Top Tips To Create A Persuasive Sales Letter

 

 Software Outsourcing

Software outsourcing, also called offshoring or offshore outsourcing, is the practice of transferring a function usually performed in-house by a business to an outsourced service provider (Outsourcing service providers) in another country. This is often done to improve productivity and reduce costs.

The practice can be controversial due to its effects on employment and wages 

and because of the difficulties for business leaders trying to implement the strategy successfully. This article provides tips for software application lifecycle management on how businesses can avoid common pitfalls associated with software outsourcing such as cost overages, training issues, and communication challenges.

The concept of software outsourcing involves a company transferring to an outside party the software functions that are not core to its business. Software is also called a non-differentiated product by economists—that is, it's a commodity whose value comes mainly from its price and being properly delivered on time. Software companies are well positioned to focus on developing innovative products and services, and offshoring their non-core activities allows them to concentrate their resources on innovation. Offshore outsourcing offers the advantage of lower costs, provided the offshoring partner can use the same processes as the client company; in this case, no major re-engineering or adaptation efforts will be required in order to reuse existing components or code.

There are several types of software outsourcing:

Software outsourcing is a high-growth area. In 2000, the revenue from software outsourcing was estimated at $10 billion and is expected to reach $50 billion by 2005.

However, to take advantage of the benefits of offshoring in terms of higher productivity and lower costs, hardware and software must be compatible with local standards. The company may also want to focus on research and development or other activities that require proximity between partners or require fast responses to problems (in this case the offshore partner would be a long-term partner). Management systems need to be compatible with the offshoring nation's regulations, laws and mores.

With the power of "dual sourcing" which allows companies to take advantage of both established outsourcing businesses and new local suppliers, value-added products can be designed, tested and implemented more quickly. For example, a company could design a new product concept in the U.S. and have it manufactured by an offshoring partner (perhaps through a sublicense arrangement), or it could develop the product concept in Japan and pay for internal production of a product that is resold to another company within the same group (perhaps via a licensing agreement) as long as it also has access to an offshoring partner (perhaps through a third party arrangement).

Companies often outsource to save the costs of in-house software development. They want to easily switch developers if their current partner cannot perform well. By outsourcing, companies can also gain access to various technologies and improve their competitive advantage.

Software offshoring helps companies develop global delivery capabilities while minimizing costs and risks. It enables companies to leverage a skilled workforce at a lower cost, as well as gain access to innovative technology and products from an offshore location. It also offers clients access to products and services that are based on tried-and-tested industry standards.

Offshoring involves an external supplier, where the customer works directly with a third party supplier and pays the third party directly. This is different from outsourcing, which involves an internal supplier or a regional center, where the customer pays the supplier's internal unit. While outsourcing requires knowledge in programming, offshoring needs knowledge of software development process, application architecture and integration approaches in order to benefit from lower costs and higher quality.

Software as a service (SaaS) comparing with traditional software packages is also very popular for many reasons like scalability, flexibility and lower cost.

Companies can take advantage of offshoring by improving management processes, automating manual processes, introducing new technologies and improving customer management.

Offshoring allows companies to reduce overall costs by more than 50% if they adopt the right process. Similarly it can help companies reduce the time taken to deliver a project by 30%. The benefit of offshoring is not limited to cost and time reductions but also extends to the quality of software. All these benefits are attained through the use of process-oriented approach in software outsourcing.

Due to globalization, software development projects are often outsourced to a region where software engineers are available at lower cost. Technically the offshore location is chosen based on the capability of outsourcing company to execute the project by keeping in sync with the client's business environment (e.g. Culture, language, time zone, etc.). The greater number of international subcontractors involved in the lifetime of a project increases risk dramatically for the employer and can result in cost over-runs and scheduling overruns. More than 60% of client organizations have experienced employee turnover due to factors related to location, time zone differences and culture shock. Acquiring new skills can also pose to be a challenge.

Due to the low cost of software engineers in developing countries, companies such as Microsoft and IBM have outsourced their software development activities to various countries. Various medical, financial and insurance software products are developed in India, Ireland, Russia etc. Also, many companies are outsourcing their software development to other company or agencies like MphasiS Limited or Firstsource Solutions Ltd. These outsource agencies provide customized offshore software development services by leveraging core competencies such as mobile application development Services along with expertise in a variety of processes such as R&D offshore outsourcing, IT services and business process outsourcing all over the world including India, China and many more locations. In 2015, India's software offshoring revenues (for Information technology services) grew to $7.9 billion, according to the Software Productivity Council.

The offshoring of software development from high cost locations such as the U.S into low cost locations such as India resulted in several negative consequences for the original software developers. These negative consequences include loss of skills, lower wages and other disadvantages caused by the implementation of offshore outsourcing projects in a highly advanced IT field like Software Engineering and Technology.

Conclusion

Offshoring software development is just a way to reduce the cost and time taken to develop the software. It provides benefits like reducing the cost of software development, improving quality of software, enhancing efficiency and increasing delivery speed. Some companies may see offshoring in terms of losing a good employee but this is very rare in India where employment laws are strict and there are many skilled employees. In an earlier study conducted by the Software Productivity Council, most offshore outsourcing companies in India grew at a rate of 42% per year between 2004-05 and 2009-10 which shows that there can be offshoring for both management and technical reasons.