{"id":4702,"date":"2020-08-13T11:10:42","date_gmt":"2020-08-13T11:10:42","guid":{"rendered":"https:\/\/www.ateamsoftsolutions.com\/beta\/?p=4702"},"modified":"2021-05-06T10:46:08","modified_gmt":"2021-05-06T10:46:08","slug":"the-ultimate-guide-to-software-development-outsourcing-in-2020","status":"publish","type":"post","link":"https:\/\/www.ateamsoftsolutions.com\/beta\/the-ultimate-guide-to-software-development-outsourcing-in-2020\/","title":{"rendered":"The Ultimate Guide to Software Development Outsourcing in 2020"},"content":{"rendered":"\t\t
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The Ultimate Guide to Software Development Outsourcing in 2020<\/h3>\n

The technology industry has witnessed a revolutionary change with the advent of disruptive outsourcing.\u00a0This kind of outsourcing involves technological advancements like automation, cloud computing etc.<\/p>\n\n

According to the 2018 Deloitte survey, 500 executives from leading organizations have stated that disruptive outsourcing has helped them increase their productivity and competitiveness in the market.\u00a0<\/p>\n\n

Emerging trends and solutions in cloud and automation have\u00a0enabled various tech industries to scale faster and reach the global market.\u00a0Outsourcing is a valuable strategic tool,\u00a0especially for the tech industry.\u00a0<\/p>\n\n

For\u00a0example,\u00a0outsourcing\u00a0an activity\u00a0like software development, Software maintenance\u00a0to a vendor helps to cut down operation cost and also helps to focus the resources on the business logic. Moreover, technology is rapidly changing and it is difficult for your in-house team of developers to be good at everything.\u00a0<\/p>\n\n

Outsourcing\u00a0of services\u00a0opens up the immense possibility of working with expertise that is not available to individual companies. Your workforce instead can focus on the core competencies of the company while IT services are handled offshore.\u00a0<\/p>\n\n

According to the surveys of Deloitte,\u00a031% of all IT-related services were outsourced and the global outsourcing industry produced a whopping 88.9 billion U.S dollars in revenue, last year alone.\u00a0<\/em><\/p>\n\n

\"Software<\/figure>\n\n

Outsourcing\u00a0software development\u00a0helps companies to reduce the costs that they incur and also helps them focus solely on business goals. It is not just beneficial for saving money but it is\u00a0a\u00a0great means of innovation.\u00a0<\/p>\n\n

Why Do Companies Outsource?<\/strong><\/h2>\n\n

\u201cAs with many initiatives, organizations are finding that delivering competitive advantage through disruptive outsourcing solutions is anything but simple; effort and expertise are needed to address potential data security and cyber risks, changing regulations, organizational resistance, skill gaps, and to help flatten fragmented processes. In this new world, place your bets on the brave and the good, and against the fearful and complacent.\u201d<\/p>\n\n

Doug Plotkin<\/a>, managing director, Deloitte Consulting LLP<\/p>\n\n

1.\u00a0Time to\u00a0Market\u00a0<\/strong><\/h3>\n\n

Time to market is basically the duration between the creation of a product idea to launching it in the market. If\u00a0you have the development process streamlined and effectively planned out then it becomes easier to predict the time you will take for your launch. It is also extremely important to decrease this time gap.\u00a0<\/p>\n\n

Delaying your launch will\u00a0allow your competitors\u00a0to get ahead of you. The ephemeral nature of technology can also you\u2019re your product idea redundant and useless.\u00a0<\/p>\n\n

\"Why<\/figure>\n\n

Hiring an outsourcing\u00a0company\u00a0helps you to make your delivery to the market much quicker, thereby reducing a considerable amount of time. This improves your competitiveness in the market and also gives you a head start\u00a0among your contemporaries.\u00a0<\/p>\n\n

