Deciding to Outsource development?
Here’s Your Decision-Making Matrix.
Ameen Abu Leil is VP of Galil Software R&D business unit. He builds development groups for a long list of well recognize companies for more than 5 years.
For many companies, the decision to outsource software development makes sense. They might not have the resources to support an in-house development team, and even if they did, it can be difficult to attract and retain that talent. So, what factors should you consider when you decide to outsource development? I’ve come up with a decision-making matrix for making outsourcing decisions.
Define Your Need for software Outsourcing
Before you set out on a journey, you consult a roadmap. The same advice holds true when you’re deciding to outsource a software development project.
It’s important to figure out why you want to outsource development, because it will help you determine your goals and the purpose for turning to a third party developer.
Some companies need to outsource because it’s more cost effective. For others, outsourcing enables them to reach a new talent pool they wouldn’t have been able to connect to otherwise. And other firms simply don’t have the resources to support a development team. Those resources might be financial, or they might be constraints on office space. Last, they need to create some flexibility in the team size meaning they serve specific customer requirements that are not easy to predict.
There are some very good reasons for any company to choose outsourcing, regardless of other motivations. Some of them are:
- The ability to take advantage of a third party’s professional services. For example, a company that practice Java coding is looking for a C# team or a Python team for a specific component- or need vast experience in QA Automation which is not easy to develop and maintain inside the company.
- The capability to scale up or down. Most high-tech companies treat their talent as the company’s most important asset. Great engineers are the heart that keeps the company IP. They’re the talent who keep the knowledge that enables the company to move forward quickly. Companies are trying to avoid losing engineers and cases where customer requirements are decreasing, which may lead to fire people and to a bad atmosphere. This works the same for financial issues, something that happens to many companies during their long ride. The ability to scale down to reduce spending is a critical component.
- Companies also choose to outsource development to focus on their core business processes, and outsource the projects which are out of the company’s roadmap or time consuming. Ask any CEO, focus is everything. If the core product API is well defined and a 3rd party can work closely with your team to build specific customers solutions upon it, (solutions that are not relevant to other customer and to the core product) a 3rd party that might expert on working with your customers can be a great solution.
- Lower costs. If software outsourcing is done correctly, the savings are significant. There are many cases where a good outsource company reduces the development cost. Either using a company that resides in a country with lower GDP or in a cheaper location inside your country, you can save a good chunk of in-house cost. This, together with the flexibility of a 3rd party lowers the costs significantly.
In the next post we’ll talk about some important points from my experience in choosing and operating software outsourcing.