Reasons for Outsourcing Software Development

Every company makes decisions that are right for them. Outsourcing software development can be risky sometimes, as some of the outsourced projects fail to meet deadlines and requirements of the customer. The trick is to choose the ideal software vendor that will deliver all useful functionalities on time and on budget. Trustful software companies usually can boast an impressive portfolios of international projects in the corresponding field of the company’s industry.

For many companies software development and maintenance is just a function within a much larger enterprise. Only partnership with more tech-savvy software development companies can allow such companies to launch and deploy innovative products designed around emerging technologies like backend as a service or data mining. But the time moves forward, and most of corporate giants maintain their leading positions thanks to state-of-the-art technologies they buy and deploy. Ready-made software solutions are often not the best fit for a fast-developing business, as they lack certain features and don’t follow the main business logic of an enterprise. Under such conditions, outsourcing custom software development is the right move to do.

The first reason to outsource IT tasks is efficiency. Today many large companies have their own IT departments that are capable of developing some products in-house. The question is, in what situations it is efficient enough. Most of technology departments successfully cope with software integration, development and maintenance of minor priority products and third party systems. The smooth operation of an enterprise would be impossible without their modest work, but this is also a reason not to distract internal teams by supercomplex tasks.

The next reason is the qualifications and expertise of highly specialized IT production. Rational work of an enterprise serves the larger purposes than building software infrastructure and developing custom software. If the general course of business is other than IT, then it should not rely too much on its own technology department. To take, for example, mobile software development which is becoming more and more demanded by companies in various industries. But it also needs skills and expertise in a relatively specific subject, especially when it comes to iPhone programming. For this reason, even established technology vendors outsource mobile programming when they need mobile applications for enterprise or e-commerce use.

One of the most important reasons for outsourcing from the business point of view is that time is crucial for commercial success, and extra teams can significantly accelerate the development. When the decision is made to implement an absolutely new solution to boost sales or enable programming services, this software solution must be deployed as quickly as possible to make excellent progress on the company’s strategic plans. It is in the organization’s best interests to outsource software development to larger, better prepared teams of software developers that are able to accomplish the task quickly and focus on the best practices of development.

Finally, risk management experts also agree on the efficiency of outsourcing. Success of a software project is not only following the timeframe and specifications. Best software projects demand creativity and innovation, which is not easy to find in software companies specializing in offshore development. But the risks of failing the project partly lay on the contractor, so they are actually less than in case of in-house development. Risk sharing is also a very important reason for passing the tasks offshore, and the risks of failure can actually be considerably decreased by cooperation with reliable software vendors from countries with a strong legal system and profound education system. In this case, offshore development can be an answer to many challenges that increasingly complex business world is posing on many companies.

Offshore Software Development Trends in 2012

The Drivers of Offshore Software Development

The offshore Software development trend has been around for a while now and many IT as well as non-IT companies all over the world are engaged in outsourcing their software development needs to offshore software development centers due to the various benefits provided by the outsourcing process. One of the leading drivers of this trend has been the reduced cost factor associated with the outsourcing process in general. During the credit crunch caused by the global financial crisis, companies were focused on reducing costs and the offshoring process helped reduce overheads and improve the outsourcing company’s bottom line. In other cases, non-IT firms with no or minimalist IT departments also outsource their software development requirements as developing such software in-house often tends to be cost prohibitive. The lack of expertise of a company with regard to use of a specific set of software tools/platforms necessary for developing one or more applications is another driver commonly associated with such outsourcing. Such non-IT firms include industries from a wide range of sectors including but not limited to transport and logistics; education; healthcare as well as banking and financial services. Each of these sectors and even companies within the same sector, however, require unique solutions suited to their own needs. Many organizations also follow a blended approach by mixing outsourcing with in-house expertise to develop the necessary solutions.

Leading Offshore Software Development Priorities

Many companies across the world are currently engaged in developing new software products/applications according to the requirements of clients. New software development is expected to account for a major portion of the software revenue in 2012 and beyond. A close second is the requirement for companies to upgrade their existing software application by integrating new technologies/modules into their already deployed solutions. In 2012, the integration aspect is expected to gain more ground as new technologies/applications increase the benefits provided to organizations by the current solutions. The main benefit of such integration is the reduced deployment time for the company as well as the decreased cost of development as compared to in-house development. The consumerism of IT (CoIT) trend is also beginning to affect the market as users demand a superior user experience delivered by these solutions. As the market for solutions which go beyond delivering basic functionality expands in 2012 and beyond, the focus of many an offshore software development company is expected to shift towards using new technology to develop better User Interface (UI) and graphics for solutions, which were deployed earlier in the enterprise. Such development is often classified as custom software development, is also expected to witness robust grow among offshore development companies in the year 2012 as well as the recent future driven by increases demand across multiple industries.

Other key functional areas for offshore software development operations include performance improvement-based software development as well as the continued maintenance and support for existing solutions. As more and more companies deploy software solutions in order to gain a competitive advantage in the intensely competitive market, the number of performance enhancement contracts between organizations and offshore software development firms is expected to increase. Another software development area expected to witness rapid growth in 2012 is the development of dedicated mobile apps. The focus on developing apps for mobile is expected to continue in the recent future driven by increased enterprise mobility requirements and the growing adoption of BYOD (bring your own device) philosophy by enterprises. A related area which is forecast to grow in 2012 is the development of cloud apps for use by the enterprise as well as the development of improved security solutions to ensure superior data security and compliance with all existing regulations of data protection.