2.\u00a0Access to\u00a0Expertise\u00a0<\/strong><\/h3>\n\n

There might arise a situation where your company might lack people who are qualified enough for a big project. However, with\u00a0hiring a dedicated team,\u00a0you have access to the most qualified\u00a0and experienced professionals. The\u00a0hired\u00a0outsourcing company\u00a0will be the expert in the field and hence\u00a0can make your projects professional.\u00a0<\/p>\n\n

Outsourcing\u00a0of services\u00a0can enable somebody who specializes in the field\u00a0to\u00a0apply their specific technical expertise to make your product better.\u00a0<\/p>\n\n

You get access to expert specialists like business analysts, project managers,\u00a0fullstack\u00a0software developers\u00a0etc\u00a0who can guarantee you a high-end\u00a0product\u00a0.<\/p>\n\n

3.\u00a0Domain\u00a0Awareness\u00a0<\/strong><\/h3>\n\n

You might have a project that involves a complex technology. For this,\u00a0you\u00a0might\u00a0require a team that has specific and deep domain expertise for that particular activity. It is not financially practical to recruit an in-house team merely for such a skill-specific project.\u00a0<\/p>\n\n

This is where outsourcing helps you.\u00a0For example, if you want a team of developers for custom software development you can look for vendors that are proficient in custom software development.\u00a0<\/p>\n\n

4.\u00a0Cost-Effectiveness\u00a0<\/strong><\/h3>\n\n

Offshore outsourcing\u00a0reduces the overall business operating cost. It eliminates the need to hire permanent employees who have to be paid even after the completion of a project. This, in turn, reduces the cost of training and recruiting.\u00a0<\/p>\n\n

In most developed countries, companies have the added burden of paying the employees insurance, tax, security benefits and other collateral dues.<\/p>\n\n

Outsourcing\u00a0benefits in flexibility\u00a0when it comes to termination of services. It eliminates the need to pay government-mandated compensation while terminating an employee.\u00a0<\/p>\n\n

With an independent outsourcing contract, they can simply change the service provider if not satisfied with the service.\u00a0<\/p>\n\n

Outsourcing\u00a0software development\u00a0are on a steady rise. More companies are now outsourcing both their major as well as minor projects.\u00a0<\/p>\n\n

Why do software outsourcings fail?<\/strong><\/h2>\n\n

Even though the trend of outsourcing has grown, it also had high failure rates.<\/p>\n\n

According to the data collected by\u00a0Dun & Bradstreet\u2019s Barometer of Global,\u00a025% of outsourcing project fails within two years and 50 % of them fail within the first five years.<\/p>\n\n

\"Why<\/figure>\n\n

5\u00a0reasons why outsourcing relationships fail<\/strong><\/h2>\n\n

1.\u00a0Unclear\u00a0Expectations and\u00a0Objectives<\/strong><\/h3>\n\n

Client companies often fail to communicate the goal they are trying to achieve and what they are expecting to get out of the outsourcing company. This will drastically affect the outsourcing company\u2019s perspective of the work they have to do.\u00a0<\/p>\n\n

Without\u00a0a detailed understanding,\u00a0orders might have to\u00a0be\u00a0changed. This can,\u00a0in turn,\u00a0lead to delays and cost overruns.\u00a0There\u00a0has to be a clear understanding of what the project entails and\u00a0preferences. Clients have to be transparent about their goals and keep them realistic. Then you have to make sure that the outsourcing company is on the same page as you.\u00a0<\/p>\n\n

2.\u00a0Lack of\u00a0Clarity<\/strong><\/h3>\n\n

Lack of overall clarity of the business can lead to poor planning. It can lead to a waste of your\u00a0budget. You must succinctly pinpoint all the essential details about the project. The implications of the project must be communicated properly to the outsourcing vendor and other important stakeholders. A detailed portfolio\u00a0of\u00a0your expectations and goals and the entire plan and methodology of the project will help.\u00a0<\/p>\n\n

3.\u00a0Insufficient Technical\u00a0Experience\u00a0<\/strong><\/h3>\n\n

Most often,\u00a0companies outsource software development to keep the cost low and also to not hire employees permanently.\u00a0<\/p>\n\n

