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Outsourcing and Software Developing
from:Deb St. George, Publisher, GettingToSuccess.com
Outsourcing refers to contracting work to another company that might otherwise be performed by in-house employees. Many big companies outsource certain specialized jobs such as call center services, software maintenance services, etc. These contracts are taken up by companies that specialize in these services.
Customer satisfaction is an important aspect of outsourcing. It is about building relationships based on trust and mutual respect.
Software outsourcing has become an important factor for companies that present a cost and quality advantage in a competitive market. More often than not software outsourcing is done to a company which is situated offshore in another country or continent. India has become an important centre for IT or software outsourcing with its large pool of technical experts and low wage rates. It has attracted a lot of investments from domestic as well as international players who have setup their centers here and have seen them grow into multi billion dollar businesses.
Developing software in-house requires huge infrastructure to be setup, lengthy recruitment procedures to be carried out, maintaining standards and codes in the facility and lots of other compliance issues to be met and complications to be handled. When compared to all the hassle, outsourcing emerges as a very easy and convenient option. It takes away the entire headache and also lets the company concentrates on the core business activities rather than fussing about supporting tasks.
Other reasons why companies outsource software development are:
Cost savings: Mostly the countries where the outsourcing centers are setup offers lower wage rate than the company’s primary country.
Cost restructuring: Outsourcing allows increase in the ratio of fixed cost to variable cost. Most often the project outsourced has a fixed payout amount and even in projects where the client is billed by hour the variable expense estimation becomes easy to estimate.
Better quality service: The company to which the job is outsourced are experts in providing the services and often has world class facilities and capabilities with access to better technology.
Staffing convenience: The service providers have access to a better and large talent pool well suited to provide quality service to the company’s clients.
Reduce delivery time: The development of the product becomes faster as the company is now able to focus on improving its core activities.
Risk management: Some companies are better positioned to mitigate certain types of risks owing to their nature of business or location. By not keeping the entire chain of work with itself the company has transferred some of its risks on the other company now contracted to provide certain services.
Some disadvantages of software outsourcing are:
Company client link: It removes any direct communication between a company and its clients. This hampers the relationship building activities of the company.
Information confidentiality issue: Sensitive client and company information in the hands of the outsourced company may be vulnerable to leakage thereby posing problems for the main company on confidentiality terms and conditions. Strict, written and signed contract documents have to be kept in place with relevant clauses to tackle this problem.
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