Leading Deployment Areas for Software developed at Offshore Locations

The requirement of software developed by offshore centers is not limited to any specific industry therefore the list of probable deployment areas is quite large and expected to grow further in 2012 as technological advancements open up new application areas. However, the development of data storage/management/Business Intelligence software is expected to be the leading business area for offshore software developers in 2012. Such solutions are deployed by a wide range of industries to cope with the explosion of digital data and facilitate an informed decision-making procedure, which is expected to propel continued growth of the Business Intelligence solutions market. Other leading deployment areas for software developed at leading offshore locations include applications required by the financial and healthcare sectors as well as solutions deployed for managing processes/projects and applications which are necessary to facilitate enterprise-wide networking and communications. Other areas of interest for these companies in 2012 include applications for facilitating the deployment of e-commerce, CRM, content (document) management platforms, online analytics etc. Overall, in 2012 and beyond, the industry is expected to witness robust growth as companies increase their IT expenditure with the intention of gaining a competitive advantage in the market.

Development Platforms Preferred by Outsourcing Enterprises

Among the available software/application development platforms currently in use today, internet/web-based development platforms are expected to dominate the offshore development market in 2012. However, enterprise application development platforms and SaaS/Cloud-based platforms are also expected to witness growth as more organizations issue contracts for new solutions based on these emerging platforms. The emergence of BYOD is also expected to result in the development of various mobile platform-based applications in the recent future, while desktop application and embedded platforms are expected to witness only marginal growth in 2012 due to the perceived restrictions inherent to these platforms.

Leading Offshore Destinations around the World

Over the years, India has traditionally been the leading offshore software development destination for firms based in the US and Europe. This situation is not expected to change in 2012 even though emerging players are expected to partially erode India’s current lead in the global offshore development market. Emerging markets, where organizations are currently outsourcing their software development requirements include Central and South America mainly Brazil and Mexico; various countries in Eastern Europe; China; countries in the Asia-Pacific region such as Philippines, Indonesia, Vietnam; as well as Russia and Ukraine. Over the next few years, these emerging players are expected to provide stiff competition to software development centers based in India. The key criterion for competition among these offshore development centers is forecast to include overall cost, development quality, project/client handling procedures and the total development time required. However, even in the face of such challenges, India is expected to retain a dominant position in the global offshore software development market in the year 2012 as well as in the recent future.

Advanced Approach of Software Development Process

Outsourcing custom software development is not uncommon today. Large corporations and even small businesses prefer to work with outsourcing companies, rather than developing software solutions and customize off-the-shelf by themselves.

In most software development outsourcing, you promise many benefits to customers. For example, the development of software implemented by third parties will enable the client to save resources on software developers and other maintenance staff.

Moreover, severe competition between the companies custom software development required to reduce prices of their products and services and improve their quality to attract new customers and retain old ones.

However, as we begin to talk about competition in the market for custom software development, it is necessary to note that this segment is becoming increasingly saturated. Each year a large number of new companies are starting to operate in this area. They try to offer such a solution the customer needs, from customization of existing solutions and developing software from ground zero. They are ready to develop simple applications for small business and automation solutions to complex large-scale enterprise.

Although the custom software development companies are facing the situation where it becomes more difficult to compete with each other using a mechanism of “low price / quality. To achieve higher results and attract more customers, outsourcing companies must develop more sophisticated approaches to deal with custom software development and use of advanced technologies and methodologies in the process of project management, which will allow the company to shape its own memorable, distinctive, impressive and positive image company.

India had probably chosen the most effective and the right to resist competition. Management team had realized the strong need to develop and implement the advanced approach of outsourcing custom software development process. It is this complex approach that contributes to compete successfully in both domestic and international market more saturated.

The complex consists of four unique approaches:

  • Management of customer relationship
  • Project Management
  • Personnel management and training teams
  • Wide-accumulated experience of use

Customer relationship management to customer-oriented approach, bringing in its core is based on the use of updates and management of information technology, which helps Company to collect information on customers and use this information in its own interest and in the interest of its customers. Customer relationship management enables the companies to respond effectively to customer needs, taking into account all customer requirements to adapt their work style, and while to build strong mutually beneficial relationships with them.

The project management approach presented by companies covers all stages of the lifecycle of the project (project analysis, development, testing, implementation, maintenance). The practical users incorporate records and methodologies, including Agile (XP, Scrum) and RUP (Rational Unified Process). This approach to project management include effective time management, a process of interactive communication between all participants involved in the project, the use of effective monitoring system, regular reports on the status of work, strict system of control quality that avoid output errors and provide quick answers to customers’ requests.

Unique personnel management and team building approach are very important for the success of company and competitiveness depends mainly on its human resources. Team training process begins with research, selection and hiring the best candidates, qualified specialists and graduate students in mind, and smooth in the process of transfer of training and preparation of new employees. In fact, we can say that approach had made continuing education, which contributes specifically to improve the efficiency of business operations.

Another important approach could be the experience that the company has accumulated during the long period of its activity. All information collected by the company staff and processes related to project management and custom software development process is placed in the unique knowledge base that could be systematized used by any employee of the company at a time in the process of implementing the project and in the process of staff training.

As we mentioned in the article, approaches to outsourcing custom software development process. This is the unique aspect that will allow the company to optimize the use of his time, resources and cash work, and client resources as well. With the help of all these approaches, the company had trained its positive image and has won high customer credibility.

In sum, it is necessary to mark today the company specializes in outsourcing custom software development process could achieve good results if it could develop and introduce cutting-edge approaches and new practices and techniques in his work. These conditions are dictated by the situation of modern and highly competitive market especially during the difficult period of global crisis.