The outsourcing\u00a0company\u00a0might not have the\u00a0technical expertise or know-how, it\u00a0can lead to severe\u00a0problems,\u00a0especially in project estimation.<\/p>\n\n

The whole purpose of outsourcing services is to get the work done by somebody that is more equipped at it than your company. Therefore, if the company is not better than your own in-house team or lacks sufficient knowledge, the whole exercise becomes fruitless. You also outsource services expecting better quality than what you can achieve.\u00a0<\/p>\n\n

Quality that does not meet your market standards also lead to failed projects.\u00a0<\/p>\n\n

4.\u00a0Communication\u00a0Barriers\u00a0<\/strong><\/h3>\n\n

Clients sometimes do not share information thinking it is apparent.\u00a0<\/p>\n\n

However, if the outsourcing company is not aware of what they are expected to do, the project will not be finished as is expected.\u00a0<\/p>\n\n

What might seem apparent might not be apparent to the outsourcing company.\u00a0<\/p>\n\n

Therefore,\u00a0all details have to be shared even if it might seem redundant. Ideally, there should not be a communication gap.\u00a0<\/p>\n\n

It is imperative to hold regular meetings and video conferences as well as exchange feedback.\u00a0<\/p>\n\n

28% of respondents indicated poor communication as the most important cause of outsourcing projects failure.<\/strong><\/p>\n\n

According to the white paper released by\u00a0<\/em><\/strong>SourcingFocus.com<\/strong><\/a><\/p>\n\n

Sometimes the reluctance to share information might be due to confidential information which has\u00a0the risk of being stolen.\u00a0<\/p>\n\n

To solve this,\u00a0a confidentiality agreement or a non-disclosure agreement can be signed. This\u00a0will delineate the security responsibility each party holds. Once this agreement is signed the outsourcing company will be bound not to disclose any information covered in the ambit of the contract.\u00a0<\/p>\n\n

5.\u00a0Failure to Fine Tune Contract<\/strong><\/h3>\n\n

Signing a contract with the outsourcing company does end the job of the clients.\u00a0<\/p>\n\n

The project needs to be managed and under supervision throughout the process.<\/p>\n\n

The main priorities that the clients have should be set out and the project must be planned to the very details before a release date is announced.\u00a0These details must also be informed to the outsourcing company.\u00a0<\/p>\n\n

Failure to have a consistent method and planning for the project can lead to\u00a0a\u00a0loss. Not every single thing can be planned but the tasks to the nearest milestone must be planned and specific.\u00a0<\/p>\n\n

These are some of the most common reasons why outsourcing relations and projects fail at a high rate. This can easily be avoided if the clients do their due diligence during the pre-deployment phase of a project.\u00a0<\/p>\n\n

Choosing the Right Development Partner<\/strong><\/h2>\n\n

The planning that goes into the pre-deployment phase is what ensures a smooth launch post-deployment.\u00a0<\/p>\n\n

Choosing the right development offshore partner and building a good team can prevent your outsourced projects from failing.\u00a0<\/p>\n\n

Following are some of the\u00a0guidelines\u00a0while choosing your offshore\u00a0team.<\/p>\n\n

1.\u00a0Team\u00a0Skill\u00a0Set and\u00a0Expertise<\/strong><\/h3>\n\n
\"Team<\/figure>\n\n

It is extremely important to study and know everything about the team you intend\u00a0to work with.<\/p>\n\n

You have to collect information about the company, what their skill set is, the expertise of their team, how adept they are with\u00a0the\u00a0latest technology, exposure to the latest technology, their portfolio, how effective are they with meeting deadlines, experience in handling different kinds of projects\u00a0communication etc.\u00a0<\/p>\n\n

You must look for an offshore\u00a0outsourcing\u00a0partner that can give you the appropriate person to handle your account. It is advisable to keep in touch with a developer who is working on your project.\u00a0<\/p>\n\n

