| Outsourcing Software Development Offshore This is | | | | offshore outsourcing might be the availability of |
| a strategy that has "taken off" and is rapidly becoming | | | | software developers locally. A few years ago after |
| mainstream in the software industry. Much has been | | | | the dot com bubble burst, developers were suddenly |
| written on the social and macroeconomic | | | | available, practically everywhere. But as we enter |
| consequences of this phenomenon. My take on it will | | | | 2006, they are very scarce in Southern California, |
| be strictly from a business perspective. | | | | where I'm based. And if you are looking for a |
| In my research in this area for a number of clients, | | | | narrowly-defined skill set, you can almost forget about |
| several important questions popped to the forefront. I'll | | | | hiring internally. Conversely, there is still a large pool of |
| address them one at a time. | | | | educated, skilled and experienced developers, which |
| What are the circumstances whereby outsourcing to | | | | have not yet been fully absorbed, in a number of |
| a lower cost country makes sense? | | | | developing countries with a tradition in technical |
| This is a complex question with no simple answer. | | | | education. So while it may not be obvious on the |
| There are actually many reasons to consider | | | | surface, labor availability can sometime be an even |
| outsourcing. | | | | more important driver than cost. |
| The first and most obvious is to lower your | | | | A third important consideration is expedient access to |
| development expenses, of course. How much can you | | | | specific skills. An example of this is that I have several |
| save? The answer depends upon what your costs | | | | early stage software clients, who are embarking on |
| are in your home location, as well as where you | | | | their first large scale software project. For the first |
| outsource too. Let's look at example of a California | | | | time, having a sophisticated QA function has moved |
| Software company outsourcing to a company in India, | | | | from being a luxury to a necessity. For a small |
| a common example. My research indicates that the | | | | software company, it can take several years, with |
| California software company can reduce its hourly | | | | many bumps in the road and significant investment in |
| costs by at least 60-70%. This doesn't even include | | | | both people and equipment, to build up an adequate |
| the "fully loaded costs" of permanent employees. On | | | | in-house QA department. Another approach would be |
| the other hand, it doesn't take into account the | | | | to use one of the many outsourcing firms specializing |
| inefficiencies inherent in having software development | | | | in QA. QA is all they do, every day. As an alternative |
| done by a third party, let alone one with a very | | | | to building up an in-house department, you can get |
| different culture, potentially a different language, and | | | | immediate access to a seasoned, fully functional QA |
| ten time zones away. These inefficiencies are hard to | | | | team. In other circumstances you may already have a |
| quantify, and will vary from situation to situation--they | | | | good in-house QA team, but can use the outsourcer |
| are largely dependent upon how well you choose your | | | | to provide "overflow" support, as an extension of your |
| partner, and how well you manage the relationship. | | | | in-house team. |
| Another important consideration that would lead you to | | | | What benefits can I expect from outsourcing? |