The concept of Offshore Software Development or outsourcing a software development project has its place, no doubt; it offers two key opportunities at potential savings. The first is the substantially lower offshore labor rates and the second comes from the theory of elasticity in staffing. However, there are many pitfalls to be well aware of, before deciding to send your software development project overseas. Some risks (and their costs) will far outweigh any potential benefits when something unforeseen happens.
Software Development Offshoring – Common Misconceptions
• Lower Labor Rates: The first and most commonly made mistake is that offshore software developers have the same capabilities as the onshore one … except the price. Nothing could be further from the truth.
• Staffing Elasticity: Staffing elasticity is not exclusively an offshore benefit. Onshore developers have an equal, if not greater, ability to bring a wide variety of skill sets to the project … and at a moment’s notice.
• Language and Cultural Issues: Many executives are misled by offshore sales people who are highly conversant in American English and culture, only to be disappointed when they find that the actual web developers that will be working on their software project are not. Communication (language barriers) can become an issue, and cultural differences create inherent anomalies in understanding project scope, particularly when it comes to “user friendly” applications.
• Non Disclosures and Confidentiality: Many foreign countries lag behind the United States in their Intellectual Property laws. This may mean that your tidy Non Disclosure may be worthless if you ever need to enforce it (because of your offshore partners).
• Any Project Can Be Taken Offshore: It is ill advised to take any project offshore that has a high degree of end-user involvement, a great deal of system integration is required, or there are “any” yet-to-be defined business rules.
• Estimating Potential Savings: There is a documented and considerably higher risk of project failure when using offshore software developers. Consequently savings are overestimated and potential recovery costs are substantially underestimated. Every project runs into some unforeseen difficulties … offshoring increases the likelihood of unrecoverable failure.
• Project Commitments: While there is the potential for savings in offshore labor rates it is important to realize there will need to be a much larger time commitment on your part for communication, if nothing else. Project requirement will need to be more clearly defined up front and testing procedures during the project will need to be more thorough. It’s certainly important to establish that the offshore developer has a solid record of verifiable success with other American companies before starting.
Offshore Software Development – Great Risk or Reward
We agree that there may be savings to be realized from using offshore labor pools and software developers, but the trade off is risk … higher rates of software development project failures. If you cannot resist the temptation of saving money by offshoring your project, we suggest using a hybrid approach. Keep project scope, coordination, direction, and management under close control through the use of in-house staff or the auspices of a well qualified local web development organization. Use offshore labor only for those portions of the project that carry the least amount of risk and the highest potential for labor savings.
Business Success is about managing technologies and utilizing resources in the most cost effective manner while limiting exposure to risk … this is the key to profitability. Onshore Software Development Companies can offer highly qualified staffing, extensive industry experience, and the ability to analyze what may be appropriate to take offshore.