Going for a team that works with hybrid models or agile models will be beneficial for your project. It has to\u00a0be\u00a0made sure that they understand what exactly it is that you want and also that they are serious about achieving your project milestones.\u00a0<\/p>\n\n

2.\u00a0Market\u00a0Reputation\u00a0<\/strong><\/h3>\n\n

Working with the best company can yield you the best results.\u00a0Therefore, it is important to check up on the market reputation of your prospective partner.\u00a0<\/p>\n\n

This can be done by taking a look at their client base and completed project history.\u00a0<\/p>\n\n

You can also look for reviews and feedback from their previous clients, from their website and other social media platforms.<\/p>\n\n

You have to ensure that their services are customer-centric, that is services centered around the needs of the customers.\u00a0All of these have to be considered before you decide to hire a particular vendor.\u00a0<\/p>\n\n

3.\u00a0The\u00a0Trust and\u00a0Security\u00a0Factors<\/strong><\/h3>\n\n

Trust is a very important factor for such a project to succeed.<\/p>\n\n

During the course of the project,\u00a0you might have to share a lot of information. Sensitive information stands\u00a0at\u00a0the risk of being misused.\u00a0<\/p>\n\n

One of the major security\u00a0concerns\u00a0is the intellectual property of the client and\u00a0the\u00a0sensitive data.\u00a0<\/p>\n\n

Before hiring\u00a0an outsourcing company,\u00a0you can make sure that they will respect your privacy. The vendor must be somebody who has regular security and network audits.\u00a0<\/p>\n\n

You have to make sure that they have sufficient infrastructure to protect your data.\u00a0<\/p>\n\n

4.\u00a0Scalability and\u00a0Flexibility\u00a0<\/strong><\/h3>\n\n

Scalability\u00a0and flexibility\u00a0are\u00a0important\u00a0elements\u00a0that\u00a0you need to consider when you choose the company for your software outsourcing project.\u00a0You have to check how much scalable their services are and how much customization they\u00a0can\u00a0provide. This is an important factor when your business is expanding. The software has to be scalable as per the growth of the business.\u00a0Your offshore business partner must be able to handle your growing needs.\u00a0<\/p>\n\n

5.\u00a0Project\u00a0Management\u00a0<\/strong><\/h3>\n\n

There has to be a clear idea as to how the project will be managed. Signing the contract and handing over the project does not end your responsibility.\u00a0<\/p>\n\n

There has to be constant management throughout the whole process.\u00a0<\/p>\n\n

All the decision making and planning must go smoothly so that the project does not have any delay. The supervisory role of your client and\u00a0the\u00a0management of the project must be decided along with the key terms of the work contract. There must be several channels of communication between your in-house team and the offshore team so that your team can manage and supervise the project.\u00a0<\/p>\n\n

6.\u00a0Post\u00a0Deployment\u00a0Support\u00a0<\/strong><\/h3>\n\n

Technical assistance is not only needed during the project put also post-deployment.\u00a0<\/p>\n\n

A small bug or technical glitch can cause a huge loss to your business.\u00a0You have to inquire how your offshore partner is going to handle technical issues and updates. There has to be consistent post-deployment support to maintain your product.\u00a0<\/p>\n\n

Team Set-Up Process and Guidelines<\/strong><\/h2>\n\n
\"Team<\/figure>\n\n

Software that you build or a product that you make is a\u00a0long-term\u00a0investment.\u00a0So is the outsourcing partner you choose. It has to be an addition that will always be valuable to your business. Therefore, it is important to have a great team of developers.\u00a0<\/p>\n\n

Guidelines\u00a0to\u00a0follow\u00a0while setting up a team.<\/p>\n\n

1.\u00a0Legal\u00a0Aspects of\u00a0Hiring a\u00a0Dedicated\u00a0Team\u00a0<\/strong><\/h3>\n\n

The legal aspects of building a team mainly include three important agreements:\u00a0Non-Disclosure\u00a0Agreement or NDA, statement of work or SOW\u00a0and\u00a0Master Services Agreement or MSA.\u00a0<\/p>\n\n