The Benefits of Software Development Outsourcing and What to Look For in a Partner

By Gregg Spivack

Director of Client Services, NPI

February 19, 2019

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As the evolutionary pace of IT accelerates, many companies turn to software development outsourcing to keep up. While there are many benefits to in-sourcing (hiring internally and/or building your own products), I’d like to focus this post on outsourcing.

There are many factors to consider when selecting an outsourced vendor such as cost, location, compatibility and culture - all of which can directly impact the desired output. Historically, offshore outsourcing was believed to be the best option because it was less expensive to hire comparable labor from overseas. While this trend continues, companies began seeing issues with distance, culture and collaboration between domestic and foreign teams. It was underestimated how much of an impact these factors could have on code output.

More recently, the balance we see NPI clients implementing is a mix of offshore self-contained teams and onshore local in-sourced and outsourced individuals working in teams without major time differences. There has also been a shift to adding additional near-shore based teams (Mexico, Europe) to help decrease time zone issues. This will continue to evolve over time, as every firm’s needs are different to achieve the balance of software development outsourcing that’s right for them.

As with other enterprise IT purchases, cost is one of the most important elements of getting the best possible deal for software development outsourcing. But it’s not the only element. Whether you’re writing an RFP for outsourced development resources, or vetting candidates without a formal RFP process, a company should be asking logistical questions unrelated to cost such as:

  • What is the established technology used to keep teams working in different time zones in sync?
  • What are the potential differences in corporate culture to better understand compatibility between IT professionals?
  • What are the hiring procedures and timelines?
  • What do the developer skill sets look like and how are they utilizing alternative programming styles?
  • What methods are used in-house to produce quality code?
  • It is also incredibly important to factor in the expertise an external partner can bring. Working with multiple clients gives external partners a unique perspective to help you grow as a company and stay relevant (“What are your other customers doing in this area?”).

    Benefits of Software Development Outsourcing in the Age of Cloud and Digital Transformation

    With the increased adoption of cloud principles, automation, and alternative programming styles such as XP (extreme programming), the sourcing of talent has changed. Before selecting a partner and direction for hiring, it is important to understand the high-level goals of your organization and to consider how the team’s hiring/partnerships will contribute towards those goals. Finding the lowest cost resources may no longer be optimal for your needs - smart spending in high-quality, specialized resources may ultimately lead to greater output and long-term savings. For example, if your company currently maintains a large manual QA resource pool, a better option may be to hire Automation Engineers who are more expensive individually, but fewer are required for increased output and faster delivery times.

    Another good example is digital transformation and its impact on developer resources. Companies are struggling to stay relevant and produce quality code faster and more efficiently to reach end users. This is especially true for an organization built on mainframe that maintains a large manual QA framework and releases code quarterly. The need to release code quickly can directly impact the success of the business.

    Hiring talent is becoming increasingly difficult, especially since there is an increased focus on niche skill sets such as Full Stack Engineers with front, middle and back-end tech stack knowledge along with experience in Cloud, DevOps, Microservices, Containers, etc. It will remain important to hire or in-source some of this talent, but for many companies it will continue to be necessary to outsource off and onshore, and build strong relationships with vendors who are focused on up-skilling, hiring, and training their IT professionals to stay relevant and up to speed in developing for a new digital age.