Should SMEs outsource the software development?
Outsourcing the software development has always been a controversial issue. A section of entrepreneurs vouches for the outsourcing. They stress on benefits like cutting cost and short term commitment. Another group favors in-house app development. They won’t mind spending some extra money for reliability and superior quality. For SMEs, it is a quite tight place to end up with. On one hand, you may not have adequate resources to build in-house development team. On the other, poor quality software or app can hurt the business. In this article, we will try to find out the sweet spot, weighing the pros and the cons of outsourcing. Outsourcing: the current scenario The concept of outsourcing is dated back to 1970s when manufacturing companies used to outsource relatively less important aspects of manufacturing to offshore companies. Since then the outsourcing has gained momentum. According to statista, IT outsourcing has reached $442 billion marks in 2015. Benefits of the software outsourcing: Cost saving: The main advantage of software outsourcing, it can reduce the cost dramatically. In a recent interview by Elance, most of the participants have revealed outsourcing can cut the expenses at least 50%. Moreover, the quality of outsourced work is as par in-house developers. For SMEs, especially the early stage startups, outsourcing it is an excellent opportunity to get customized app/software without spending huge amount money on in-house developers. You can use the saved money to optimize other sections of business to gain competitive advantage. Short-term commitment: One of the less highlighted benefits of the outsourcing, SMEs can hire expert developers on a short term basis. Based on short term goal, you may need to hire experts for a specific project. In the case of in-house production, irrespective of the time span of the project you have to spend on infrastructure and human resource. But by signing a short-term contract with offshore developers you can easily side step such responsibilities and focus on business growth. Even if your business required implementation different technologies a few months later, you can again outsource. It helps to concentrate on main business: For non-IT SMEs whose core objective is not software/app development, setting up a new in-house developer team can shift focus from main business goals. Your managers have to train themselves and concentrate on development related matters. As a result, your primary business objectives can take a backseat. In a highly competitive scenario, such lack of focus can give your competitors an opportunity to out-maneuver your business. By outsourcing development related responsibilities to capable freelance developers, you share your responsibility with other. You get your software from the industry experts and at the same time, you can run core functions smoothly. Therefore, outsourcing helps you to increase overall efficiency and productivity by 10- to 100-folds. You will harness the power of new technologies while maintaining your competitive edge. Disadvantage of outsourcing: In spite of having such benefits, a section of businesses had a poor experience with outsourcing. From missing the deadlines to sloppy software, there are plenty of horror stories. According to a survey by Lieberman software, IT service outsourcing contracts cost more than expected in 62% cases. The main challenges of development outsourcing are,
- Quality control: Quality control is a major issue with software development outsourcing. Usually, freelance development houses display their best works (done by their best coders) as their portfolio. But after securing the project they may use less skilled developers and end product could be outright sloppy. Communication barrier also can affect the quality. If your developers fail to understand your requirement, the end product will be of inferior quality.
- Code collaboration: Code collaboration is another biggest challenge of outsourcing. Depending on which part of the world you are outsourcing, culture, time zone work ethic can hinder collaboration greatly. Software development is a collaborative work but if you fail to set expectation; product quality can affect negatively.
- Long term support: Your outsource developers are liable to offer their services for a certain amount of time. In case of breakdown of the application after the contract period, fixing the bugs can be a real headache.
