Software Development: To Outsource or Not To Outsource
Let’s talk about a quite common situation: A certain company not having software development in its core business, however needs software development from time to time rather often. What is a perfect business model for such a company?
I would suggest choosing one of the two following options:
1. The company hires a few software developers to create kind of own software development department.
2. The company hires a software development outsourcing firm.
What are pros and cons of each of the above options?
Option 1. Hiring developers and creating own software department.
Pros:
• It is your staff, and they are always under your direct control. You are able to see their results and their mistakes instantly.
• Your spendings counted as cost of effective development hour might be lower than the same per hour cost offered by a software development outsourcing firm.
Cons:
• Hired developers might be of insufficient skills and expertise. It is not so easy to solve this problem, since, first of all, good specialists cost a lot, or it’s a chance you might be misled by an applicant during the interview.
• Even if the effective per hour cost is lower, your overall spendings might be greater than in the situation with outsourcing: You have to pay your staff for all working time, be it effective or not. You pay salary rather than compensate only for hours spent for working on an approved task.
Option 2. Hiring a software development outsourcing company
Pros:
• Your relationships with this company are backed by a formal agreement, so they must provide you with services of a definite quality and thus they have to obtain skills and expertise of the needed level.
• You yourself concentrate on your core business not being distracted by non-core IT-activities.
• If you hire offshore software outsourcing development company from, for example, Russia, you will get high quality service for very competitive cost. About high quality service: Certainly it’s true only assuming you make deal with a right outsourcing company.
• In any case you pay only for the job done; it is not salary you pay to your employee for time spent in the office. The task is over - you stop paying. The task is not done as you ordered - you do not pay whatever time has been spent by vendor.
Cons:
• You might need to call vendor for each single IT-task you come across. It sounds boring.
• You need to have a good contact person in your staff to manage agreements with software development outsourcing companies. Probably, it should be a manager educated in IT at least to some extent.
So here are the basics of considering different solutions for a problem of carrying out occasional non-core software development activities, and I hope you have got at least a bit of helpful information to make right choice.