Critical Mistakes Companies Make When Outsourcing
How to Maximize your Outsourcing Opportunities
The benefits of software outsourcing can be greatly rewarding. However, the general nature of the industry divides outsourcing into specialized areas of information technology (IT) services or product development. As the roles between these two areas are vast, there are many considerations that must be taken into account when deciding to outsource production.
When outsourcing software product development, it is assumed that the team will remain intact for an extended period of years to oversee the evolution of the product. In contrast, IT development teams are often limited in their lifeline, as there is little reason to keep teams together. This is why geography is important when outsourcing — it would be counter-productive to place a product development team in an area of high employee turnover rates, such as India.
Product specifications are a variable for heavy consideration for market regions. Product development teams are best suited for the creative and adaptable, as outsourcing teams of this nature are usually specified to develop a unique solution. IT development teams generally need specific details under fixed bids. Asian countries tend to be more successful in IT services, as the culture climate is better suited for mechanical and detail-oriented work. Eastern Europe and Latin America are centers that are focused on the flexible development styles that lend themselves to better serve product development.
It is also important to consider the range of services offered. IT companies do not have the wide range of branding, product design, website development, etc. that a product-based company has to attach themselves to for many years.
To success in outsourcing development, seek out a firm that has the experience with the specific technology. This should be an obvious issue, but it is often overlooked. If a project is utilizing embedded Linux, hire a firm renowned for their prior work with the technology. Otherwise, a firm will have to start from the ground up to become familiar with the technology and lengthen the end product.
If there is no specific technology aligned, find a full services team that specializes in inventive solutions for products, well-adapted to architecture, development, product design and technology selection.
Size of Outsourcing Firm
A team of efficient developers usually starts around three to 10 members. Many large companies, IT service firms in particular, are looking for teams massing in 50 developers or more. Working with too big a team often leaves your product in a shuffle and left to the resources least needed for bigger projects. Conversely, there are many offshore developers that work from home in very small units. These may be cheaper, but the cost will be much greater at the expense of being denied a full range of services for your product — maintenance, support, QA, etc.
As stated earlier, geography is extremely important to the success of development. Large companies can afford the high costs of labor in India, including attrition, IP protection and more. A startup company will flounder under the expenses in high turnover markets. Products that request databases and web development statistically do some of the best work by dividing the workload. Having QA centers in Latin America and development teams in Europe extend the workday due to the geographical difference, making your brand more efficient to the client.
This “follow the sun” model has become the standard for many US-headquartered firms. As this model is recognized to be the most efficient, locations are chosen to get the most production out of each day.
Many countries have IP laws that mirror those in the US. More often than people think, poorly formed IP protection has companies competing with US-based companies that have similar software at a distinctively lower cost. Some Eastern European countries — Ukraine, Russia — have excellent engineering talent but lack IP protection. The European Union, Japan and most of Latin America are safe areas with high-quality protection.
Software development companies based in the US often have significant ties with bankers, private equity firms, venture capitalists or other technology firms. These established connections can add value to your partnership with sensible results.
However, price is not the main concern with this issue. The best course of action is to find a company that can become a long-time partner. Once a roster is chosen, then you can select a firm based on price. Look for the added value of a long-term investment and if it is a feasible expenditure. If price is a primary concern, find an outsource firm that works with clients with partial equity.
About Teqniksoft, LLC
Teqniksoft is an international software development company with operations in North America, South America, Europe, and Asia Pacific.
We provide complete product lifecycle solutions for desktop, Web 2.0/Cloud, and mobility applications, and core competency in embedded systems engineering, CPLD and FPGA design and development, integrated circuit and PCB design and development, and building software systems for both Bare-Metal and RTOS environments. We also provide consulting services for all stages of development from architecture through QA, provide component technician services, and we have worked with all of the leading suppliers and manufacturers in the industry.
Our team has architected, designed, developed and delivered commercial products for broad spectrum of clients who range in size from large, public technology companies to early stage start-ups. The solutions cut across industries that range from Rotating Media and Solid State storage systems to viral mobility applications running on iPhone, Android, and many other mobility platforms.