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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.
Read more Software Articles offered by WebExcel Solutions below
Offshore Software Development, Software Outsourcing
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