a lower cost. Saving time to market is a bigger advantage than even saving cost.
And therefore, offshore is now getting combined with nearshore and onshore development. It’s a complete, three-course meal that only the best restaurants serve up! Buyers looking for “best shore” development or the ideal combination of the three shores will still need to be alert in order to benefit from the deal.
- If looking for different service providers in different locations, ensure there’s a cultural fit and vendor buy-in for the project.
- Give clear mandates and deadlines so that both – or all three – teams understand exactly where their part of the piece fits into the jigsaw puzzle. You don’t want two ends of the bridge built by teams on either shore to end up not meeting in the middle.
- You’d probably be better off if the on-shore team worked out of your own premises even if the employees get their paycheck from the vendor. This way they’ll stay close to the heart of the project and feel ownership towards it.
- While calculating the ifs and buts of the cost and time of a project is not an exact science, buyers will still be able to figure out how they did benefit from an outsourced project versus trying to do it in-house.
- Go with ballpark figures to calculate what it would cost you to hire a full-fledged development team in-house versus what the service provider is quoting.
- Understand how much time you might have to spend training the outsourced team as against one you hire yourself.
- Calculate the legal costs in the event your service provider fails to deliver, or if the product does not match your specifics. The worst-case scenario must be taken into account even if you trust your provider implicitly.
No going back
Just like time, progress in software development outsourcing comes with a “no returns” clause. Cloud, mobile and social media technologies have made communication between teams easier and better. There’s really no point doing everything yourself if someone can do it better, faster and cheaper than you can and if that someone is willing to be hired.
The bottom line is this: it doesn’t matter where the work is done, as long as it’s done. To be sure, not everything will run smoothly the first time around.
What has been your experience with outsourcing? We’d love to hear your story.