The Top Benefits Of Outsourcing to Help Managing Software Development Growth
Extending or supplementing your Software Development team is a challenge for most CIO's or VP’s of Engineering. Most companies can’t hire fast enough to meet the demand - or in some cases have projects that hiring full-time employees just doesn’t make sense. The most cost effective way of course is to Outsource some of the work. It’s hard to believe that some people still need to be convinced that Outsourcing is a good idea. Some think it takes away from their power base, while others are concerned with quality or their ability to control resources. Others simply don’t want to manage an outside team. There are are ways around all of these issues but if you’re in business, and you’re not outsourcing at least some of the work, you’re not running your business as efficiently as possible.
Here are my top 5 most common benefits from Outsourcing - yours might be different. I’ve based my benefits based on a mix of internal and external teams. The other assumption is that these companies found an Outsourcing Vendor that matched their needs with regards to Education, Experience, Location, Process and Communication. If you questions about how to find the right Outsourcing company, contact me. I’m happy to help.
1. Your Internal team now can focus on core competencies.
Core competencies distinguish a company from its competitors. Determine what makes you different from your competitors and apply the resources to those areas that you free up by outsourcing. The value of focusing on core competencies can be measured through faster growth and increased profitability.
2. Your internal team is now free to innovate
Once you start to outsource, you will discover that many tasks that you thought were core competencies are not. If your management team and staff truly focus on core competencies, they will find new and better ways to outsource those tasks that are distractions and add value to those tasks that remain within the organization. What is a new idea worth?
3. Shorter Time-to-Market
If you outsource a new product to a facility that has everything in place to produce the product, you have a turnkey solution. You don't have to build infrastructure or change your systems. You eliminate an entire development cycle and can introduce your product in months, rather than years.
If you can deliver your product six months earlier, you have a six-month revenue stream you would not otherwise have. Use your revenue projections to calculate the value of your early start.
4. Overall Reduced costs
Comparing the cost of outsourcing with the cost of performing the work internally will tell you if outsourcing will reduce your costs. No further calculations are necessary. You’ll need to find the true cost of your internal employees. This is called the “Fully Loaded Cost” and includes, salary, benefits, training, the space each employee occupies in your building, and more. The cost of Outsourcing is an “Expense” meaning, the actual dollars you spend can be accounted for as a straight-line expense and therefore, a huge financial benefit in most cases. Having a balance of Internal and Outsourced developers and testers can help greatly with your bottom line. Also, another advantage of working with a good vendor is that they have a larger pool of qualified engineers to choose from and if for any reason someone isn’t a fit, you can quickly replace them. Unlike an internal employee who leaves, there is no additional recruitment or other HR costs in replacing the Outsourced engineer.
5. Overall Improved quality.
Quality can be measured in many ways. The standards you create for your vendor will typically be higher than the standards you use internally. You are outsourcing to an expert and have a right to demand high quality. Ideally the vendor uses a compatible development and testing process as your internal team, meaning the Outsource team is a true extension of your internal team. This helps create better overall quality because the expectations, planning, execution and delivery have consistent and measurable results.
Hope this helps.
Mark Andrews is an executive with Waverley Software, a California based Software Engineering firm with engineers in California, The Ukraine and Vietnam. Mark has over 25 years experience in delivering global software solutions across a wide variety platforms and technologies.