Software Outsourcing

Software Outsourcing :- No longer just a buzzword, software outsourcing has become an integral part of the global IT market. It can be described as the transfer of certain internal functions to an external service provider, which specializes in these operations. The outsourced model has been adopted by companies of all sizes and is no longer for large companies only.

The primary reason for outsourcing is usually cost reduction. And indeed, research has proved that this model reduces a company's overhead costs leading to improved earnings. However, it is no longer just about saving money, software outsourcing solves several core business issues:

Benefits of Software Outsourcing
Access to skills - The outsourcing company gains access to superior expertise and skills not available in-house. Having been exposed to projects in different sectors, the service providers can bring this experience and knowledge of best practices into the development team.

Staffing flexibility - The team size of a project can be increased or decreased as and when required without going through a long arduous hiring or downsizing process.

Reduced costs - This way, the company can avoid the costs of maintaining a large team in between projects, besides saving on recruitment, infrastructure and training costs.

Faster development - A larger team translates to a shorter development time enabling the company to speed up its time to market, a significant advantage in the highly competitive business world.

Reduced maintenance hassles - After a product is built, outsourcing the application's maintenance enables the internal resources to focus on their core competencies and in turn benefit from the service provider's core competency. Internal resources can now study and explore new technologies and markets.

Software Outsourcing , however does not mean outsourcing responsibility as well, this is an important note to remember. The client and not the service provider, is still responsible for the company's market success.

Software Outsourcing as just a short-term engagement is not very effective - the cost and labor gains happen only when a long-term relationship is maintained. In fact research shows that only with large contracts can a company expect to see improvement in their bottom-line results. It is worth spending effort and time on selecting the perfect vendor. There are certain time-tested factors that must be considered before plunging into the outsourcing model:

Vendor Selection - Cost should not be the only factor while selecting a vendor, very low costs could mean very low quality. The technical skills of the vendor and those required by the client must match. It is important to understand the vendor's processes for knowledge transfer, submission of status reports, and response to changes in project requirements throughout the project period. Communication is key. An inefficient transfer of information can ruin any project. Understanding each other well, both in terms of methodology as well as management, is crucial.

Political and Social Conditions - It is essential to understand the business and economic policies of the potential vendor's location. Today, more often than not, the outsourced work is done overseas. If the vendor's country is politically or economically unstable, a business partnership with such a vendor might prove to be costly.

Research has proved convincingly that outsourcing is a successful business model. A well-planned and well-executed outsourcing strategy can boost the growth of a company. This business model is here to stay and will soon give rise to newer and more innovative business ecosystems.

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