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