Outsourced or Offshore software development has been an increasingly popular trend for several years now. The cost benefits are easy to understand when you consider the average annual salary of an engineer in the USA as compared with the average salary for an engineer in India. Outsourcing gives you access to professionals, experts, and high-quality services. Through outsourcing companies allocate specific business processes to a specialist external service provider. This is needed as most of the times an enterprise cannot handle all aspects of a business process internally, due to resource constraints.
Prevailing Questions Related to Outsourcing
Is Offshoring worth it? Are the cost savings as large as they seem? Is quality of the software sacrificed or is it improved? Are there risks associated with offshoring software development? Are there ways you can hedge against any such risks? Should you consider offshoring any type of software development, or are there certain things you should not outsource? How can you recognize the danger signs of offshore work going awry?
Advantages of Offshore Outsourcing
Advantages need to be substantial for companies to endure the disadvantages of offshoring. Some of the advantages listed that are reported by companies that have experience with outsourcing. Offshore outsourcing is a viable way to remain competitive in an increasingly aggressive global environment. Many USA, UK, and Australian companies are now looking to outsource due to ever-increasing overhead costs of software development. Outsourcing helps in cost reductions up to 30%.
- Cost Savings The most powerful attraction is significant cost savings. Companies are finding that offshoring their software development process saves them big because of lower labor costs. With outsourcing get cheaper labor cost and improved output.
- Time Savings When employees work on your projects round the clock, the software development takes much less time, so the product reaches the market more quickly.
- Tax Savings - Some companies are attracted to offshore outsourcing because of potential tax savings. They can take advantage of opportunities for tax incentives offered by the Indian government.
- Focused Strategy Some companies that have had successful experiences with offshoring report that outsourcing offshore allows their companies to focus on business-critical initiatives, while they outsource their non-critical software and project-management functions.
- Talented IT Professionals Outsourcing companies accumulate the best information technology and software development brains, so you get access to that pool of talented resources overseas.
Disadvantages of Offshore Outsourcing
Nothing is without tradeoffs, and offshoring is not an exception. It's essential to look at few potential drawbacks before deciding to send your software development requirement offshore. Risk of losing sensitive data and the loss of confidentiality are few of the biggest disadvantages of outsourcing. This will help determine accurately whether the rewards outweigh the risks of offshoring.
- Technology Difference Technology differences can pose problems. It is important to ensure that the hardware and software development platforms used for software development are compatible with the intended platforms for the end product software.
- Cultural Problems Soft factors such as cultural differences relating to software development, different standards, coding practices, documentation styles, and work ethic, all can be problematic. However, some of the offshore development houses are well versed with these factors and are aware of the outcome of these issues - as they mostly cater to the needs of overseas companies for years.
- Hidden Costs Travel and communications cost can be substantial if your offshore partner needs to spend an extended period of time on site.
- Communication Gaps One of the most obvious disadvantages is language and difference in language can sometimes lead to miscommunication. Since good communication between user and developer is key to accurately extracting the requirements for the software to be developed.
Despite many challenges and drawbacks, offshore outsourcing will remain an attractive solution for many companies. Companies should reap the maximum benefits of offshore outsourcing but before that, it is advisable to determine the importance of the tasks which are to be outsourced. Keyideas has years of knowledge and experience serving companies overseas especially from the USA and possess good communication levels to extract and understand complex web and mobile application development requirement. Keyideas, a custom software development company in India is focused on quality from the very beginning since they started and have built credibility in the overseas market for outsourcing. We are focused on our processes and quality aspect, which naturally differentiates us from ordinary suppliers. With Outsourcing, there is an increase in productivity and efficiency, as hence business can be more successful, better-prepared for market challenges with streamlined cash flow.